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Binary Options Provide Ease of Trading

September 18, 2014 •

You Can Make CashUsing binary options is not for everyone, but it does provide an ease of entry to the marketplace that you will not find anywhere else. Yes, you can buy stocks for very cheap through automatic investing with some stockbrokers, but this is not an effective short term strategy. Binaries are the only type of trading where you can make worthwhile profits with small amounts of cash and little risk. They are more effective and cheaper to process than anything else you can find, and this is one of the biggest reasons why they are growing so rapidly in popularity.

First, consider the stock market. Many brokers allow you to buy stocks for as little as $4 in some cases. If you bought 10 shares of a $25 stock, you would spend $254 to do this. Now, let’s say the stock goes up $5 per share in a week. You sell your shares for $15 and have $285 credited to your account. The stock went up 20 percent, but you only made a $31 profit off of it after broker fees instead of the $50 that you thought you had.

Now, look at the Forex market. You open an account for $250, and with leverage, you are able to buy $25,000 worth of the euro. At the end of the day, the euro has gained $0.01 on the dollar after the spread, and you sell your shares for a one day profit of $250. This is a much better deal! You make a ton more money doing this in a much shorter amount of time. But, what if the $250 that you risked off the bat was gone instantly? If the price of the euro had dropped a single pip during the day, your broker would have ended the trade immediately and you would have lost everything. That $250 profit you made to double your cash would have been erased, along with what you had risked.

Binaries present a safer alternative. You need the same $250 to open your account, but to realize the same profit, you can risk far less. Let’s say the asset you are trading has a return rate of 80 percent. But, instead of making one single trade, you now want to make four trades, each of which last 15 minutes. You look at the $25 stock from before, buy a call option for $100, and 15 minutes later, the stock has gone up a single penny. You are given $80 in profits. Next, you look at the euro. Instead of 100 pips of movement like we had in the example above, it only moves 5 pips. Again, $80 in profits. Then you make two more similar trades, each at $80. You’ve made $320 for the day, you’ve had your money exposed to the markets for much less time (an hour total), and you have made more money.

These were ideal examples, but the idea is not compromised, either. By taking less risk at once, and breaking your trades up into smaller pieces, you can make more money with less threat to your cash. Binaries are not the only way to do this, but they are one of the easiest and they are by far the cheapest way to do so. Even if they are not your primary method of trading, they should at least warrant some attention on your part as a way to supplement income when other trading conditions are not perfect for you. Tiny changes in prices can make big profits for you, all you need to do is have a good idea of the direction that prices are headed.

Categories: Starting Out
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