Forex and binary options have become significant players in the world’s financial industry as such we have decided to help our readers understand the basic of binary options as part of our personal finance category.
Binary options are virtual financial asset which are traded on online platforms. The principal of this type of trading is predicting the price change of a traded asset in a given trading time period.
Options are sold on a wide variety of financial asset including; Stock, Indices, Commodities and Currency Pairs above this, assets have a wide variety of predefined expiry time which varies from 30 seconds and up to one year long.
When buying a binary options traders have two options; Call for a price rise or Put for a price fall, if the prediction is correct the trader ned in the profit and takes home a profit of as high as 95% return on investment, if the prediction fails, the trade ends with no money and with a loss of the traders initial investment.
The first step in trading binary options is choosing a broker. The binary industry is booming and there are more than 200 companies offering their services to any potential trader. So choosing a broker isn’t so easy. When choosing a broker it is very important to choose a broker which fits your trading nature and personality.
Binary options brokers can be divided into three major groups; regulated brokers, US friendly brokers and unregulated brokers. Binary options were first introduced to the world in 2008 and had been in a gray zone for several years. Increased popularity led authorities to legalize and regulate binary options and so in the past years many brokers have applied for a license and have gained the legal approval of the European Union which now classifies these brokers as investment companies. Although binaries are now regulated there several brokers which have decided to keep the operation running as an unregulated institute, this is done for various reasons and does not mean these companies are less trusted than others.
Generally speaking the no 1 way to go is choosing one of the very best regulated binary options brokers, however this option is not available to everyone. US residents at this day and time can only trade on specific regulated platforms and therefore tend to go with an unregulated broker.
Regulated brokers do provide a safer trading environment due to the fact they are obligated to International investing laws and are constantly supervised by several regulators.
Although it is recommended to trade on a regulated platform, if this is not possible it is important to check the brokers reliability and reputation which can be easily found on several binary options forums and portals. Don’t hesitate to ask the right questions and trade wisely.