Day trading binary options is one of the fastest growing investments of preference amongst day traders. The high yields and rapid turnover associated with this relatively new investment has created quite a stir a day trading desks all over the world.
How Trading Binary Options Works
The simple way to think of these new investments is to think of a light switch. A light switch has an on or off position. When the light is on, there is light in the room. When the position is set to off, the room remains dark. Trading binary options works the same way - when the market moves up (and you have bought a call), the trade is in the money. When the market moves down and you hold a call, the position is considered out of the money and pays little or nothing.
Why Would People Trade All or Nothing Contracts?
People have had success trading binary options and like using them because of the high yield, or rate of return on their investments. Typically an all or nothing option like these will pay 60-75% yield for an in the money position, and sometimes will pay as much as a 15% return of original capital on so called out of the money trades. Perhaps an example will help.
A $200 trade in a typical contract would pay $350 ($200 initial investment plus 75% profit) for a 75% yielding investment. An unsuccessful trade might pay $30 (15% of the original $200 investment).
Investments Allocated In Fixed Dollar Amounts
You may have noticed that in the previous example the trade it was allocated in a fixed dollar amount - . $200. Some platforms are designed to take trades in these fixed amounts much in the same way mutual fund orders are processed. This is another nice feature of this type of investment.
Trading binary options is a low cost, fast paced, high return way of participating in the stock market.
The trades expire hourly and have a simple up or down payout structure making them simpler to understand than other types of options. Open a binary options trading account.
Just two in the money $200 investments can make $300 a day.
Steve B. Wise
For more information, please visit: High Yield Money Market