Investing in common stocks could sometimes requires lot of time and effort. I recently found a new investing vehicle enabling investors to start with little money and little knowledge; it is called binary options. Banc de Binary is a great resource to understand binary options.
Binary options explained
Binary options are relatively easy to understand. You need to create an account with a broker that will give you access to their investing platform. All options are listed with the expected return if you make a successful trade. You then select an asset and decide if it will go up or down within a defined time frame. The expiry time frame could be a small as 30 seconds and the amount invested could be as small as $1.
Rule #1 know what you trade
Since most binary option expires in a very short time frame, it is crucial to understand what you are trading. Selecting the right type of asset is crucial. You can select assets you understand and know how they will react to events on the stock market. This is the most effective way to invest in binary options. Conducting further research is advised as you don’t want to gamble your money, you would rather invest it.
Rule #2 concentrate on a small basket of assets
If you are trying to trade on everything you can, you will invest, and more likely lose lots of money. Each asset type has their own characteristics and you should rather concentrate on a few of them to thoroughly understand instead of barely know how each asset evolves over time.
Rule #3 plan carefully
Typically, you earn very strong return on your investment while you will lose it all if you are wrong. For example, if you invest $100 in a binary option, you will either complete your trade with $185 in your pocket or $0 if you are wrong. This is why it is important not to invest too much money on a single trade and to know when it is the right time to cash your investment and stop trading. Don’t try to “make up” for a loss trade by taking additional risk on your next one.
One last tip
If you never traded binary options before, a very good idea could be to open a demo account. Most brokers offer you the possibility to open a real account with no money. You can then start making fictitious trades to see how you could be making money with this system. It will allow you get familiar with the platform and how binary option works. You can make your rookie mistakes within the demo platform and get ready for real investments afterwards. By testing your trading aptitudes and strategy, you can see if you could make money in the real world. This is probably the best way to initiate yourself to binary options.