The average person is no economics major, investment broker or student of stock market patterns. Prior to the invention of the Internet, those who wanted to partake in investment banking and not spend hours in the library reading up on economic history would hire a professional to manage their investments, and take a cut of the profit.
These days, though, the investment industry has become infinitely more accessible, and requires only some basic introduction to the industry, which can be found in tutorial videos on YouTube (News - Alert), a few hundred bucks in a bank account and a few clicks of the mouse. And it becomes even more simple with binary options trading.
Introduction to Binary Options Trading
For those unaware, binary options trading is a system of investing described as "simple fixed reward contracts," where the amount of potential money gained and lost are fixed amounts, known to the investor at the time the investment is made. The simplest form of this trading is called High-Low or Up/Down binary trading. With this strategy, the investor puts X amount of money on the table, and bets that a given stock will either rise above a certain price point, or fall below it.
As an example, the investor pays $100 and suggests that the Dow Jones will be trading at or above $14478.05 by 4 p.m. EST on the day of the investment. If he is correct, and the Dow ends the day at or above his given estimate, he wins a certain percentage of pay-off, say 65 percent of the bet. Thus, at 4 p.m. EST, typically only hours after investing the $100, the investor could make a profit of $65. However, if the Dow falls, or does not rise to the desired price point, the investor gains back only a small percentage of the invested amount, say 15 percent, and would have lost $85 on that particular investment.
The Good News about Binary Trading
This shift toward simplicity has a few implications. It opens the investment world to the layman, who can now partake in ever-shifting stock trading on a small scale, with a quick pay-off. For those who are knowledgeable, it can be an ideal way to make money in only a matter of hours, without leaving home. A variety of strategies are listed to assist in the art of binary trading; the Financial Trading School offers a series of online video lectures on these strategies to provide an insider perspective for those investing from their home computers.
Faults in the System
Gordon Pape of Forbes has something less positive to add about the changes binary options trading is making in the investment world. He suggests in his article, Don't Gamble on Binary Options, that binary options trading, in simplifying the process and providing almost instant gratification, turns this form of investing into something like a game of online poker. Because the uneducated can just as easily happen upon a site like OptionsClick.com or 24option.com, investing becomes a game of chance that has nothing to do with the actual technical probabilities of stocks rising or declining within a certain point range.
Pape describes this online investing craze as "a kind of pseudo investing sub-culture," and insists that in the end, online binary options trading is "a crap-shoot" due to unregulated websites and the general layman nature of the game. Like any investment, there is the potential for mindless profit loss -- in this instance, it merely flies under the radar of a skilled broker or regulated stock trading website.
In the end, binary options trading is similar to any other investment -- though it may pay off in some instances without any forethought, it is best approached with clear insight and some knowledge of the investment world. In terms of accessibility, it can't be matched, and for that reason it adds a new dimension to the formerly lofty Wall Street investment crowd; a dimension that may change the average education on investing in years to come.
