In Binary Options, there will always be a positive and negative side of this kind of investment or instrument. One of the major advantages, when you trade in Binary Option, is that the possible reward and risk are both predictable and known.
The market will move whether on the favor or against the trader or investor. In Binary Option, the trader will always have to expect only two results or outcomes: a fixed amount of reward and a return of investment or a loss in amount and no return of investment at all. In other words, Binary Option is a cash or nothing at all.
They say that it takes much perspective or point of view to be assured of a return of investment. So, how a trader can develop a better perspective while investing on Binary Option?
Frame of Reference or Perspective
In Binary Option, a trader should be able to have a point of view or a nice perspective, whether to choose the target they believe will hit before the expiry time and date comes. When a trader has a better perspective, there is a greater chance that the trader will receive a fixed amount of reward and will less likely to lose the investment. Although, it really takes much frame of reference/stance on the part of the trader or the trader will lose everything.
Trading in Binary Options
When trading in Binary Options, the trader can invest any amount he or she wants, but this amount will depend on the broker. Most of the times, the range amount of investment of traders is usually between £10 to £100.
For example, the trader invests around £1500 for a S&P of 800; this means that the trader expects the target price would be higher than 1500 before the expiry will come. But if the target price is lower than the invested amount, then the trader will lose everything of his or her investment.
Call or Put
The trader has the option to call or put in binary option. Whenever the trader decides to have the call option, this means that the trader has every right to purchase or buy a stock at the targeted price before the expiry date or time.
But when the trader decides to take the put option, then, this means that the trader has every right to sell a stock at the targeted price before the expiry date or time. Bear in mind that in every decision of the trader, whether the trader decides between the call or put option, there is always another trader selling it.
Therefore, binary option can be compared to gambling but the binary option is legal and acceptable since it abides and complies with the rules and regulations intended for this kind of financial trading. Binary Option in simpler terms is most likely having to bet on something and hoping that your bet will win or else you will lose every amount of money you have a bet. Traders should always put the time to understand the rules and regulations of the broker before investing on Binary Option, which you can try with Binary Option Robot.