In the trading market, there are several different methods that an investor can use to get a respectable return on investment (ROI). You can trade stocks, bonds, mutual funds, commodities, IRAs and the list goes on and on. In order to trade any options, however, you’ll need a broker.
Before going in to what to look for in a broker, it’s important to know what a binary option is. These options are predictions as to the future value of a specific asset. For example, you can purchase an option predicting that the cost of gold will go up for a specific amount of money; this is called a put option. You’ll have a predetermined time for the value of gold to rise in order to make a profit.
This is were the decreased risk comes in. Unlike other forms of trading, you aren’t buying the gold, you’re just purchasing an option to predict the value of gold and profiting if you’re correct. If you predict incorrectly, you lose the money you paid to buy the option; you don’t lose the value of what the option was based on, in this case gold. The ROI for binary options are typically 50 to 80 percent, and in some cases, it can be higher depending on the option you purchase.
Now that you know what these options are, you’ll need to find a broker that can facilitate your options purchasing. There are many brokers to choose from and a quick look online will prove that point sufficiently.
As stated earlier, the primary role of a broker will be to allow you to purchase options. A good broker will offer a wide range of different options from stocks, commodities, currencies and various global indices.
Another thing you’ll notice with options brokers is that all of them will have a minimum amount needed to open an account. This number can vary from as little as $100 to $500. As to which you end up choosing will largely depend on the available capital you have designated for your options trading account.
Brokers will also have a minimum and maximum allowance for trade sizes. As with opening an account, these numbers will also vary quite considerably depending on the different brokers.
Minimum trade sizes can be as little as $1 to $25. For maximum trade sizes the range can be from $2000 to unlimited amounts. In the unlimited sized options, most brokers will work on a case by case basis and take into account the option as well as the trader looking to purchase the option.
It is also good to find a binary options trader that accepts several different types of international currency. For practical reasons, it’s almost a necessity for a broker to accept various different forms of currency. As binary options are a global trading method and has no physical trading floor, the majority of these options are traded online. This opens up potential clients from all over the globe. Even if the broker is located in America, a good broker will accept various currencies as payment to draw from a larger investors pool.
Lastly, it’s a good idea to look at a broker you are considering and check their ‘in the money’ percentages. This number will give you a good idea as to the percentages of winning options the broker has sold over the past year or longer. Many brokers advertise this and you’ll also find these in the money percentages on the various broker comparison websites.
If you want a less risky way of trading and/or your trading dollars are somewhat limited, you may want to consider binary options. With decent rates of return and an uncomplicated trading process, binary options couldn’t be a better choice .