The binary options trading are the most profitable trading options and are also the fastest way of earning money for the investors. Thus it has a lot of advantages over the vanilla trading options. The binary options strategies are much more fulfilling and are brings in higher returns than the vanilla trading options. The binary option trading involves speculations by the trader on whether the underlying option is going to make profit or the prices are going to decline. Based on these speculations the profits are calculated. In binary options investment the investor receives upto 95% of the profit earned from the broker thus in such type of investment it is either everything or nothing. If the predictions are wrong then the investor loses out all the money invested on the asset.
Making profit and loss
An option is bought with a prefixed amount from the seller but the option holder cannot exercise any right on the underlying property that is he cannot buy or sell the asset until the lapse of the prefixed term. At the end of the term if the value of the asset increases then the option holder makes a handsome profit and if it decreases he loses out on all the money that was invested. The decision is made on a Call or a Put.
Factors that make it work
There are different factors that work in favour of the binary options investments. Firstly, it has a risk management factor that is the investor knows from before that what amount of money is being invested and he can thus have an idea of the amount of loss that can be incurred in case the speculation goes wrong, Secondly, the amount of profit received is much higher than the vanilla option trading. In this case the broker pays the investor almost about 95% of the profit. Thirdly, the profit can be earned faster than any other form of investment. Since interaction can be done instantly one can buy a binary option immediately after learning that the value of an asset is going to increase.
There are basically two types of strategies, the Fundamental Strategy and the Technical strategy. The Fundamental strategy is taken by making a proper market analysis of the historical data of the market and the Technical strategy is taken by merely speculating on the maximum and the minimum price points of the assets and then set the price. Based on these charts an analysis can be done.