Are Binary Options Good for Saving Money?

admin | July 6, 2013

binary options (Photo credit: opportplanet)

The binary options trading industry is one of the fastest growing financial service markets on the globe. A recent market research revealed that binary trading might grows as fast as to become 4 times larger by the end of 2013 than it was in January 2013.

More and more people have decided to invest money in this form of online trading and a large number of people have managed to generate substantial revenues as well. But the question is: Is this form of investment also recommended to people interested in saving money or it’s something only for die hard speculators and traders.

How it Works?

In order to answer the above question, we will have to explain what binary option trading actually is. As per the definition on the website http://www.optionsadvice.com/, binary options trading is betting on the future movement of various assets such as stocks, currency pairs and commodities.

For example, if you know for sure that the stocks of company X will increase the next few days, then at a binary options broker you will have the possibility to bet on this event. In order to do so you will have to invest a certain amount of money.

If your prediction will come true, then your investment will be returned to you along with a pretty high commission, usually around 85%-90% of the initial investment. This is different from traditional betting on sports events from the fact that if you have some financial expertise then you will be able to accurately predict your bets.

Is it Risky?

Like any form of investing, binary trading is quite risky. If you will not manage to predict your bets, then you will lose all of your investment. Like said above, you will only be able to win in binary trading if you are somewhat knowledgeable in the world of business and finances.

You definitely do not have to be a financial expert in order to win at this form of online trading. If this would be the case, then only a limited number of people would be able to trade binary options. In reality, these days millions of people trade binary options.

But you DO have to have at least some idea about how the financial system works if you hope to make profits. If you have no clue about these things, then binary trading is not recommended to you because you risk losing your money.

You may naturally also acquire these skills if you are determined enough. For example, at the website http://www.optionsadvice.com/strategy/ you can find extensive material and strategy guides regarding efficient binary options trading.

Another thing you can do in order to learn to trade binary options is to try out so-called demo accounts. Most brokers offer free-money accounts that work and function like real money accounts. With these you can trade as much as possible without actually having to invest anything at all.

After you have tried out all the strategies and tricks given to you by the above linked website and other websites, you may as well decide to invest real money. This is the proper way of trading options online. Never trade with real money straight away from the very beginning!

Is it the Right Choice to Save Money?

Now the obvious question is if this form of online trading is actually suited for people who are only interested in saving some money for various purposes such as retirement, college fund and other issues.

While you can definitely make large sums of money in binary trading, this activity is perhaps not recommended to people who are only interested in saving money. This is because in order to make substantial profits you will have to invest a great deal of effort and research.

It’s recommended to those who can take risks

Binary trading is actually only recommended to people who are interested in generating substantial amounts of money while being comfortable with taking huge risks. Most people who are interested in saving money might not be comfortable with taking huge risks.

Saving money involves cutting expenses as much as possible but also eliminating potential risks of unexpectedly losing money. This means that these people are also not necessarily interested in gaining large sums fast.

Not recommended to average money savers

So, as tempting the promises of large gains are, binary trading is perhaps not something that average money savers should engage into. The last thing a money saver needs is losing the money that was slowly saved over the course of multiple years.

However, if you have already amazed a very large sum of money for yourself then perhaps you can give it a shot with some limited funds. Let’s say you have saved $10,000 total over the course of one year. In this case you may permit yourself to invest like $500 to $1,000 in binary options.

However, no matter what happens you should under no circumstance go above the limit you have established for yourself. In the unlikely (but still possible!) event that you lose all the $1,000 invested you should IMMEDIATELY stop trading and not invest any further money.

Conclusions

As explained above, binary trading is generally not recommended to average money savers. However, there might be some exceptions such as when someone has amazed a substantial amount of money and is not afraid to lose like 5% of it. But as said, never invest too much since you may as well lose all of it.

On the other hand, if you like taking risks with the promise of gaining large sums then you can definitely try out binary options. But be aware of the fact that you will only be successful if you take this form of online trading seriously and have at least some idea about how the financial system works.

Binary trading is at the end of the day a form of financial speculation and not a method of saving money. – Remember this no matter what decision you make and you should be fine.