Binary options refer to trading in commodities, indices, stocks, or currency in which you get some fixed monetary return,loss or nothing at all. As the market continues to grow and many people are looking for the best ways of investing their money wisely, binary options have become popular with traders. To read more about the characteristics of binary options, click on this link http://cybermentors.org.uk. It is important for you to know some of the features of binary options to enable you to make an informed decision whether to choose them as a preferred investment plan.
Trading period is fixed
One significant characteristic of the binary options is the fact that the parties involved in the transaction such as the investor, the broker, and the asset company are all aware of the expiry date right from the onset.
Before you commit your money as a trader on any asset in the options segment of the market, the trading period is fixed. The setting of this duration assists in the determination of the amount of money invested and the expected return.
Full disclosure of risks
When picking any binary option, you should know that the risks involved in the investment including the possibility of losses, the volatility of the market, and fluctuation in prices are disclosed at the beginning of the trading period. It gives you an opportunity to make informed decisions as well as make predictions that are based on available information in the market. By doing so, no one will take the blame should the investment go as unplanned.
Full disclosure rewards
As a trader planning to invest in the binary options market, you are aware of the profit you likely make at the expiry of the option is fully right from the beginning. This feature gives you the opportunity to decide whether to invest or not to trade considering the possible reward of the investment.
This kind of investment has three possible outcomes just like in the traditional trading. The first scenario is that you can get profit if your speculation in the market regarding price fluctuations is correct within the option period. The second likely result is a loss of your investment. It occurs when the market dynamics cause the prices to go contrary to your prediction.
For instance, if you predicted that the price of an asset you are trading in was going to increase before the expiration date of the option, but the price falls, then definitely you lose your money. The third potential scenario is where nothing happens to the price of the stock during the option duration, and thus, you neither lose nor gain anything in the transaction.