Binary Options: Gamble or Good Investment?


Some investors are always looking for the next big thing.  They want to buy in at the right time a.k.a. at a low price and sell to make money a.k.a. at a high price, but does that ever really happen?  Trying to time the market to buy low and sell high can make someone crazy.  Constantly watching the stock market can be a full time job, well it is actually a full time job.

You don’t need to be a stock broker to be a good investor, all you need to do is know what you want, have patience and stay invested for the long term – oh and remember that nothing in life is guaranteed.  A lower risk alternative to trying to time the market is to bet on it with binary options.

Binary options as an investment

Binary options are limited risk investment contracts that allow investors to place a bet on how they think the market will perform.  You bet on whether a commodity, stock index, Forex, event or Bitcoin market will go up or down during the day at any given time.  It’s a simple yes or no answer.  If you bet correctly you win, if not then you’ve lost the amount of money it cost you to place the bet.

Here’s an example:

According to NASDAQ the price of gold is currently trading at approximately $1,230 per ounce.  If you think it will reach $1.260 by 4:00 p.m. EST then you would purchase a bid to buy.  If you don’t think the price will reach $1,260 by 4:00 p.m. EST then you would purchase a bid to sell.

Like all investments, the options come at a price  The cost to purchase a buy option may be $40 and the price to purchase the sell option may be $45.  Those prices fluctuate and are based on the constant change in market conditions throughout the day.  It’s very similar to betting on a sporting event in Las Vegas.

A good investor stays informed

Although it may seem very simple based on the example above, investing in binary options is actually quite sophisticated.  Behind the scenes it takes knowledge of the market as well as the specific commodity being bet on or against.  If you’re new to investing this may not be the right option for you.  Be sure to understand all the risks and costs involved before investing.

Understand the risk involved

Despite their appeal to make a quick buck, binary options seem to be overlooked when it comes to a well balanced investment strategy.  Remember that you are not purchasing a specific commodity with binary options, you are only wagering on its performance and value at a certain time.

If this sounds like the right investment for you, investors can purchase binary options with companies such as BancDeBinary who aims to simplify trading for the 21st century investor with over 200 different stocks, commodities, currencies and indices on their platform.   Just remember, get informed before you invest.

Join our newsletter


Subscribe to get the latest "Engineer Your Finances" content via email.

Powered by ConvertKit
About the author

Join our newsletter

Subscribe to get the latest "Engineer Your Finances" content via email.

Powered by ConvertKit Top Finance Blogs