binary options trading risk versus rewardAs a relatively new investor outside of the standard 401(k), I have been intrigued by the other options that are out there.  Unfortunately, I have found that there are too many different types of investments that it can be overwhelming.  Investing can be scary for those that have never done it before, but that shouldn’t scare  you away from it.

Without investing, it will be relatively impossible to retire in this day and age.  Most people need the power of compounding interest to help them along to reach their retirement goal.  Unless you live on a very little amount per year, you will have to jump into investments in order to retire.  With this information, you will need to pick what will work for you and what will make you comfortable.

Most will invest in mutual funds, EFTs, and index funds in order to keep a relatively low key investment strategy.  Most of my investments are dealing with index funds that give me a well rounded diversity.  I am trying hard to keep my Roth IRA with an aggressive allocation to make some money in the beginning, but I will change that as I grow older.  This strategy is to make sure that I can keep my money as secure as possible as I invest in the volatile stock market.  Sometimes, I wonder if there are quicker ways to make money.

What about All-or-Nothing?

Just recently, I have discovered options.  Not just any options, but binary options trading (Fixed Return Options).  I was intrigued by how these worked because when you are using them as an investment strategy you could have the potential to make some good money.

If you are unaware of what binary options are, then I will just say that they usually come in two forms, cash-or-nothing and asset-or-nothing.  Now, you can simply look and see that you either get it all or nothing.  There is nothing in between.  Here is an example:

……a purchase is made of a binary cash-or-nothing call option on XYZ Corp’s stock struck at $100 with a binary payoff of $1000. Then, if at the future maturity date, the stock is trading at or above $100, $1000 is received. If its stock is trading below $100, nothing is received.

source: wikipedia

After digging into this more, I realized that if you are vigilant and research your option, you can make some money.  I would say that stocks are probably the easiest way to make money with the call option.  You can dig into the history of the company, learn about product releases, and all of the other aspects that might affect a company’s stock price.  Armed with this information, you can make the right calls, but you would have to be prepared to lose it all.  Remember, it is all or nothing.

So, my question to you is have you heard about binary options before?  If so, would you invest in something that is all-or-nothing?  I can see some times when you can make some money, but you would have to understand that either you get it right or you don’t.  This type of trading comes down to risk versus reward.

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