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Things Your Mom Never Taught You About Money

Things Your Mom Never Taught You About Binary TradingDid you know that women control 51% of the wealth in the United States? Studies show that women save more money than men and that they perform better on the stock market. Generally, they are more conservative investors who do far better research. Despite all this, women have a much smaller presence in the stock market trade. If you are a woman with some extra income that you’re looking to put to work, consider delving into the market. You can gain a money-earning edge on other traders if you learn the ins and outs of binary trading.

Binary Trading

Binary trading is a foreign concept to many. Even people who are well versed in the stock market may have never heard of binary trading. Bear with us here, because it can get a bit confusing. It is worth understanding this unique trading method, however, because it can be very easy to profit from.

Yes/No Propositions

Binary trading involves buying binary options based on yes/no propositions. These are options that have a zero sum gain. That is, either you win the option or the person on the other end of the trade wins the option. So if you lose $50 on a trade, another person gains that $50. This is popular because even though the potential is capped, the risk is also capped. A binary option is always purchased between $0 and $100. This means that $100 is the most that you can be rewarded (minus your bid and fees) for any option.

How the Transactions Occur

When you buy a binary option, it is kind of like you are betting on the performance of a certain stock. That is, you’re betting on whether a stock will reach a certain value within a certain time period. Yes or no? Yes is the binary option. The other side is actually offered by somebody on the other end who is selling the option.

There will be set terms for the purchase of the binary option on offer. If the binary option is tabled at $40, you have an option to buy it knowing that the chances are that the stock won’t reach the value by the set time period. If it does, though, you will earn $60 (remember the $100 max). This is a great instant return on your option! Most binary options are offers between $40 and $60.

Drawbacks to Binary Trading

There are a few drawbacks to binary trading. First of all, lack of knowledge about the stocks and companies that are in the binary option can be a problem. That is, if you don’t know anything about a stock, how can you predict how it is going to perform that day?

Even if you do know about a stock, binary trading requires that you are active and involved; the trades happen in real-time, and you need to be on your computer placing options frequently if you want to actually make good money on them.

Binary trading might sound like gambling, but considering the low cap, it can be a good alternative to investing in stocks.

 

Have you ever tried binary trading? What else did your mom not teach you about money?

 

Photo courtesy of: Andreas Poike

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Kayla is a mid-20s single girl living in the Midwest, USA. She is focused on paying off her consumer and student loans, while simplifying her life and closet. You can join her on her journey at ShoeaholicNoMore or follow her on Twitter.

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