If you had a crystal ball and could ask it any one finance question, what would you ask? Undoubtedly, it would be something that you could use to your advantage, something that would make you a lot of money. But you only have finite resources and the world’s trading markets are almost immeasurably huge. Something that would allow you to make the most out of your money, perhaps a market with immense volume, would be your best bet since big volume can mean big movement. Eventually, you would come to find that the global Forex market is by far the biggest trading venue and settle there. Now, add to this the fact that most brokers allow you to magnify your money with something called leverage. This is basically borrowed money that is used to multiply your buying power; sometimes by 400 times your original amount.
So, if you wanted to make a $1,000 trade, buying the euro, for example, with your U.S. dollars, you could actually extend yourself with the leverage to purchase $400,000 worth of the euro. This is great if you were to actually have that magic piece of advice and know for certain that your trade is going to be successful, but in the real world, this will never be a certainty. In actuality, you could lose a good piece of that $400,000–just as easily as you could gain it. As you can now tell, that amazing amount of leverage that you could use to multiply your trading account quickly, works both ways. You can earn a ton more than ever before, but you can also lose more than ever before. And because of the power that Forex brokers have with closing your trades automatically if they think they will not recover the money they let you borrow, a small and seemingly temporary loss can be all you have to have to lose a huge amount of money. Leverage, while a great way to multiply your cash, is also a great way to lose your cash, too.
What other alternatives do you have? The stock market can move fast at times, but this is tough to predict and can be very costly because of broker fees and margin requirements. Both stocks and Forex trading are high risk and high reward–sometimes. More often than not, you will find that the rewards you anticipated are a lot less. That’s one of the unpredictable things about trading, you can never be certain just how big your gains or losses will be until after the trade is over.
This isn’t true for binary options. With these, you have a gauge of exactly how much you can gain or lose with every single trade, and you know exactly the timeframe that it will happen within. You know you will lose all of the amount you risk, and you will gain 74 percent when you are correct (for example). Different trades will give you different results, but the risk is easy to calculate regardless. This allows you to plan accordingly for long term investing, too.
You probably noticed the number that you will be gaining. A 74 percent gain is not something to laugh at–it’s actually a huge number. And this is just an average; you can easily gain more on a single trade if you look around. Now, you will not be risking your entire life’s savings on a single trade here, but with several well thought out trades strung together carefully, you can turn that 74 percent return on a $100 trade into several thousands of dollars in just a few days. It’s not the same as the crystal ball example, but it does end up giving you a similar result over the course of a longer period of time if you are careful and have a little luck on your side.