A Newer Style of Trading Shakes Up the Standard Progression Among Investors
Most investors today get started by trading in index funds, often buying particular issues and sitting on them for months or years before making another move. That, in fact, is what the experts typically recommend, with more active and specialized trading being reserved to those with more experience. Investors who look for more in the way of action and excitement generally move next to buying and selling specific stocks, a relatively gentle introduction to the world of active trading.
Beyond that point, things become a little less clear. The usual progression used to involve a move into option contracts, with the average investor who made it that far often using put options and the like to shore up stock positions against losses. In recent years, though, a new option has become even more prominent, and it is one that many feel is accessible even to relatively inexperienced investors.
Called binary options by those in the industry, these instruments differ significantly from the traditional kind. While conventional options are priced according to market forces, with their value varying depending on the price of the underlying financial asset and how much time is left until their expiration, options of this kind are very different. When they are issued by binary options brokers, they are assigned a payout, and they either finish in the money or out of it, with no intermediate results being possible.
Compared to traditional options, those of this style are also often a lot faster paced. Many have defined lifetimes measured in minutes or less, meaning that an investor can stake out a position and 24option watch it become resolved in less time than it takes to call a traditional broker. That makes binary options trading especially suited to those who want more action and energy in their investment lives, a big reason for the popularity of this style of investing.
There are other reasons for their great appeal, too. Compared to traditional options, the set payouts of this style make it far easier to estimate just when a given investment is likely to pay off. Brokers also do their best to make this kind of trading as accessible as possible to their customers, with many standing quite justifiably behind slogans like "Binary