As mentioned earlier, Binary Options are the most simple and most profitable way of online trading. We give an example to understand in a better way what Binary Option are and how they work exactly.

Consider you have $1000 available to make an investment. If you use the usual investment opportunities like saving your money by bringing it to a local bank so you will receive interest but not able to use the money during that time. If the interest rate is for example 5% (you don’t see that often this period of time) you have a profit at the end of the year of $50.

Alternatively you van invest the $1000 into Binary Options. Binary Options give the opportunity to make an return on investment (ROI) of 85% by using a fixed pay out price on the invested amount. And all this within minutes. In our example you can make a profit of $850 when coming back from your coffee break.

To make this example even more clear we will use it with a real world scenario. One of the most attractive assets to trade in Binary Options is Oil. With a usual Binary Option the trader can choose whether the price of Oil will go up or down in the next 15 minutes. Based on the predictions and information we have we can select higher or lower and invest the amount of $1000. If the prediction is correct a profit of $850 is made in just 15 minutes!

Although, to be able to make these kind or success, traders only have to choose which direction the price of the asset will go. For example, if we know that the OPEC countries announcing that a new round of fines will be done to the oil exporting countries today at 15:00. Then we can expect that the prices of Oil will go down. Given this information it is possible to make profit in a very fast way to choose a Low Binary Option in the High/Low section. When an announcement of the OPEC is coming, but the content of the information is unclear, we can make profit because the price can go both ways. This way the Binary Option Out (Out of a certain bandwidth) a good instrument to use. When we use Binary Options we don’t buy the asset as itself but only speculate on the price of the asset.

To compare and understand these two examples we use three important points:

  1. ROI (Return On Investment): The percentage of the expected revenue. If we invest in a saving bank account we get a yearly revenue of 5%. If we invest in Binary Options we have the possibility to make an revenue of 85% within 15 minutes.
  2. Lock-in Period: Time that the invested amount is locked before you can make profit over it. If we invest into a bank saving we have to wait one year before we get the invested money back. With Binary Options the invested amount is locked for the period that the option is open.
  3. Risk: The possibility of losing the invested money. Investing money into a savings bank account has minimal risk, but compared with the ROI this is also very low. On the other side, investing in Binary Options brings low risk despite the high ROI.

The conclusion is that the more risk you take the higher the reward will be. As mentioned earlier, trading in different Binary Options allows different opportunities and disadvantages. Banks offer steady investments but the ROI on that investments are very low during a very long period. Binary Options have a significant higher revenue percentage over a shorter period of time but with a relatively higher risk.