Binary options, how to play the stock market?

Stock Exchange securities is a goldmine, but only for the brave and patient. It is all about buying and then selling financial instruments at the right time. However, in order to invest on the trading floor and trade binary options, necessary are the services of specialized companies.

Stockbroker, broker or dealer?

In the general perception the trading floor is a place where only transactions with stocks and shares of companies are made. This is only a partial truth, since this also applies to securities, including options. However, no investor does that alone, because listing rules forbid it. If someone is planning to make a transaction on the securities market they must do so through a stockbroker, broker or a dealer. Often for a layperson these terms are synonymous, but in the world of finance these are separate occupations.

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Most commonly in everyday life can be found the concept of a “stockbroker”. Is a profession wider than the broker or dealer. A stockbroker is a person who for a fee acts as an intermediary in the conclusion of transactions. They work on the investor’s command and on their behalf conclude transactions on the stock market, of course for a relevant commission. The dealer is distinguished from the broker in that the former concludes the transaction, but on their own account. Whereas the broker is a combination of both professions because they can provide both the brokerage and dealer activities. Each broker is different between each other not only in competence, but also in the scope of financial services. So it’s worth it to choose a company that specializes in binary options. There is no need to specifically look for a brokerage house to buy binary options, one can do it through online platforms.

The choice of intermediary is a crucial decision

Regardless of how an investment firm is found, be sure to check out who is entrusted with your money. The most important is the stability of the business of an intermediary. Just as there is a shadow banking system, also on the financial services market there are brokerage firms that do not have a stable economic position. Before investing money, one might want to know if this is a recognized brand and for how long it is on the market. The use of its services will be much safer than of a random stockbroker.

Another important issue to be taken into account are the so-called deposit options. A more common name is security deposits, which often are unknown to novice investors. In other words, this are funds accumulated on the accounts and frozen in order to hedge for a selected position. If as a result of adverse market events the account balance will decrease, or will increase the amount needed to maintain a position, and the funds on the account runs out, a given position will be immediately closed. In the case of binary options purchase there is no need to have a margin, while there is one in the case of a sale. As a general rule, brokerage houses and brokerage firms require option margins in cash. However, for your own good, you might want to choose such a dealer that offers a wide range of methods of payment.

You should also pay attention to the payment rates, because in this case there are completely different indicators of profitability than in case of traditional financial instruments. It is similar to the dividend payout ratio which is a part of the profit that the company shares with shareholders. In this case it’s similar, that is the part of the premium broker shares with the investor. One must therefore seek out such stockbroker or broker who has the highest payout ratio. Novice market players should note that when closing the position one does not receive the funds to the account instantly. The standard time of cash payout is 48 hours, if the intermediary company takes more time consider looking for another.

What to consider before investing

Note that binary options are not a bank deposit, which guarantees a fixed return on investment. It is an instrument dedicated to people who like risk. If you purchase binary options, but also other securities of this type, you must be set on the loss of the entire invested amount, aside from a guarantee. Binary options can generate in a few minutes the revenue in the amount of 100% of the value and a similar loss.

Before investing in the market for those securities it is worth to observe the current situation and track listing on a regular basis. Typically, financial markets are predictable and it is easy, under normal circumstances, to predict what will happen in the near future. However, sometimes plunges follow without a logical explanation and in those times even the most experienced market players can make a couple of bad investment decisions. You should always exercise caution and far-reaching control over expenditures. It is better to work with fractions of your cash, especially if the market is shaky. The intermediaries manage finances on the stock market, but the final decision is up to the investor and they must have sufficient knowledge of their instruments.