If you are new to the world of investment then you will be no doubt going through something of a learning curve right now with lots of new options, words and phrases for you to learn about. I went through this some years ago when I first got started in investment, and in truth, the learning never stops.

One investment opportunity which I want to talk about today is binary option trading, something which may be unfamiliar to you. I was in the same boat as this a couple of years ago but my good friend Jean-Yves Sireau, a professional in binary options, was on hand to give me all the info that I needed. I wanted therefore, to pass on the knowledge that I received, so that you can get your head around what binary options are, and who should invest in them.

So What is a Binary Option?

A binary option is basically a gamble as to whether or not a certain index or market will fluctuate in its valuation. This may sound very simple and that is because it really is, the complicated part is analyzing whether or not the price will fluctuate or not. As an example, let’s assume that your research indicates the FTSE500 will rise above 1100 today, but you aren’t sure by how much, the price at the moment is 1100 and so you can buy a binary option that the price will rise above 1100, in the next 4 hours. Wen the 4 hours are up, if the price is above 1100, you will see return of perhaps 60 or 70 percent deepening on the option you got, if it is below 1100, you will lose your investment. Binary options are considered ‘exotic options’ as they vary from traditional options in terms of the risk, the trading method and the payouts which they offer. As long as you know what you are talking about in terms of analysis, this could be a great way for you to make some money.

Who Should Invest in Them?

Naturally this is a trading option which is open to everyone but there are some traders who this suits far more. I you are a patient person and you have no real desire to go hard with your investments, it is probably better that you opt for more long term investment options. Binary options are great for those traders who love the cut and thrust, those who want to get in and get out quickly. Binary options can drastically alter your financial situation, both positively and negatively, given the speed of the turn around. If you are a risk-averse investor, perhaps stay away from binary options and focus on traditional options instead. If you like to sail close to the wind, binary options could be exactly what you are looking for.