FX options
put options when a downward trend is underway. It’s simply a matter of forecasting the direction a market will move. Instability brings uncertainty but it can also provide opportunities for you to make money as a binary options trader. The key to doing this is to be alert to what’s going on, follow the signs and then profit through forecasting correctly.
A not he r sig n ific a n t factor is a v a il ab il it y since the marketopened up, more br o k e ra g e s provide trading platforms and anyone with a PC can trade binary options.
A major attraction of binary options trading is its simplicity since each trade requires only a small number of simple steps. You select the asset you want to trade, forecast whether its price will rise or fall by a set time and enter the amount you want to invest. After that, you just wait for the expiration time to see if your forecast is correct.
Above all, binary options’ trading is low risk because each trade can be for a relatively low stake that you specify
at the outset. This is generally $25 with a maximum trade of $2,500 on each option, although this may be increased for certain types of account. You therefore know the maximum you can possibly lose and can limit this to an amount you can afford.
Despite the low risk, you can oſten make high returns quickly. A binary
same tax rules as regular commodities (Internal Revenue Code
Section
1256 contracts) or under the special rules of Internal Revenue Code Section 988 (Treatment of Certain Foreign Currency Transactions). Te profits from binary options trading, however, are considered short-term capital gains, which are taxed at your ordinary income rate. You may offset any losses against your gains for tax purposes but must report to the IRS any overall profit.
THE FUTURE OF BINARY OPTIONS
options trade will typically expire in only a few hours or even a few minutes and pay a 70-81% return on your investment for a correct forecast. Tis means that high returns can result from a number of successful trades over a short period of time.
For forex traders, an attractive aspect of binary options trading is that the taxes on profits you make are less onerous. As a currency trader, you can choose to be taxed under the
62 FX TRADER MAGAZINE October - December 2011
Binary options’ trading has come a long way in a relatively short time. As more brokers enter the market and traders realize the opportuni t ies that are available,
it seems likely that expansion will continue.
more flexible, with increased mobile platforms
Trading allowing
anywhere,
become any
time trading. Te range of tradable assets will also grow, with rainfall index binary options already on offer. Whatever the future, it seems unlikely it will involve anything but continued growth.
Oren Laurent will
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