Online Investment – Binary Options


 

Binary Options (BO) trading is probably the furthest from Value Investing (VI), when it comes to investment fundamentals. While in VI we focus on the business behind the symbol, A BO trader is almost completely concerned with current price movements. Some BO platforms offer options with a 15-minute life span!

BO is a relatively new version of day trading. Most BO transactions finish within an hour. Recently, some platforms started giving the trader the option to choose longer expiration periods.

The basic concept behind BO trading is to “predict” if the “asset’s” price is going to move up or down relative to the entry price.

Here’s an example: Let’s assume the trader is interested in crude oil’s price movements. The trading platform offers crude as one of the available BO assets. The trader needs to have some funds in his or her account in order to trade. The minimum amount per BO trade varies from one platform to another. Usually between $10 and $50.

Let’s say the platform in this example requires $30 to trade one BO asset. The trader selects crude, enters the minimum trading value, which is $30, then he or she has to decide, or “predict”, whether crude price will go up or down from the current price, say at the top of the hour.

From looking at the charts; trying to forecast price movement trends, reading the latest news, and using his/her best judgement and “gut feeling”, the trader decides to choose the “UP” option. Once he hits “Buy” or “Submit”, the platform registers the price at which the trader “entered” the trade. Let’s say the price was $91.5 per barrel, and the entry time was 10:15 AM.

The trader can either wait, or look for other trades, if he or she still has funds in his/her trading account (because the $30 for the crude trade has already been deducted from the available trading balance).

Now let’s fast forward to 11:00 AM. It’s the time when the BO trade expires. If the price was above 91.5, say 91.51, or more, then the transaction is said to be “In the Money”, and the trader would gain a percentage on top of the original $30. That percentage ranges between 70% and 85%. Let’s use 80%. This means: 30 *1.8 = $54, would be returned to the trader’s BO account balance, with a net profit of $24.

On the other hand, if the price was below the entry price at the expiration (11:00 AM in our example), say 91.49, or less, the transaction is said to be “Out of the Money”. The trader would lose the trading deposit ($30), but some platforms return between 5% to 15% to the account balance. If the trader had started with a balance of $100, he or she would end up with $74.5 (assuming the returned percentage was 15%).

In rare cases, the transaction expires “At the Money”, which is exactly $91.5. In that case, the trader gets back the $30, without any gain or loss.

From the above example, we can see why this kind of short-term investment is called binary. Because it has only two possible outcomes at the expiry of the trading transaction.

BO trading is stressful. Although the potential of making huge returns rapidly is obviously there, so many traders lose all their capital, especially when they get emotional, and try to retaliate, by investing even more to recover their loses.

There is also a factor of luck, and another of speculation here. That’s why experienced traders enter several transactions simultaneously, with the hope that more than half of the trades would end in the money.

Another aspect of BO trading is its heavy reliance on technical analysis. If you lack that skill, the process becomes closer to gambling than trading.

Most, if not all, BO platforms require a minimum deposit of $100, or more, just to start trading (this is different from the amount required per trade). They also run strict verification procedures, before a trader can withdraw any profits, especially if the platform was regulated.

Before engaging in this risky investment, you should research the provider (the BO platform) extensively. Read the FAQ. Evaluate your technical analysis capability, and only use money which you’re prepared to lose! Never use your milk or bread money…

I strongly suggest that if you’re a novice trader, you should steer away from BO trading.

All the best,

The Wealth Maker

Making Money Online – Investment


Value-Investment is the main theme of this blog, especially the first half of the articles. But today I’m going to address the topic of investing as it pertains to the online landscape.

The simplest definition of investment is growing financial assets (the term is broad enough to cover other kinds of investment, like investing in one’s health, family, society, but our topic here is concerned with financial investment only).

Think of it as farming: You implant a good seed, in fertile soil, wait for a certain period of time, while watering, fertilizing and weeding, then you end up with some kind of vegetable or fruit. The seed is a metaphor for the initial capital or “principal” allocated for investment. The fertile soil is the investment instrument or “program”, the period of waiting is the investment term. And finally, watering, weeding and fertilizing represent your follow-up and tracking of your investment, to make sure it’s growing, not shrinking! And of course, the fruit is your profit…

The web has revolutionized many aspects of our lives, including our finances. One of those areas is online investment. Nowadays, you may engage in several investments, from the comfort of your home.

Traditionally, people would invest in businesses directly, or through stock markets. Another type of common investment has been in precious metals, such as silver and gold.

You can still do that and more online. Following are some examples:

  • Investment in silver and/or gold
  • Investment in energy and resources (crude, gas, solar, green, water, forests, etc)
  • Investment in online businesses
  • Investment in off-line businesses via online instruments
  • Investment in advertisement programs
  • Investment in High Yield Programs (HYIP)
  • Investment in stocks
  • Investment in Forex (Foreign Exchange)
  • Investment in commodities (coffee, corn, cotton, copper, etc)
  • Investment in real estate
  • Investment in web space, or buying and selling domain names
  • investment in Binary Options and Futures
  • Investment in online traffic

I’ll give a brief description of most of the above opportunities starting from the next post.

All the Best

The Wealth Maker

Making Money Online – Online Stores


 

So far, in this series, we’ve talked about advertisement and MLM. The first article sets the stage for the whole discussion. Please read it before reading any other article in the series.

3-Online Stores

Have you ever dreamed about opening your own store? Selling something you’re interested in? I guess most entrepreneurs have.

Creating an off-line store involves licensing, real estate, decoration, shipping, etc..

On the other hand, an online store could be as simple as one page, where you display some digital products. You could even delegate the back-office details to the vendors of the products you display on your e-store.

A very common example is Amazon’s (TM) a-store. First, you need to sign-up as an Amazon affiliate, for free. Then, you design your online store using Amazon’s templates and menus. It’s a fairly simple process. You finally end up with a website that shows Amazon’s digital, or physical, products.

Your next step is to promote your a-store’s URL, following the methods we’ve covered so far. If you managed to drive enough traffic to your store, and hence sales, you would receive commissions from Amazon right into your affiliate account. They would take care of accounting, shipping, handling, and so on. Your job is: First to design the site, using Amazon’s help, then promote it, so it makes sales.

Amazon is not the only online provider of e-stores. If you liked the idea, you could search for other companies that offer products or services you are interested in. Become an affiliate, then create an e-store using their ready-made templates and tools.

Some people prefer to have their own thing, completely independent of any existing business. In that case, the first part of the process becomes harder. You would need to have your own domain name, hosting, and web design (if you lack that skill, or don’t have the time for it). Each one of those costs you money, and time. But the end result would be a custom-made e-store, where you would sell products, services, memberships, programs, whatever, of your own choice. You could even list your own products, things that you’ve created yourself. A common example is an e-book, or a traditional book. Another example would be a service you intend to offer, like training or coaching.

If you went that path, you would be responsible for all the details. Your site should be equipped with online payment forms and buttons. It has to be able to process payments by credit cards or e-currencies, such as PayPal or Alertpay. You would need to take care of your own inventory management, website back-office maintenance and update, etc.

The second step of the process is the same. You still have to promote you custom-made e-store, drive traffic, and make sales. But while an affiliate e-store owner is not responsible for anything once the customer decides to buy, the owner of a custom-made e-store must follow-up the steps of completing the sale, till the money actually lands in his/her account of choice. Not only that. He or she has to perform all after-sales activities. Things like returns, refunds, complains, maintenance, and so on.

Please spend enough time researching both options. There is enough information online. But you may also consider talking to someone who has already started an e-store, of either type. Pick their minds, ask them questions, do your own online research, then prepare your strategies and plans.

All the Best…

The Wealth Maker