Category / Investing


Binary Options: Money saved through lesser liquidity requirements

Except for a job, doing any business or investment venture requires that you maintain working capital. In a job you don’t have to set up a supply chain, pressure debtors to pay full and quick, or think of delaying tactics when paying creditors. However, when you are doing any business, you need to maintain cash or bank to continuously fund running core operations until a profit is attained. Insufficient funds just halt to a grinding stop any business.

In the same manner as any business, trading derivatives also requires maintenance of “working capital”. This is particularly the case in trading regular options. Whenever a trade starts to go bad, you have to make good the margin calls to avoid closure of your position in a loss. Even so, you never know for how long or deep the loss position will go on. And until you find an amicable position, you need to keep funds at the ready. In regular options trading, you decide at the inception of any trading account the leverage you wish to use. The higher leverage you use, the greater will be your funding requirements in case of an ongoing loss.

Trading binary options would also require one to keep his funds at the ready. However, the requirement is never as intensive as it is in regular options trading. You do not have to worry about margin funding once you run a loss; when you run a loss, it’s a loss. You do not have to maintain liquidity for margin funding. In this aspect, binary options save you money inherently. For example, unlike regular options trading, if trades get deeply out of the money, traders borrow from the broker or banks at very high interest rates to remain liquid.

So what exactly do you need the working capital fund in binary trading? The answer is, to make more trades. You have to remain liquid enough to make trades whenever you see the “technicals” on your interface blinking an opportunity. If a 10 minute binary option leads you to a loss, it does not matter. If the loss is a one way slide, make another trade with the funds available and may be use a shorter trade time frame. This way you can always recover your losses quickly and save your money.

Consider a situation in regular options trading. You make a loss by big margin, that leads to a margin call. You have no other way but to close you position with a higher amount of loss then your original investment. You have to start over again to recover all those losses, “capital plus what you lost in margin call”. Now if this was a binary options trade, your position would have expired in a short period leaving you a loss of your invested capital. However, you minimize your loss and save money quicker, by making another trade considering the market slide; there is no requirement to recover “capital plus loss in margin call”.

Therefore, it is comfortably proved that operating a binary options trading portfolio, practically requires minimum liquidity maintenance, and hence save you quite a lot of money.


All you wanted to know about binary option trading withdrawal procedure

Binary option trading is easy and a simple way of earning profits within a very short time span and also by investing a low amount. But as a trader you are required to make minimum initial deposits and also withdraw the returns and profits that you have earned in a trade. This is a procedure very few traders are actually well versed in. So, we will address this topic in this article so that you have a better idea about the manner in which you can withdraw funds from the binary option trading account that you have opened with a trading platform or a binary option broker. So, read on for more information.

Easy and secured

If you are planning to withdraw funds from your trading account, it is a simple process. When you visit the website of the trading platform you have opted for, you have to look for the withdrawal box, which is present on the main page and rarely, there are websites that will require you to navigate to another web page of the website when you want to withdraw your binary option trading funds. All you have to do is select the amount that you intend to withdraw. Remember, it will essentially be currency based and you have to choose your currency.

Essential features of fund withdrawal in binary trading

Although the process takes less than even a minute, there are few important aspects that you need to know pertaining to withdrawal or deposit of funds when you are associated with a trading platform. These include the following-

ü  If you are withdrawing binary option trading funds for the first time, you will have to furnish your proof of identity. This is usually done so that there is no other individual or prospective trader that uses your name for fund withdrawal. This process makes your transactions secured and reduces the chances of fraudulence. As far as documents that you can furnish to prove your identity include recent utility bill that is in your name, photo identification, valid passport. Alternatively, you can also provide details of your credit card bills as identity proof.

ü  Time limits apply when you withdraw your funds from the binary option trading account. While wire transfers and bank transfers take longer, you can opt for E-wallets, debit as well as credit cards for withdrawing your profit funds. Also the time taken for accessing your funds will depend on the mode of withdrawal that you go for. The time limit for the fund withdrawal will vary from one trading platform to another. Also do not forget to take into account the processing fee of the broker.

ü  You will be required to shell out the so called withdrawal fees when you want to avail the returns from binary option trading that you have earned. This fee also differs from one broker to another and also on the mode of withdrawal of funds that you have opted for.

Regardless of the trading platform you have opted for, it is best to find out the details about deposit as well as withdrawal even before you sign up for the services of a binary option trading broker. In this way, you know what you can expect. 


Why buy stocks when you can trade stock options?

Many of us would jump at the chance of buying stocks in a company, be it one that is already successful or one that you know is going to be successful. However, for many the dream of been a stakeholder dies as soon as the stock price is quoted! You see, buying stocks is not cheap, or maybe I should say buying enough stocks to make a return on your investment is not cheap.

As I write this article, the current price of buying a share in Facebook is $24.31, this is not a lot of money by a long stretch of the imagination but I would need to buy at least 100 shares to see any kind of significant return – and there is no guarantee that I will see a return. However, there is another way that I can invest in Facebook stocks without having to pay thousands of dollars for shares, and a way that I can profit regardless if the share prices rise or fall. How you might ask, and I would answer by buying stock options, not stocks!

So what is the difference between Stocks & Stock options?

Stock options are the derivatives of stocks, deriving their value from the movements of the actual physical stocks. The main difference between the two is ownership, when you buy stocks you have an equity stake in the company but when you buy stock options you have no ownership in the company, you simply have the right to buy or sell the option.

Stock options are limited by time; purchased as contracts they are valid until a given date. Buying or selling is possible until that date, but after the date passes, the option contract expires.

The advantages of stock options:

The main advantages of stock options over stocks are accessibility, price, and profitability. Stock options can be purchased at a fraction of the price that you would pay for a stock, and you can profit from your stock option in both rising and falling markets – so it is a win, win situation. In addition, the return you get from trading stock options is far greater; you can make returns of up to 71% or more stock option trading with or other such binary option brokers.

Stock option trading:

Getting started in stock option trading is straightforward, it does not require you to be present on a trading floor, nor does it even require that you even have knowledge of trading, or markets. All you need is an option broker and a little capital to invest – the amount needed will depend on the broker that you are using.

There is no shortage of online trading brokers; websites that allow you to set-up and account and trade assets from different stock exchanges around the world. They all require a minimum deposit before you can trade for some it can be a couple of hundred dollars other you can deposit as little as $20 dollars to get started.

The trading process itself is very easy: E.G, if you think that the price of Facebook’s stock is going to increase then you take what is known as a “Call” option, if you think that it will decrease then you place a “Put” option, if your predication is correct you can make high profits. However, if your predication is wrong then you stand to lose all of your initial investment.

Just to wrap this up!

So there you have it, if you have an interest in stock market trading but do not have the capital to buy physical shares in a company you should consider the alternative of buying stock options, you really can make considerable profit with this form of investment. However, keep in mind that you can also lose money but that is just the nature of the beast when it comes to investing and stock market trading.


The Will Smith Index: 4 Reasons Why You’re Losing Money By Ignoring It

Celebrities are on pedestals in every industry. You want that dress, that car, that new makeup she’s endorsing, that soda he’s drinking in that funny commercial. It’s the celebrity selling point, the Will Smith Index: if they endorse it, you should invest in it.

The Midas Touch

Midas Touch

Image via Flickr by missmareck

Look at Will Smith. He’s one of the biggest stars in the world. He can’t fail; even when he makes a bad choice, such as making Wild Wild West instead of The Matrix, he keeps people talking. He’s planned his career every step of the way, from creating clean raps to tackling TV to becoming one of the hottest actors ever. His movies routinely gross millions and he is a billionaire. Every A-list actor has something in common with Smith at the moment: whatever they touch turns to gold.

If Will Smith appeared on TV tomorrow endorsing a car that runs on Pepsi, everyone in the world would run out to buy both the car and as many cases of Pepsi as possible. If Angelina Jolie, his female counterpart in terms of talent and top billing, strutted the red carpet wearing mom jeans, women would break their necks to buy a pair—or ten. If a celebrity is popular and pleases the public, they make no wrong choices. Everyone wants what they have.

People Want to Become Celebrities

Regular people long to become like their favorite celebrities. They see fame, riches, the ability to travel anywhere and buy anything. They want that. They see plastic surgeons asking for Angelina’s lips and Scarlet Johansson’s cheekbones. When George Clooney premiered Caesar bangs, guys everywhere asked for the same look.

If Bruce Willis steps up for a brand of beer, the stock goes up. When Drew Barrymore says she loves CoverGirl, stores sell out of their cosmetics. In an effort to become more like their favorite celebrities, the public believes what they’re selling. The trick is this: rather than losing money by buying a celebrity endorsed product in bulk, start investing in that company. If Jennifer Lawrence, the new It-Girl, comes out for Doritos, don’t buy the chips, buy the stock.

Celebrities Inspire Big Emotions

The biggest actors and singers are popular for many reasons, but it mainly comes down to what they inspire. They make people feel things—happiness, sadness, anger, desire. Will Smith makes people happy. Angelina Jolie makes people feel sexy and smoldering. Ryan Gosling makes them feel romanced. Financial investors can and should prey on those emotions, because what do people do when they’re emotional? They buy things. Look for tips from a Fisher Investment Forbes Contributor and it instantly becomes clear: the more emotional a person is, the more likely they are to spend.

Influential Stars Influence the People

The biggest reason to take advantage of the Will Smith Index is because he influences people. Influential celebrities influence their fans. When a celebrity endorses a product, the fans buy. If the star makes it look believable, fans buy even more. Invest in those stocks and you’ll make more too. You’ll have to know how long to stay in before you unload what you have, but take advantage of that sweet spot and the money is yours.

Financial investors and planners need to make the most of star power. Once they do, then in theory, they become star makers themselves.

Guest Post Investing

7 Ideas to Help Cut Expenses in Retirement

Creative Commons License photo credit: Lucy Boynton

This guest post was written by Arjun of Investing Thesis: Credits Toward Financial Freedom – a personal finance and investing site from a Canadian perspective. If you like this article, I encourage you to subscribe to their site.

Not all of us will retire well-to-do and comfortable for the rest of our lives. In fact, since the chaos caused by the recession, many people who thought retirement was just around the corner were very wrong and finding out you can’t retire when you planned can be devastating news. Finding a new job or staying longer at your old one may not have been in the cards but for some, it is the only alternative for staying afloat in a world of rising consumer prices and lowered incomes. If you have suffered through some unfortunately financial times on the road so close to retirement, there are still some practical tips that will allow you to retire as you intended by cutting down the costs of living and by spending more wisely. Here are some tips to help you retire on schedule and still enjoy the rest of your life without much financial worry:

1. Senior Discounts Save Money

For some, asking for a senior discount is a hard thing to do. But pride be gone – senior discounts should be considered a financially-savvy move rather than an age reminder. There are so many businesses that offer special perks to seniors, many of which are well-advertised and beneficial. But more often than not, companies that do not advertise will still offer price discounts or other incentives if customers ask. Dine out during the early-bird specials and keep your eyes peeled for other local businesses offering weekly incentives.

2. Smaller Home, Smaller Bills

While you may be mortgage free, it still may not pay for you to live in a large, multi-room home that you rarely use or need the space you once did. Typically the largest expense is still the maintenance on a large home. The yard still needs tending, the furnace needs to be cleaned, the utility expenses may be unnecessary in a larger home that now just houses one person or a married couple. Consider downsizing your house once the kids are out of the family home. Depending on your preference, you may choose to move to a smaller home or even a condo where no yard work or other maintenance is required. Look for properties in other areas that are more affordable and more manageable since you no longer have to consider school districts or the proximity to other things you no longer need to do. All of the extra income you make from the sale of your home should be invested into your retirement nest egg for additional security in retirement.

3. Investment Fees Can Bite

Investment returns laden with fees and other expenses can be drastically reduced. Even after retirement, you might want to check out other investment options that have fewer fees. Have an understanding of how much in fee expenses you are paying out and how it can impact your overall retirement funds. Even bank fees like those imposed on checking accounts, overdrafts, and ATM usage can eat away your savings for retirement.

4. Retirement Distributions: Take the Minimum

If you are 70 ½ years or older, you are required to take minimum distributions from your retirement accounts annually. The amount is calculated by dividing your individual retirement account and any 401k balances by your IRS-determined life expectancy. If you do not take the required amount, you can face a steep 50% tax penalty plus and additional hit when the income tax is place on the amount you should have withdrawn.

5. Get on Board with Medicare

Three months before your 65th birthday, you can sign up for Medicare coverage. Be sure to complete the application in a timely manner to avoid premium increases of 10% for delayed enrollment. If you are still working and have health coverage, you need to sign up within an eight month period once you leave your job or you will be penalized.

6. Spoil the Grandkids With Time, Not Money

Any grandparent could potentially go broke trying to keep up with the latest and greatest products being marketed to kids. Sure it’s fine for grandma and grandpa to buy nice things for their kin but spending needs to be controlled. Now that you are in retirement and have more time on your hands than you know what to do with, choose to spend time with the kids rather than spoil them with material goods.

7. Travel Smart

One of the perks most people consider during retirement is the ability to travel without time constraints. Even if you are working on a tight retirement budget, travel is still possible. Work to cut out expenses you no longer even use like full package cable television or two vehicles. Find ways to supplement your travel account and plan ahead. There are many kinds of trips that are planned especially for seniors so check with a travel agent. Plan to travel on off-peak times and days to get even more savings. But do plan to do something fun for yourself during your retirement years.

Retirement has become a time not everyone is looking forward to out of financial fears but it is never too late to start paving the way for a more golden ‘Golden Years’. If you are the child of a parent approaching retirement, you can do your part to help them comparison shop using the Internet or keep them updated about other money saving tips they are not aware of coming from a different generation.

How do you plan on cutting expenses for retirement?