A binary option is a type of option, where the payoff is a fixed amount or nothing at all. There are two main types – a cash-or-nothing binary option and an asset-or-nothing binary option. While binary options can lead to solid profits, they are also risky. So, let’s take a look at the top alternatives to binary options in South Africa.
Can You Actually Make Money with Binary Options?
You definitely can make money with binary options, however the money that you will make is predetermined before it ever reflects. You’ll never earn more or less than you expected, which certainly reduces the element of surprise but also limits your profit potential.
The other issue is that you’ll either see profits of the exact amount you expect or nothing at all – it kind of takes the fun out of trading.
Alternatives to Binary Options in South Africa
There are many alternatives to trading binary options in South Africa. Leverage trading on a platform like SnapEx, is a great start.
Leverage trading is actually a fairly simple concept to understand, and it can be applied to a multitude of assets including Forex and cryptocurrency trading. Leverage is when a trader uses borrowed funds to increase their trading position beyond what they have available in their balance.
Certain trading platforms, like SnapEx, allow leverage through margin trading – providing the borrowed funds. Traders can use leverage to profit from small price changes, as it amplifies profits. However, you should be careful as it can amplify losses too.
How Does Leverage Trading Work?
The actual word “leverage” usually refers to the ratio between the position value and the investment required, while “margin” refers to the percentage needed for the position.
Leverage adds a third dimension to your trading – credit. It brings your portfolio together and can yield some big returns. If we’re looking at leverage trading crypto, it could work as follows:
You buy 1 BTC at $10,000. You can either buy it cash, or buy it with a margin account and 10x leverage – then you’ll just need a deposit of $1,000. A loan of $9,000 will supply the balance of the amount. If BTC then rises by $1,000, you’ll get 10% profit – minus fees.
Things to Know Before Your Leverage in South Africa
Before you start leverage trading, you’ll want to consider what kind of assets you have to put up to make up your deposit. Know the loan values and their time period, as cryptocurrency margin account loans tend to chance quite often.
Furthermore, the amount of leverage available will vary according to platform. SnapEx may have one amount available, while Avatrade will have more or less. Research the platform you’re intending to use, and make sure that it will work for you.
As an Alternative to Binary Options, Leverage Trading Shines
George Soros has a particularly interesting quote about leverage trading, that really sums up the whole experience perfectly:
The best way to understand the role of leverage is to think of an ordinary investment portfolio as something flat and loose, as the name implies. Leverage adds a third dimension: credit. What was a loosely held together flat portfolio becomes a tightly knit three dimensional structure in which the equity base has to support the credit used.
Leverage trading adds a new layer to your trading experience, and is sure to set South African traders on the right track – seeing bigger profits than they would with binary options.
Disclaimer: This post is a paid press release. Readers should do their due diligence before taking any actions related to the promoted company or its affiliates or services.