Binary options asics moneysmart
To find out more about futures, try the ASX's futures online course. An option is a contract between two parties. The buyer has the right, but not the obligation, to buy or sell an asset, at a set price, on or before a specified future date.
The seller of an option keeps the money paid for the option whether or not the buyer exercises their rights. If you buy an option but don't exercise your right to buy or sell the asset by the due date, it expires and becomes worthless. Options can be bought or sold at any time. The market price of an option will reflect the current value of the asset and the time left before the option expires. Selling an option can be very risky especially if you don't already own the underlying asset.
If the market price rises above the 'exercise' price you may be forced to buy at the market price and immediately sell at the lower 'exercise' price, incurring an immediate loss. Try the ASX's options course if you want to find out more. Binary options are a type of option where you try to predict the short-term movements of a share price, currency, index or commodity. Unlike other options the holder does not have the right to buy or sell the underlying asset. They are relatively new in Australia and are a speculative, high risk product.
Futures and options are complex products. Even experienced investors will struggle to understand the risks involved in trading them. Forex trading raises the stakes further by letting you trade with borrowed money leverage , but you'll be responsible for all losses, which may exceed your initial investment.
Margin FX trading is one of the riskiest investments you can make. Different types of foreign exchange trading products involve different risks so you should read the product disclosure statement carefully before investing. You should also check that the forex provider you are thinking of dealing with has an Australian Financial Services Licence. Find out what an AFS Licence means.
If the provider does not have an AFS licence, make sure it is regulated by an appropriate overseas authority trading with these providers may not give you recourse to Australian laws. See check an investment company or scheme for more details.
Read ASIC media release warning about a fake forex website. To successfully trade you will need to have good knowledge of foreign exchange, leverage, volatility and the conditions of each country whose currency you are trading.
You will also need to predict how these conditions affect the relative value of those currencies. This is extremely difficult as so many factors come into play, including politics, economics and market confidence, and these are unexpected, random events.
There are also many software programs available for this type of trading. They may claim their programs can let you know when to make trades.
Remember that no person or program can ever accurately predict movements in foreign currencies. Be wary of companies that say if you use a particular product you will get access to better exchange rates or easy money. They may let you trial their trading platform for free at first, but this is usually just a teaser for you to buy the software or platform.
You should also do your own research and consider getting separate financial advice from a licensed adviser. Foreign exchange trading is very risky even if you have years of skill and experience in this type of trading. You will need plenty of spare money if you have to cover a margin call. What is forex trading?