Monthly Archives: April 2013

Diversification

For a while now I’ve been looking at ways to diversify my assets. I’ve been dumping money into a 401k for as long as I can remember, but I’ve never actually played around with my money to see how I can make it work for me. All I can tell you about my current investment portfolio is that I put 6% of my weekly income in a 401k, it’s matched….aaaand that’s it. Well, I have also been saving tons of money and now I think it’s time I learn a little bit about playing the markets.

Of course, I’m not what most people would call “normal” so I can’t just buy a few stocks and sit on them until a company makes a big change that nets me a few grand, I need a challenge. Not only do I need a challenge, but I like to see fast results. If I wanted slower growth, I’d open an IRA and just double my retirement contribution. I want to play the market in a way that pushes the envelope, where there is great risk and great reward. That’s why I’ve actually been looking into binary options after reading about them on http://www.financialtradingschool.com/curriculum/binary-options/ a few months ago while I was researching all of this.

Binary options are interesting to me because they aren’t direct investments. You actually wager money that a stock will act a certain way. If you’re right, you can win big but if you’re wrong, you can lose your entire investment. How does it work? Let’s say for example I have been watching a major stock for a while and the CEO of the company is about to make a decision to release a new product. When that product is released, the stock could potentially explode. Instead of just buying that stock and sitting on it, I purchase a binary option.

When I invest in a binary option, I’m saying something along the lines of “this company’s stock will increase by 5% in the next 24 hours” or “this company’s stock will bottom out at 24.50/share in three days.” I invest a set amount and the return on investment is also predetermined. If I’m right, I walk away with 2x, 5x, or even as high as 10x the amount I initially invested but if I’m wrong then I walk away empty handed.

There’s definitely some skill required in binary trading, but I’ve been doing my research and it seems like something I’d love to try. It’s definitely not for everyone, but the risk/reward seems right up my alley. I’m not going to be using money that I *need* for anything else, so why not? It could be a great learning experience and potentially a great earning experience.