Trading Binary Options and its benefits.
Many people prefer to trade binary options these days instead of forex or stocks but….how come actually? Are there real benefits when trading binary options and above all….what are these advantages? Below you can find a more detailed explanation of these advantages.
Trading with a so called reduced risk.
In the forex market, one of its advantages is called leverage. With the use of leverage you can actually enlarge your trading volume but on the other hand it also makes you more vulnerable. Leverage can actually be seen as one of the reasons why people lose so much money in these markets. When trading binary options although, there is no leverage. You estimate whether the rate of the asset at that moment will rise or fall and when you’re right, you can earn up to 90% profit on your investment but when wrong….you will lose it all (unless you close your position earlier than the expiry time).
The risk when trading is no only the leverage although. Slippage, extreme volatility and no limits to loses can make trading super risky.
As said before, when trading binary options all the rules change a bit. In first the lack of adding leverage to your deal already minimizes the possibility of losing big amounts of money in ones. Loss or profit really depend on how much the trader is willing to invest. When trading binary options you can calculate easily how much you can lose on a trade. For example, when putting $100 on a position, you know you could win $85 (if the profit percentage is set on 85% (depends on the broker. Some brokers offer 85% profit on assets whilst other go up to 93%) or simply lose its $100.
More choices are offered.
Trading the markets is not always suitable for traders. When trading forex for example, you might suffer from limited profit possibilities when big announcements are awaited or low trade volumes and a lack of volatility is present. These problematic situations (for forex traders) can make trading binary options actually very suitable because a trader could use the low volatility by opening no touch trades.
On another matter, a binary trader could simply decide to trade something on the binary option market. Let’s imagine a scenario of a country’s stock market being in a bearish correction which is reducing the value of equity holdings. At such moments, binary traders could simply decide to trade other assets or take their advantage from the market corrections by shortening the corresponding index on the binary option platform. As so, binary option trading gives you more possibilities when it comes to choosing what to trade.
Trading Binary Options and its benefits.
More acceptable entry points
When trading stocks or forex, most brokers demand quiet an investment to start trading. Mostly traders are persuaded to open accounts of minimum $5000. Salesmen often say that if you want to trade decently, 5K should be the minimum investment. STP brokers demand mostly even investments of 50K (!) which actually is a huge amount of money.
This makes trading forex actually pretty hard for the average joe as not everybody has 50K on the side. When trading binary options although, brokers offer you to open accounts with a starting budget of $100, something which people are willing to risk considering the fact they could double their investment within the short timeframe of 60 seconds! When a binary option trader would be very new to the market, he could even decide to open trades of sometimes $5 or $10 which is actually making you feel way less vulnerable.
More control on your trades.
When trading on a binary option platform, a trader has more control over his trades. From the moment he opens his position on a specific asset, he can follow exactly what is happening as most platforms indicate (by color or the words profit/loss) what is exactly happening with their investment.
Another option they have is actually to extend the expiration time or on the other hand, close their position earlier than planned. Mostly this influences the amount to be made or lost.
The above arguments could indicate that binary options definitely have some big advantages compared to stock trading or forex trading.
Below the main points once again
- Less risk
- Lower entry costs
- Knowing your loss or profit in advance.
- Potential of limited loss per trade
- Reduced trading costs (i.e.; commissions are lower)
- Very simple to enter the binary market
- Tons of education
- Super easy to use platforms.