Binary Options have many advantages over tradition Options and indeed over traditional currency, commodity and stock trading. Ideally suited to new investors and those unfamiliar with trading environments we are seeing many experienced investors move away from FOREX and other types of trading due to the many advantages of Binary Options trading.
Binary Options facilitate the trading of a wide variety of assets across multiple markets with high rewards and lower risk in a fast time-frame when compared to other types of trading.
What Are The Advantages Of Binary Options
Easy to Get Started
Getting started trading Binary Options is simple. You choose a broker or brokers, sign up, make a deposit and you can start trading. However it is strongly advised to practice on the broker’s demo system first so that you can test out your trading strategy.
Many brokers now have low initial deposit requirements ($200) making this form of trading accessible to almost everyone. Other forms of trading require large initial deposits of perhaps $10,000 or even more than $100,000 thereby excluding people that don’t have large amounts of money readily available.
Simple and Easy to Trade
Binary Options are simple to trade as you only need to predict the direction that the asset will move whereas with traditional options you also need to predict by how much the asset will move. In addition the expiry times can be very short which can make the outcome easier to predict.
Once logged into your account with your broker you simply select the asset, select the direction (CALL = Increase in price, PUT = decrease in price) and decide how much you wish to invest in the trade. Finally select start/submit and your trade is recorded. Now all you have to do is wait for the trade to expire to see if you are “in the money”.
Experienced traders use a proven trading strategy and follow the information wires looking for news and events that could have an effect on their chosen asset price. It is important also to check an Economic Calendar regularly to see if there are any announcements or events scheduled that could influence the asset price.
Unlike other forms of trading the potential profits and losses are known upfront. You cannot lose more than your original investment in the trade. Some brokers now return up to 15% of any losses which is unique to Binary Options trading.
Many traders use the 5% rule of thumb when trading. They never invest more than 5% of their total capital in any one trade which protects them from one bad trade wiping them out completely.
High Fixed Payouts and Fast Returns
Payouts are usually higher from Binary Options trading than from other types of trading and typically range from 75%-85% for standard options. In addition, the expiry times are short with most brokers offering 60 second, 5 minute, 15 minute, 1 hour and end of day so you know quickly how you are performing and fast returns are possible.
One single broker account gives you access to Currencies, Commodities, Stocks and Indices across multiple worldwide exchanges. Brokers do offer different sets of assets so it is worth checking their asset lists first, that way you are sure to find your preferred assets or areas that you want to focus on.
Short Term Contracts
As mentioned earlier contracts can be as short as 60 seconds while others may last for 3 months. This gives you several investment opportunities and flexibility when trading to cope with changing market conditions.
Multiple Types of Binary Options
Binary Options trading provides you with multiple types of Options to trade so that you can adapt your strategy depending on the current market conditions. For example you can trade boundary or touch options when the market is volatile. This allows you to trade in any market condition.
Trade Small Amounts
Many brokers have low minimum trade amounts so that you can build you confidence while learning to trade. These minimums can be as low as $10 but $25 is more typical. There are no other trading environments where you can make such high returns for so little so quickly.
Trade Anywhere Anytime
Trading platforms are available via PC and laptop and more recently via tablet and mobile phone. This latest development means you can now trade and check on your assets when out and about accessing your broker’s system via a smartphone or tablet. This will allow you to trade 24 hours a day as Binary Options cover international markets and there are always assets being traded.
As we have seen there are many advantages of Binary Options trading from being easy to get started, simple to use, high payouts and quick returns. This makes them an ideal investment choice for new traders and an attractive alternative for experienced traders.