The Benefits Of Trading Binary Options

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Benefits Of Binary Options Trading

Top 10 Benefits of Trading Binary Options

If you have previously been involved in trading stocks, than binary options will be a quick learning process for you. Many of the same rules that apply to stocks are also used with trading binary options; additionally, having a good knowledge of the market will help you make informed decisions. While trading binary options involves a certain amount of risk, there are also many rewards. Below are the top 10 incentives to trade binary options.

1. High Return on Investment Potential

Due to the higher risk nature of binary options, typically the returns on your investment are also higher. Average returns are typically between 60-90%. This compares to a FOREX trader who would typically realize returns of approximately 10%.

2. Known Risk And Reward – Fixed Risk

You know right up front exactly how much you are risking and exactly how much you will profit if you win the trade. There is no risk of leverage costing your more than the amount you risked on the trade. Only your chosen amount to risk on any particular trade is at risk on that trade. You know exactly how much money you can possibly lose and how much exactly you can possibly make if you win. Binaries are unlike forex. It does not matter how high or low a price goes as long as it closes in the money for you. A single pip in the money is as good as 50 pips in the money. You still get the same payout on the trade either way.

3. Some Returns Even When You Lose

Although binary options produce higher payouts, the risk of these assets is inevitably higher than other investments. To help reduce this risk and make binary option trading more appealing, many brokers offer a small return on the money invested on a losing bet. For instance, on an option that did not go in your favor, instead of losing 100% of the initial investment, you may receive anywhere between 5-15% of that investment back. See our list of brokers for more.

4. Easy To Trade – Not Complicated Like Forex

Binary option trading platforms have begun to cater to investors who have little experience trading this style of assets. As such, websites have become incredibly user-friendly with features such as demo accounts, informative videos and live chat features to answer any questions you may have while trading. You also only have to make a prediction correct out of two possible outcomes. You do not have to worry with stop losses, leverage and magnitude of price movement when binary trading.

5. Fast Turnover Rate – Quick Profits In Your Pocket

One of the most intriguing factors of binary options is the fact that they have a very fast turnover and therefore a quick payout. Although this can differ across different assets, binary option expiry times are typically an hour or less, thus you can trade more options per day and therefore have the opportunity for more profit. Many of the daily binary option traders trade 15 or 30 minute options. And the ones that really feel like gambling trade the extremely exciting 60 second options. You can see which brokers offer the one minute options on this page: https://www.bestfxbrokers.com/binary-trading/trading-school/beginner/60-second-options/.

6. Free Trading Accounts With Select Brokers

With most brokers offering free accounts, signing up to trade binary options has never been easier. This means that all of the money you deposit in your account will go directly into your trades. Keep in mind however, that in order to qualify for a demo account, many brokers require a minimum deposit. Check to see which brokers allow smaller deposits or even free demo accounts. Potential buyers can place as little as $100 into an account and gain access to a full demo account where they can trade with fake money at no risk. A credit of trial money is then awarded in order to help you gain a better feel for investing in these options.

7. Variety in the Types of Assets That Can Be Traded

As you learn more about trading binary options, you will soon realize that there is an abundance of different assets that are available to trade. This provides a great way to diversify risk and allows investors to control the amount of risk they want to take on at a given time.

8. Access to More Assets

In addition to the many different types of assets available to invest in, binary options also allow investors access to types of stocks that would otherwise be too expensive for the average person. Binary options allow for this since you are not investing in the stock itself but just in an overall prediction, thus by not owning a piece of the company, you can purchase the option at an inexpensive rate.

9. Easy For Beginners To Get Started

Whether you are a seasoned veteran when it comes to trading stocks and options or a beginner, there are different types of binary options, each with its own level of risk and difficulty. From simple call and put options to double no touch binary options, you can work your way up to whatever level feels comfortable to you. From vanilla options to exotic options there are a wide variety of trading choices available. Anyone can win and anyone can trade. It is designed to be straight forward for anyone off the street brand new to trading. There are also more complex options with higher returns the experienced experts can trade for big risk, big reward paydays. Something for everyone.

10. Excitement Factor – You Can Make So Much Money So Fast – It Is Exciting

The final reason for trading binary options is the level of excitement it provides. Due to its fast pace and inherent unpredictability, investors will find that, despite the high level of risk, binary options provide a new and exciting option to trading that they can use exclusively or simply once in a while.

There you have it, whether you are more interested in the rational side or the entertainment aspect, binary options have a lot to offer. Once you begin to learn more about them, can become an essential part of your investment routine.

5 Reasons Why Binary Options Trading Makes Sense

5 Reasons Why Binary Options Trading Makes Sense

There are a number of options open for people who gamble, apart from land-based or online casinos. There are the sports books, poker rooms, and also binary options trading.

Today, more and more people are engaging in binary options trading because it deals directly with the financial markets and offers high returns. People engaging in this form of gambling can trade a range of financial components, including cash and assets, across multiple markets. The lure is greater rewards in a shorter time span.

There are a number of advantages that binary options trading offers people who engage in it. The biggest draw is that it is very simple and offers large rewards. On this page we list out for you the five major advantages of trading in binary options. We will also list out a few disadvantages that it may offer.

Five Top Advantages of Binary Options Trading

The following are five advantages that binary options trading offers. These are why more and more people are opting for this cool option nowadays.

    It is simple. Trading in binary options is very simple and easy. All you need to do is follow the few basic steps and you are on. The first step is to identify and zero in on a broker who can help you trade. If you have an Internet connection and are looking to engage in binary options trading online, it is one of the simplest things to do. Select a broker and then make a deposit; that is enough to get you off the blocks.

The trading process itself is a piece of cake. All you have to do is make a prediction on whether the asset will go up or nosedive. What is amazing is that even this you do not have to do n your own; there is software to help you make that choice. So this is all you do once you have selected a broker: pick the asset and then pick the direction it will go; the next step is to enter the amount you want to spend on that trade and hit Send. Now all you have to do is track the trade.

  • You can start off with low investments. The best thing about binary options trading is that you do not necessarily have to bet high. You can start off with low investments till you get the hang of it. And even once you are good at it, you can continue to bet small. The returns may not be as high as if you bet big, but they are sufficient to get you to continue.
  • The risk involved is minimal and limited. Because you can engage in binary trading with the least amount of money, the risks are also limited. Effectively, the degree of risk is for you to decide: you could go in with minimal risk or jump in with a big element of risk. One thing that works for you is that you know how much you will win or lose based on the amount you are betting or investing. This allows you to pick the amount and limit the amount of risk you expose yourself to. You take a calculated risk, and that can translate to big reward if all goes well.
  • The returns are high and come in fast. One area where binary options trading differs from the standard financial trading is in the amount of time a trade is valid for; the expire timeframes are shorter in this form of trading. Adding to this short time frame is the stupendously high returns involved with some trades; the returns could be as high as 90% if all goes well and luck is on your side. So imagine a trade that takes all of 15 minutes and gets you a return of 80%-90% – that is financial profit heaven. You trade quick, trade safe, and get good returns.
  • Your trading is not dependent on marketing conditions. The best thing about binary options trading is that the fact of your winning is not dependent on prevalent marketing conditions. You can win regardless of whether the price of the asset you have put your money on is rising or falling. All you need to do is be aware of the different strategies that you can adopt. Adopting the right strategies can lead to you winning way more than what you ordinarily would have. Another way of maximizing wins is to track the financial markets; this allows you to be aware of when the prices are climbing skywards so you can sell and make your profits.
  • Disadvantages of Binary Options Trading

    There are a couple of minor disadvantages associated with binary options trading. The first is critical if you are a person who is cautious when it comes to your finances.

    Binary options trading gives you big wins, yes, but the converse is also true: there is also the possibility of losing big. There is in fact the possibility of losing 100% of the principal amount you invested. Of course, some traders offer sops to offset such an eventuality and increase the allure of binary options trading: you may end up getting a small percentage of returns on the money invested even in the case of a loss, anywhere between 5% to 15% of the amount you invested in the trade.

    Regulation can be another sticky issue: because binary options trading is relatively new there is not much clarity by way of the regulations in place to monitor and regulate this form of trading. As a result, you may actually find a number of brokers who do not come under the regulatory ambit. The key, therefore, is to search out regulated brokers. You can do this by putting out a search using the relevant keywords online

    About the Author

    Clive Nelson Author

    Hi, my name is Clive Nelson and welcome to Traders Bible. Just to tell you bit about myself…I have been trading FX and binary options for the best part of 10 years now. After graduating with honours in economics, I began working for an investment bank in New York as an assistant trader before working my way up. After a few years, I went on to work as a broker in London, England and then eventually came back to the U.S to work in a hedge fund, where I manage $800 million of my clients’ investments. There have been times over the course of my career where I’ve had to take a hit, but I’ve accepted that losing is part of the game, it’s a learning curve. I’ve learnt from my mistakes and you don’t have to make the same errors I did. A lot of my education came from when I was a broker and this is why I’m here to tell you that Traders’ Bible offers you the foundations of how to become a great trader.

    Forex Training Group

    One of the newest and most popular derivatives currently offered in the world of currency trading is the binary option. Binary options are simple to trade and limit the risk of the trader’s investment to the amount of money paid to purchase the option.

    Nevertheless, this type of derivative does not come without its drawbacks, in addition to its many benefits. Binary options are considered an “all or nothing” derivative and are often compared to placing a win or lose bet on a sporting event.

    The popularity and scope of binary options has grown considerably since becoming widely available for retail trading on online trading platforms. In addition to currency pairs, binary options can now be traded on many major world indexes, commodities such as oil, gold and silver, and the common stocks of many international corporations.

    What are Forex Binary Options?

    The binary option is called “binary” because there are only two possible outcomes to a trade: win or lose. This means that the asset upon which the option is purchased must achieve a certain price or exchange rate level for the trader to collect their winnings, or conversely they will lose their entire investment or get just a consolation payoff if they were wrong.

    Forex binary options are similar to normal forex options in that they have an expiration date and a strike price. Furthermore, forex binary options do not generally contain an early exercise clause like American style forex options that can be exercised at any time prior to expiration, so they are more like European style forex options that cannot be exercised early.

    Much like when purchasing regular put and call options, the maximum potential loss on a forex binary option is known in advance since any loss incurred by the trader is limited to the amount the forex binary option cost to buy.

    In the retail market, forex binary options are generally offered with rather short expiration times that range from weekly, daily or even intraday expirations that expire every hour. Daily expirations may occur at set times throughout the day, while weekly binary forex options generally expire on Friday afternoons.

    Best Binary Options Brokers 2020:
    • Binarium
      Binarium

      Best Binary Broker!
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    • Binomo
      Binomo

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    Three basic types of forex binary options that are the most common include:

    • Call/Put Binary Option – Also called Up/Down or High/Low options, this type of binary is the most basic and simply requires that the trader accurately predict whether a particular exchange rate will be above or below the strike price by a certain expiration time.
    • One Touch Binary Option – A one touch forex binary option’s payoff is either triggered or cancelled when the exchange rate reaches a certain level during the time prior to expiry. The trigger price and effect is determined and set by the trader prior to executing the option trade.
    • In/Out Boundary Binary Option – Also known as a Range Binary, this type of forex binary option has two exchange rate levels that define a range that the currency pair’s exchange rate must either remain within or fall outside of at expiration to generate a favorable payout. These options can also be structured to have one touch boundaries that result in an immediate payout or cancellation when triggered.

    Binary Options vs Forex

    Binary options may be more expensive to trade than regular leveraged forex positions, and they generally offer a lower payout than if one was trading directly in the forex market with a winning position. Nevertheless, the level of risk involved in trading binaries seems much lower in comparison to spot forex trading, especially if the foreign exchange market is very volatile, wherein the risk of stop loss order slippage is high.

    Forex trading can be extremely intense and requires much of a trader’s attention, while with binary options, it is just a matter of picking a time and an exchange rate level, and then waiting until the expiration time to see if the trade either won or lost. As a result, the trader typically has a much lower level of emotional involvement invested in the trade.

    One of the main disadvantages to trading binaries versus forex is that you often cannot just cut your losses if you see the market heading in the opposite direction since transaction costs are typically substantial — if you can even obtain a price to unwind the option. Nevertheless, a number of binary brokers offer traders variable payout options that will allow the trader to obtain a modest consolation payout even if the option expires out of the money.

    The Binary Option Market and Brokers

    Binary option market participants include financial institutions, forex brokers and hedgers and a significant percentage of individual forex speculators. In addition, binary option brokers and market makers are a major participant in the forex binary option market.

    High net worth traders can sometimes access the binary option market directly by requesting option prices from the dealing desks of over the counter market makers working at major international banks. Such traders often have much more flexibility in the types of binary options they can trade and usually dictate their option contract parameters in order to transact binary options customized to their market views.

    A limited number of forex binary options can also be traded on exchanges such as the North American Derivatives Exchange or NADEX, which is fully regulated by the Commodities Futures Trading Commission (CFTC) in the United States.

    Despite the availability of those choices, most retail forex traders will need to open an account with an online binary option broker to have the opportunity to trade binary options. They will also typically need to choose from a limited selection of binary options with fixed strike prices and expiration times rather than being able to ask for a binary option price with specific customized parameters like the OTC traders can.

    The retail binary option market currently boasts a plethora of binary option brokers that generally provide access to the market via their Internet based trading platforms.

    The key to choosing a good broker is to assess: (1) the safety of your deposited funds and your ability to withdraw funds, (2) the broker’s regulatory environment and reputation, and (3) whether they offer binary options on the assets you wish to trade that are suitable for your trading strategy.

    Basic Binary Options Platform Features

    When dealing binary options over the Internet, you will need to employ a binary option trading platform. These platforms generally consist of downloadable or web-based programs or apps that allow you to execute binary option trades. All of them require access to the Internet for a trader to enter binary option transactions.

    Some of them run on your desktop or laptop computer — either as a stand-alone, downloadable program or within your favorite web browser — while the mobile apps will operate on an Android or Apple iOS mobile device and allow binary option trading while on the go.

    Some of the basic binary option trading platform features and what you should look for in a desirable platform are listed below:

    Trading Interface – Look for an interface that is intuitive and simple to use. Those who speak a language other than English may wish to have a platform that supports multiple languages.

    Multiple Asset Trading – Make sure your trading platform offers a significant number of underlying assets that you can trade binary options on. For example, look for a platform that supports forex currency pairs, commodities like precious metals and energy products, and important stocks and market indexes as this can help you improve your trading profits via multi-market analysis and diversification.

    Expiration Times – Your chosen binary trading platform should support both hourly and daily expiration times suitable for short or longer term trading strategies.

    Maximum Payout Percentages – Look for a 75 to 90 percent payout rate on successful binary option trades, as well as a payback on unsuccessful trades in the 5 to 10 region so that you do not lose all of your investment in a trade if your market view turns out to be incorrect.

    Minimum Initial Deposit – Check out the minimum amount the broker is willing to accept to open an account and what sort of registration fees might be incurred when signing up for a new binary option broker account.

    Bonus Amounts – Many binary option brokers offer bonuses to traders that are sometimes as high as 25 percent, so be sure to check what bonuses are available and what you have to do to qualify for them when you sign up for an account.

    Payment Methods – Most binary option trading platforms offer a payment gateway that has various options for funding an account. They also usually provide a funds withdrawal interface to request the removal of funds from an account.

    Binary option trading platforms can be either proprietary to a particular online broker or they can be provided by a software company. The screenshot below shows the trading platform that clients of 24option.com use to execute binary option trades.

    Figure 1: Screenshot of the binary option trading platform provided by 24option.com showing the list of available asset classes to the left, a price chart for EUR/USD to the right and the High or Low binary option trade entry form in the center.

    Note that you can select from a variety of asset classes listed vertically to the left. The trade entry form appears in the center, and you can also plot price charts of the assets in a window appearing on the right. Below the trade entry box and price chart is an elongated window that can contain a list of open trades, orders, trading alerts or an economic calendar.

    When it comes to broker-independent binary option trading platforms, many traders like to use the SpotOption binary trading platform since it is currently reportedly supported by more than 250 different binary option brokers.

    This downloadable and web-based platform also offers a mobile app version, and it is quickly becoming the market standard for binary option traders in much the same way that MetaTrader dominates the online forex trading market. In addition to basic binary option trading functions, SpotOption also supports social trading via its Spot Follow feature and automated trading using its SpotWiz ability.

    Fundamentals of Trading Forex Binary Options

    The first thing to remember about binary forex trading is that your option trade will generally have a good return if your market view is correct, but that it will have little or no return if your market view turns about to be wrong.

    Accordingly, the first thing you will want to get right when trading binary options is your market view. This means you will need to educate yourself about and engage in some fundamental and/or technical analysis in order to get a good sense of the market’s future direction and the timing within which you expect a projected move to occur.

    Furthermore, one of the main advantages of using binary options as an alternative to the spot forex market is that you can determine your downside risk in advance since it is generally limited to the amount of premium you pay for the binary option. Using binaries therefore helps your risk management process since your option positions are not subject to potentially costly slippage that can occur when you trade forex using stop loss orders.

    As a concrete example, consider the situation where a trader anticipates a rise in the EUR/USD exchange rate over a specified time frame above the current spot rate of 1.0500. He could purchase a High, Call or Up at-expiration binary option struck at the present 1.0500 spot rate. In current market conditions, investing $100 in purchasing this option will offer a payout of $160 if the spot rate ends up above 1.0500 at expiration or no payout if it ends up below that strike price. If the trade goes as intended, the profit on the trade would then be $60, and the initial upfront premium of $100 they needed to pay for the binary option will represent the limited risk that they will have in establishing this bullish trading position.

    Conversely, they could express a bearish view by buying a 1.0500 Low, Put or Down at-expiration binary option with spot at 1.0500 for $100. If the spot rate at expiration ended up below 1.0500, then it would pay out $160, while if the spot rate ended up above 1.0500, then they would receive nothing. A successful outcome would therefore have a $60 or 60% return on the $100 invested, while an unsuccessful outcome would be limited to the initial $100 of premium paid to buy the option.

    Trading without a well-defined binary options trading strategy can be a recipe for disaster, as with any other type of financial speculation.

    Just as you should seek to develop and then employ a trading strategy for operating in the cash forex market, you will also want to plan out your trading activities when using binary options. Although many trading strategies using binary options have been devised, only a few of the more popular ones will be covered here.

    The first type of binary option trading strategy involves taking a view on the currency pair based on fundamental or technical analysis. This typically means either looking at trends in economic data and relative currency valuations or at price action and technical indicators — or both — to come to a rational decision about which way the market is likely to move during the time frame covered by a binary option. A bullish view on the market will suggest buying Up, Call or High binary options, while a bearish view suggests buying Down, Put or Low binaries.

    Another popular binary option trading strategy seems closer to the legging-in strategies used traditionally by some option traders. As an example, if the market has been moving higher, buy an Up, Call or High binary option struck at the EUR/USD spot rate of 1.0500 for $100 with a 60% payout of $160 and that pays out nothing if spot ends up below the strike price at expiration. If the market moves 15 pips higher to 1.0515, then buy a Down, Put or Low binary option struck at 1.0515 also for $100 with a 60% payout of $160 for the same expiration as the first option.

    At expiration, if the market is above 1.0515 or below 1.0500, one of the two options will pay off $160 while the other will expire worthless. This means a net $40 loss since $200 was paid to establish the position. Nevertheless, if the market ends up between 1.0500 and 1.0515, then you would earn $320 since both options would pay off $160.

    Yet another more modern strategy involves developing a proprietary trading algorithm or using a subscription based signal service that analyzes market conditions to determine when to buy binary options. Either of these methods can be used to give you trade suggestions.

    Market spread or gap trading strategies can also use binary options effectively. For example, when two assets are highly positively correlated, you can look for moments when one asset moves sharply but the other lags behind to create a temporary gap. At this point, you would buy a Call binary option on the weak asset and a Put binary option on the strong asset since you are expecting the gap to close.

    Developing a Successful Forex Binary Options Trading System

    Putting together an effective forex trading system that employs binary options generally takes some time and effort. Some traders prefer to use binary options signals generated by a professional signal service they can subscribe to, while others prefer to create their own trading system.

    If you are going to create your own system, perhaps the easiest way to start is to base your binary option trading system on one you already use for trading currency pairs. A key component to successfully trading Binary Options is to be able to develop an accurate market view.

    For those who do not already have a currency trading system, they will first need to research how to perform fundamental and technical analysis and learn about various currency forecasting methods that forex traders use.

    Best Binary Options Brokers 2020:
    • Binarium
      Binarium

      Best Binary Broker!
      Perfect for beginners!
      Free Demo Account! Free Trading Education!

    • Binomo
      Binomo

      Only for experienced traders!

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