Binary options trading has lately grown leaps and bounds in popularity – partly due to the ease of trading. Those, who are already familiar with the stock market have an advantage when switching to, or adding binary options trading to their portfolio. Although binary options trading focuses on purchasing options based on predicted price movements rather than actual shares, the principles regarding the market and its movements still apply.
Whether one is a seasoned trader or not, the potential to gain good returns is always there with trading binary options. But as with any form of investing, there are risks.
The following benefits should help to convince you that trading in binary options is worth all the risks:
Returns
Most stock market traders will be happy to make a double figure rate of return on their investment. Anything over nine percent is considered worthwhile and acceptable. However, binary trading has more risk attached to it; this is partly because it is an all or nothing type of investing, as in, the speculative rate of return is way higher than actual rate of return. Some brokers go as high as ninety percent, while others limit themselves to the sixty percent level.
Factual
Among the advantages of trading in binary options, one is that you always know where you stand. Before you enter any trade agreement you were going to know how much you are prepared to invest; and how much you might lose on your trade. You get prior information of the rate of return and how much you are going to make in case your speculation turns reality. Depending on the trading type you have chosen you may have no interest in the actual price, as long as it moves in the right direction.
Losing Funds
You can sell your shares to brokers who are willing to buy back. Consider this a desperate measure when your stocks are underperforming. You get a small percentage of what they make, depending on what type of agreement you have with them. This is an option that costs you but at the same time, limit your losses. Brokers are offering these rewards in order to attract new customers and retain existing customers. In a business environment that’s extremely competitive, such a move may benefit both parties.
As mentioned, not all brokers offer this service but it is worth checking out!
Trade Instantly
The basics of trading in binary options are easy to understand and can be picked up in a few minutes. Learning about the different types of trade and how to monitor the market can take a little longer. However, the majority of brokers provide a wealth of information on their websites which are designed to help anyone get started trading.
Two of the most popular options are live chat and webinars; these allow anyone to understand that the basic skill involves predicting the price movement of a chosen asset.
Instant
The stock market requires you to purchase shares and hold onto them while the company matures. You have to wait for a long time to make a fortune from selling stocks. However, binary options are a much quicker proposition. Trades can be incredibly short term; in fact it is possible to predict an outcome for just one minute in the future. Even the longest trades do not generally go past the end of the day.
The beauty of this is that you can quickly consolidate any position and make multiple trades in one day, provided you stick to your own financial limits. There is the potential to make excellent returns. The range of trades and lengths of trades vary between brokers and it is important to check before signing up with a broker.
No Upfront Cost
Surprisingly almost all brokers offer the opportunity to trade in binary options completely free of charge. In fact, some brokers even offer access to a trial account. This is an excellent way of learning the ropes and of finding your way around a broker’s software.
On top of that, many of the brokers offer a welcome incentive – they give you a percentage of your initial deposit as a welcome gift. Don’t get carried away yet, because there are terms attached to these gifts and you should study them first to ensure you know what you are doing.
The average minimum initial deposit is $250 but it is possible to find some brokers who ask for less.
Trading
There are different types of binary trades, from simple price direction prediction, to pinpointing a peak price or even setting high and low boundaries. Alongside, there are several different types of assets which can be invested in; you may wish to trade in currencies, stocks or even commodities. Each asset type and trade type has its own set of risks; trading across the range can minimize your exposure.
The real beauty of binary options trading is that you do not need to purchase stocks, only options; this makes it much more affordable for anyone to start trading.
Levels
There is a huge array of different levels, as already touched up. This means that a novice trader can accept small, less risky trades and gradually build his tolerance and comfort level. In general, the more complex the trade the higher the potential reward. However, these types of trade are really for those who have gained experience in binary options. Beginners should stick to basic trades which are easy to understand.
Fun
Surprisingly, trading can be fun. Short term trades can really get the adrenaline going as you are going to feel like you are gambling. However, trades should be placed after carefully considering the options and the risks. It can be exceptionally exciting; with constant trades or you can take it a little slower and consider each trade more. The approach you take will be based on your own risk preference and aims.
