Binary options are becoming more popular with traders. This article discusses several advantages when it comes to trading binary options.
1. Access to many markets
When it comes to binary options, traders can access multiple markets and trade various asset classes from a single online binary options account provided by such companies as TorOption.
From a single platform, it is now possible to trade stocks, foreign exchange, international stock indices as well as a variety of commodities including energy, base and precious metals, and agricultural products.
This way, you can be trading stocks and few minutes later (or even simultaneously) make a bet on commodities. Or, if you’re thinking dollar is going up, you can bet on its rise against other currencies and, meanwhile, sell oil or gold as often prices of these commodities are inversely related to the American dollar. Options to trade are many.
2. Easy and simple to trade
Every binary option bet has only two options: Buy (Call) or Sell (Put). This makes it simple and easy to trade many markets. With only two options, traders can concentrate on figuring where the prices of assets are going rather than going through complicated trade execution and trade management steps.
Once a trade is opened, there’s no need to close it, it will close automatically once the time period is over.
3. No need for large capital contribution
When it comes to many online brokers, especially stock brokerage houses, you’ll need to contribute at least $2,000 to have a margin account. This can go up much higher if you’re based in the United States and want to day trade.
With forex or commodity brokers, the minimum contribution can also be substantial. On the contrary, opening a binary options online account doesn’t require as much funding. For example, with TorOption you can open an account and start trading with as little as $250.
4. Risk control
It’s easy to control risk with binary options. You risk as much as you bet. This doesn’t apply to other types of trading. If you’re trading forex or commodities, you can lose more than your account’s equity if there’s a volatile swing. Also, when short-selling stocks, your losses are potentially unlimited.
Your risk with binary options can be as little as $5. This is the minimum many brokers will ask you to bet on a binary option contract, especially when it comes to very-short term bets including 60-second or 5-minute intervals.
5. Multiple time periods
There are multiple time periods you can choose when trading binary options online. Some bets are for ultra short-term such as 60 seconds or 5 minutes. There are also bets available for longer time periods, so a binary options trader has many choices.
6. Fast payouts
Once your binary option bet expires, and you bet in the right direction, you’ll receive a payout, which can be as high as 85%, or even more. As a result, it’s possible to make 85% on your bet in few minutes!
Before entering a trade, you’ll see the payout offered. This way you’ll know exactly what gain is possible in advance. This is not possible with more traditional forms of trading.
7. Added flexibility
There are many binary option types. You can simply bet on an asset closing above, or below, a certain level to win. With some brokers, there are Touch options available. Basically, the asset price needs to touch a certain level during specified time period (which you get to choose), but doesn’t have to close above, or below, a certain level.
Moreover, the Boundary options allow traders for betting on the asset price staying within a certain price range. A related version of this is betting on the asset price going outside the range. As you can see, there are many ways to bet, which greatly adds to flexibility.
8. 24-hour trading
It’s possible to trade binary options 24-hours day since these are international markets. This is especially good for those who work during the day. On the other hand, if you want to trade stocks with a regular broker, the market may already be closed by the time you get home.
Trading during extended hours can be a benefit when major events are developing. You don’t need to wait for many markets to open to start betting.
9. No commissions
When you trade stocks with a traditional online broker, you pay to a commission to enter and exit a trade. On a binary options bet, there are no commissions. You simply bet and expect a payout. If you are wrong, you lose your bet but don’t pay a commission.
10. You don’t get stuck in a trade
When it comes to trading financial assets, many traders will hesitate to close a losing position, thus tying their capital for longer periods of time. This doesn’t happen with binary options. There’s time limit to them, so if you’re wrong, you lose, but then you can move on to the next bet. No time to cry over spilled milk.
As you can see, binary options trading has many advantages. Plus it can be great fun.