Benefits of Trading Binary Options
Over the last ten years, the world has been exposed to all the lingo and terminologies of the financial markets emanating from the problems that beset the markets from mid 2008. People have heard about currency trading, CDOs, derivative instruments, mortgage-backed securities, etc. So when people now started hearing of binary options, not a few met it with the same scepticism that greeted other modes of trading and investment that took many to the cleaners when the global financial crisis hit. But a closer look at the way the binary options market operates should give intending traders some measure of confidence as there are a lot of benefits in trading binary options. Here are some of these benefits listed below:
Benefits of Trading Binary Options: Reduced Downside Risk
The global financial crisis has shown us just how risky conventional and derivative market instruments can be. There is a general concern about the exposure of retail traders, who ordinarily do not have so much in-depth knowledge of the markets, to such risky instruments. But this is actually why the US Securities and Exchange Commission licensed binary options as a tradable form of investment; they were designed with the intention of providing bruised and battered traders with a safer and less risky form of investment.
Traders do not have to comply with the huge margin requirements obtainable in other markets; requirements which ordinarily force people into investing with money that they cannot afford to lose. Traders also do not have to worry about issues that deal with pricing, leverage, slippage, etc. So a benefit of trading binary options is the reduced downside risks inherent in the trading structure of this market.
Benefits of Trading Binary Options: Greater Choice
The power to choose is one of the most compelling benefits of trading binary options. Where else can you get to trade stocks, currencies, bonds, stock indices and commodities all in one less risky atmosphere, with just the amount of money that you can afford to lose?
Potentially Greater Earnings
Payouts are usually a minimum of 70%. This means that for every $100 invested in a trade, you stand the chance of making $70. If you are a forex trader, you will discover that in order to make $70 from a $1,000 account, you will need the market to move in your favour by 70 pips, and will also need to invest the same amount over 2 trades and with greater margin requirements. So with binary options, you can make more money with lesser trades and lesser risk than any other market.
The new margin regulations in the US mean that any trader who wants to trade currencies or commodities in the US will need thousands of dollars to be able to just trade the minimum contract requirements. This has severely limited the ability of North American traders to trade the financial markets. But with binary options, no such requirements exist, and so there is greater market accessibility to all categories of traders.
These benefits of trading binary options make this form of investment an attractive proposition for traders searching for low-risk ways of trading.