Binary option trading is increasingly gaining prominence. And one of the main reasons for the same is the number of benefits it offers to the traders. Read through the article to find out what makes this form of trading beneficial and most importantly much sought after.
Risk is limited
If you are planning to trade binary options and it happens to be the first time, you can curtail the risk you take by trading with a low amount. So, the amount you invest and hope to earn profits from is at your discretion. This also implies that since you are investing less, you lose less in the event the trade does not proceed the way you have predicted. In other words, you can limit the risk you undertake.
Binary option trading is easy
Another important aspect that appeals to the traders is the simplicity of the trade, the ease with which you can trade the assets. All you have to do in binary option trading is first select the underlying asset with which you want to trade, assess the amount you want to invest in the trade, predict the direction in which the price of the underlying asset will move, take into account an expiration time/date, and wait for the trade to start and end. So, it is a simple process of trading. Most importantly, you will have to do all this just with a click of a button. And all you need is a computer and an internet connection.
Rewards and returns are attractive
In case of binary option trading, it is a well known fact that the expiration time/date is always short. This is in sharp contrast to the conventional mode of trading. The total time can be anything between 15 minutes and a week. And in case of the traditional modes of trading, you will have to wait for several months before you can assess the returns. In case of binary trading, the returns usually range between 70% and 85%. So, you can enjoy substantial profits by shelling out little money for the trade.
Choice of assets to trade
There are innumerable assets that can be traded on a daily basis. You will come across many trading platforms that will offer a broad spectrum of assets that can be traded ranging from indices, stocks, currencies, and commodities. So, you will be perhaps spoilt for choice. However, prior to selecting an asset, you should be well versed with the same and also know how you ought to go about trading the asset so that you get the most out of your investment.
Earn profits in any market condition
With binary option trading, there is another advantage. Unlike the conventional methods of trading where you need to be prepared for the fall in the profits you earn, in case of binary trading, you earn profits even when the price of the asset has been correctly predicted and even if the price of the asset has dropped. All you have to do is gain some knowledge in different binary option trading strategies
What’s the Buzz Around Binary Options?
If you’ve taken an interest in financial trading recently, then there’s a very good chance that you’ve heard about binary options. They aren’t a very common product, but they are becoming more popular as people enjoy their fast paced and all-or-nothing style. Let’s take a look at what people are saying about them.
“Binary options are flexible” – If flexibility is your thing, then binary options are likely to be a good choice for you. They can be used with just about any financial instrument that you can think of, whether forex or stocks, and can also take advantage of prices moving up or down. If there’s a signal you want to take advantage of, then there’s a very good chance you can do it with a binary option. You can find out more information about signals at http://www.masterbinaryoptionstrading.com/category/binary-options-blog.
“Binary options are fast” – Traditional options often have a maturity date set well into the future, but binary options are far less. They can be closed at the end of the trading day, in just sixty seconds, or an interval in-between. There’s no waiting around, which is great if you’re looking to make money quickly, or prefer to make high volumes of smaller trades. Some brokers are offering smartphone apps that mean you can trade quickly on the go.
“Binary options are like gambling” – Some people claim that because there are only two outcomes to a binary option – a loss or a win of a specific amount, the product is tantamount to gambling. In reality however, you still have to look at signals just as with anything else, and a seasoned trading expert will be a lot more successful than someone making trades without direction.
“Binary options favour the broker” – While it’s true that the broker wins when you lose a binary option trade, they still give you the very best chance of returns that they can, because they’ll get more custom this way. Binary options are just as valid as any other financial trading product.
“Binary options have no unknowns” – Many people enjoy the fact that there are only two possible outcomes of a binary options trade. It means that the markets don’t need to be monitored at all, because there’s nothing that you can change before the maturity time. It’s also very easy to calculate the risk and reward, because you know exactly what is going to happen.
College Students and Their Binary Option Trades
The Education of Trading Binary Options
Before beginning to make online trades, taking some quick and free courses offered through many leading online brokers is obviously a wise step. Podcasts and e-books are also readily available to everyone.
Knowledge of the trading process and skill development are easily attainable through educational sources and trading experience. Starting with the lowest investment possible and retaining a conservative approach is a valid avenue to trading success. At the point that any investor, including the college student, begins to feel comfortable with binary options trading, that is the time to possibly increase their investments.
Advantages to Initiating Binary Option Investments at the College Level
Learning the Ins and Outs of Trading – Geared to the educational mindset, college students find it easy to quickly absorb an understanding of the binary options market. The trading courses are short and concise; and the material is relatively simple.
While learning, investors often start trading, putting into practice their newly-discovered investing strategies and market comprehension. Forex and commodity market traders often begin their trading experience in just this way. Successful investors have found that studying markets and simultaneously opening transactions have led to a quicker understanding of the trading process.
Establishing a Timeframe – The goals of trading, including the time and aims, are set entirely by the student. Relax and enjoy the process. Go at your own pace, and find your trading excitement. Binary options are fast, risky and potentially lucrative. Every trade is a thrill, especially when the outcome spells a profit.
Keep in mind that you, the trader, are the focus of every online broker. Your trading success is your broker’s goal. The leading online site that you choose as your trading home will work with you to ensure, to the greatest extent possible, your investment comfort and gain. Helpful courses are made available; ease of registering has been enhanced; automatic copying of the real time actions of successful traders is available to every investor through many online brokers; Stop limits are provided to minimize losses; and current market news is constantly provided and updated to maximize the potential for gains.
Both you and your broker will work together toward successful trades. But the outcome of each transaction will result directly from your own tenacity and determination.
Extracurricular Activity – Binary options are a form of exciting and challenging extracurricular activity with a potentially lucrative outcome. The risk of a loss need be no greater than the cost of any non-academic pursuit. And a profitable transaction may pay for all of your other extracurricular activities, with perhaps a bit remaining to put away for future endeavors.
Investing Online – Without leaving the comfort of your room, you can learn the skill of trading in binary options and earn while you learn. Not only is trading accomplished online through computers; the binary options market is also available via tablet and smartphone.
The real world is a fast-paced challenge for every individual. Trading in binary options, while more exciting than most worldly endeavors, presents a beneficial experience in skill development and real life decision making, with a profit potential to boot.
Understanding Trading Regulations of Binary Options
Binary options are relatively new and until recently, not as closely regulated as other forms of trading. At first, they appeared as a refreshing opportunity to invest in a market attempting to rally back from global financial failures. However, unsuspecting buyers experienced unjust conditions, market infractions, thievery, and in some cases monetary ruin. In response, several countries have implemented measures designed to offer protection to binary options traders. Therefore, it helps to be aware of the current trading regulations and to understand what to look for.
Protecting Traders
The burden of regulation falls primarily on binary brokers in order to ensure that they are supporting the best interest of their clients. Brokers need to have a physical establishment with a respectable staff that is equipped to handle claim withdrawals. They must be prepared to undergo periodic regulatory enquiries. Client funds are to be separate from broker accounts so as not to suffer a loss due to brokerage bankruptcy issues. The purpose of these regulations is to prevent traders from fraud and unjust financial damage.
Regulation of Binary Options
Until recently, there has been little regulation in the binary options arena. Binary options received a reputation as a type of gambling rather than respectable financial trading. There was little segregation of funding sources. Government regulators failed to monitor binary options brokers. Binary operations were not always transparent and capital requirements remained open-ended.
Fortunately, the binary options situation for trading regulation is undergoing a transformation. As of May 2012, CySEC (Cyprus Securities and Exchange Commission) announced a change in binary options classifications. This development followed grievances regarding “bucket shop brokers operating in Cyprus.” As a result, the classification for binary options changed causing them become ‘financial instruments’ requiring regulation. This revamped policy was to go into effect late in 2012 and by late 2013, all binary options dealers had to conform to the new regulations.
International Regulation
Since then, Malta has transferred binary options status from the gaming industry to the Financial Services Authority. Japan no longer allows for trading options with expiration under two hours. Italy and Turkish industry regulators for financial services can legally block binary options IP addresses to selected brokers. France and Spain have warned binary options agents about regulatory status requirements. In the UK, the Financial Conduct Authority regulates binary options trading. In Australia, regulation occurs through the Australian Securities and Investment Council.
US Regulation and Trading
The US allows a single regulated dealer for binary options, NADEX. As such, it provides for trading on several instruments, regulated through the Commission for Commodities and Futures Trading. North America requires US citizens to report taxable profits to the IRS. Additionally, US law prohibits binary options traders from dealing with brokers from other countries.
Although the handling of regulatory requirements differs between countries, it is clear that both traders and binary options brokers must adjust to heightened standards or face potential financial loss.