10 reasons to trade binary options
In the beginning, binary options were reserved only for large banks since the early 70 and it was not until 2008 when they became instruments that could also be negotiated in OTC (Over The Counter) markets. With the collapse of the stock markets in 2008 as a result of the global financial crisis, the need for new investment alternatives for the individual trader with little experience and knowledge of the financial markets arose, so that he could participate without being exposed to the high risk profile inherent in traditional markets. This led to the deregulation of the market in 2008 to allow individual traders a higher level of participation, similar to that of traditional participants, such as large banks and professional traders.
Here are 10 reasons why a trader should consider binary options as an instrument that he can use to speculate on financial markets.
Reduced risk profile
When compared to other markets such as the stock market and even the Forex spot, the binary options market presents a lower risk profile. In the Forex market for example, the trader has to consider with care factors such as leverage, the initial margin of the transaction, the total margin in the account, the price slip and other related things that can affect the results of their operations and the balance of the account. These parameters do not have to be analyzed in the transactions carried out in the binary options market, which means that the trader only has to devote himself to analyzing the operation. Likewise, the investor does not have to worry about what price was opened his position or if he has sufficient margin in his account so that the operation can be carried out.
Reduced entry costs
The cost of opening a trading account to operate binary options is less than other financial instruments. For example, a trader can open a trading account for just $100 in some binary option brokers, a value very similar to that offered by some companies specialized in the forex market through their trading accounts for beginners ( The most reliable we recommend is IQOPTION and ETORO Clik in each one for more information). In the United States, it may cost $25000 or more to open an account to operate directly with stock market shares. This cost can rise even more if the trader is interested in derivatives such as futures or traditional options due to margin requirements, which leaves many individual traders out. However, the reduced entry costs of the binary options market allow for broader participation in this market, as much of a trader with few resources as of trader as more capital to invest.
The trader knows in advance how much he can win and lose in each operation
In the binary options market, the trader has the advantage that trading platforms show the potential gain that can be obtained if the operation is successful (the option expires in the Money). Also, the trader knows in advance what is the maximum loss that can suffer. This allows you to determine whether a particular transaction is worthwhile or not and prevents you from taking unnecessary risks. Such facilities do not exist in other markets and this makes it easier for individual traders and with little experience to control their exposure to risk.
Potential loss limited by each operation
In the binary options market, any losses suffered are restricted to the amount that was invested in the transaction. This reduces the potential loss per transaction. This differentiates binary options from other investment instruments, especially the leveraged ones, in which it is possible to lose much more than the invested in the position, especially when the conditions of the market are especially volatile and produce landslides that can cause that the price passes through the orders stop loss without activating them.
Flexibility
The fact that there are various types of binary options and strategies that can be used to operate with a wide variety of binary options market assets means that the trader has more flexibility and more scenarios with which he can work.
Possibility of obtaining a high profitability in a short time
Due to the relatively short maturity periods offered by the binary options market (including 60 seconds), it is possible for a trader who has a good trading strategy and has a good performance in the market, to achieve higher gains over time than it could obtain in more conventional markets.
Reduced trading costs
The costs of trading binary options are lower than those presented by other markets. A trader who operates with stock market shares or with traditional options has to pay much more in commissions and spreads compared to a trader who operates with binary options.
Binary options operation is extremely simple
The procedure for opening a position with binary options is much simpler compared to other fianncieros instruments. To open a position in the market spot Forex For example, the trader has to calculate the volume of the transaction, place orders stop loss and take profit (to take the profits) and also have to decide what type of order will be used. This makes it easier for the novice trader to make mistakes. In the binary options market, all the investor has to do is indicate the amount you want to invest, select the expiration period and run the transaction (buy the Call or Put option).
Advanced Education for Trader
Many binary option brokers offer an intensive educational program that includes e-books, video tutorials, webinars, various educational materials, 1-1 training sessions with market experts and other resources that the trader can employ to increase their market knowledge. In this sense, these brokers have educational programs that are similar to those offered by the main Forex brokers.
Simple and easy-to-use trading platforms
Web-based trading platforms offered by binary option brokers are characterized by their simple interface and because they are easy to use, even for the novice trader. Many errors in the process of opening a position in the market spot Forex and other financial markets, can be attributed to the complicated nature of trading platforms, many of which have interfaces that confuse beginners. However, for the advanced trader and with more knowledge about the market, binary option brokers platforms can be insufficient, so it is advisable to use the applications offered by Forex brokers, which have multiple market analysis tools, including advanced technical indicators.
Conclusions
In conclusion, for beginner traders with little experience and knowledge about financial markets, binary options are an ideal tool to start investing in markets, before venturing into more complex markets and also offering a high potential to generate profits, such as Forex.
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