Unless you’ve been living under a rock, chances are you’ll have heard of binary trading options. This form of investment has caught the attention of many recently, with traders stating that there’s a lot of money to be made. But what are the differences between trading binary options vs. stocks in the stock market? Here are just a few of them.
The Up Front Investment Cost
The first thing to think about is how much cash you will set aside to trade. With binary options, you generally don’t require as much money to begin. A few hundred dollars is enough to fund an account with most brokers. However when it comes to trading regular stocks, you’re likely to need a lot more- around $3000 just to open a margin account. This is the type of account you would need to purchase sell options, or make short sale trades.
The Range Of Assets You Can Trade
In the stock market, you are dealing with stocks from different companies. However, with binary options, you have the advantage of being able to trade a wide variety of various assets. It allows you to trade commodities such as gold or oil, crops such as coffee and corn and currencies- as well as stocks in companies. This can make it a very dynamic and exciting form of trading.
The Ease of Use
With stock trading, if you want to trade stocks from different parts of the world it means you need to have charting packages for each country all up and running. Not only can this become confusing but it’s also time-consuming to keep tabs on, and any human error can mean lost money. However, with binary options, all trading can be done through one site. Stocks, commodities, currencies and different indices from around the world can all be kept tabs of from one site. You need software such as Gemini2 to get started, and from there you can make trades in the market. This makes binary options a much more user-friendly way of trading, as well as something that beginners are more likely to get along with.
When you trade stocks, you often have to wait hours or days to see a profit. This can be frustrating and time-consuming. Binary brokers, on the other hand, give you a choice to tailor suit your timeframes, which of course adds a level of certainty that you can’t get from stocks. This means with binary options you have potential for a lot more profits.
Risks To Be Aware Of
When it comes to any kind of investment like this, a return isn’t guaranteed. Although there are numerous factors which can help you assess stocks, no one can predict exactly how they will perform in the future. And as binary options are typically an all or nothing trade, you need to develop a long-term strategy so that you can keep your profits up. You will of course be wrong from time to time, and so you need a framework that allows you keep your profits above your losses. Gaining understanding as to how the market works and hiring a professional to guide you are other ways you can minimize your risk.