Binary options trading has been compared to gambling, and it’s also been called a simpler, safer alternative to day trading. What is the truth? Binary option trading is closer to the latter than the former for many different reasons. Here are four reasons why everybody should consider binary options.
Simplicity
It is rather easy to start trading options. The risk is mitigated by doing your research on both the trading platform you choose and the strategy you plan on using. Once you choose a binary options trading platform and make an initial deposit, you can get started in a matter of minutes. This does not negate your obligation to study the commodities or investments you want to buy options in, or your obligation to do your due diligence researching the fees and reputation of the trading platform before you start. If you want to invest in binary options through the Chicago Board Options Exchange or CBOE, you can trade via an options-approved brokerage account through your current trading account. However, not all brokerages offer this, hence the rise of binary options trading platforms like Stern Options.
Another benefit of binary option trading platforms is that the platforms themselves are nowhere nearly as complicated as forex. And binary options can let you invest in global investment indices like the FTSE 100 (British equivalent to S&P 500), Germany 30 and Japan 225 without the hassle of setting up foreign investment accounts.
Flexibility
Binary options trading is a very flexible form of investing. You can invest in options that expire in a matter of minutes, while some sites offer options that expire in only 30 to 60 seconds. You can invest in binary options that last hours or days. Pick the schedule that works for you, such as selecting options that expire in a few hours so that you aren’t left checking the markets throughout the evening out of fear. You can also invest in a variety of options, whether simple binary options or more complex types of options. The latter is only recommended for those with experience. Binary options platforms like Stern Options let you trade in many different things, such as stocks, stock indexes, foreign currency, commodities and, sometimes, more exotic investments. Unlike a stock day trader, you can switch from stocks to stock indexes simply and easily.
Another variation of the flexible options trading permits is the fact that you can purchase multiple contracts if you want. You could even set up several types of binary options for the same type of option at the same time and use this to learn which type of option and criteria yields the greatest return. You learn faster this way.
A Safer Way to Trade in Speculative Investments
There was a news story about a man who bought Bitcoins when they first came out, misplaced his hard drive, and lost the equivalent of several hundred thousand dollars in Bitcoins. Others lose Bitcoins when their hard drives with the data crash, are stolen or lost. Ransomware is an ironic loss when you have to pay ransom in Bitcoin to get data back, but may not be able to use the computer where Bitcoins are stored. The tax agencies aren’t sure how to treat Bitcoin trading or profits from them, while some nations have outlawed Bitcoin usage altogether. The safer way to trade in Bitcoins is through binary trading options. You can profit from the rise or fall of Bitcoins, but you don’t have to learn the technology necessary to own them and avoid the legal risk of owning them if the government bans them.
There is a similar argument to be made for trading gold via binary options. You’re trading in gold, but without the security risk that comes with owning gold coins and bars. No one can steal your retirement by taking a safe in the closet. If gold prices crash, you only lose the amount invested in the gold options, not the entire value of your 401K. If we end up with a repeat of the Great Depression that outlaws private ownership of gold, your contract is one step removed from gold ownership itself.
Another benefit of trading in binary options is that you can diversify your investments into several types of options, putting some money in Bitcoin or commodity options and others in more mundane but well known investments like stocks, indices or foreign markets. Note that foreign binary options are structured differently than those in the United States, though they tend to be safer than hedging and speculating on foreign markets, and going through a U.S. trading platform is certainly less likely to be a scam than investing through a foreign website promising you investment returns on overseas market returns.
Controlled Risk
Binary options allow you to limit the risk involved, though this may result in slightly higher fees or lower returns. However, the new trader should value the lower risk because it is repeated heavy losses that drive people from the market. You should avoid types of binary options that could put you into debt if you lose as compared to losing your principle. Yet you enjoy average returns of 60% to 90% with binary options trading when you win. For some types of binary options, you may even get 5% to 15% of the invested amount back when you’re wrong instead of losing 100%.
Depending on the options trading platform you choose, you can find free trading accounts that have no fees, though they will make their money in other ways. Never set up an account and then hand over control to a “professional” who works for the options trading company; they’ll make trades based on what earns them a high commission, not what is best for you.
Conclusion
Trading in binary options is far simpler than trying to buy foreign securities or currency or use their trading platforms. You can buy options for almost anything, and you can select from a wide range of expiration dates and terms. The risks you take for each trade are by design limited, and the risk you take investing in more speculative investments like Bitcoin and foreign currency are even less than if you invested in them directly. While you need to learn about binary stock options trading before you start investing in them, it is far less challenging than learning about exotic investments traded through several layers of international bureaucracy and securities law.
