Advantages and disadvantages of Binary Options Online Trading
An article by Thomas No Comments
As any other financial market product Binary Options trading has its advantages and disadvantages.
There is no doubt that Binary Options is an extremely interesting and exciting product that has number of significant benefits, but as I already said there are certain disadvantages also and you need to be aware of them before you start trading.
Risk Control – before you start trading you will be asked to write in a trading box an amount that you would like to invest. After this the amount that you can earn if your prognosis is correct and the amount that you can lose if your prognosis is not correct will be shown to you. Thus binary option traders know the amount of the return and the potential risks even before they start the trade, which makes Binary Option trading one of the safest online trading methods. If for some reason the numbers of your potential return and risks will not be suitable for trader it is always possible to change the investment amount to a larger or smaller number and begin the trade.
High Payouts – The most exciting thing about Binary Options trading is a possibility to make up to 85% from your investments in less than an hour. Imagine that you prognosed an Apple stocks growth and invested $100. If by the expiry time that you chose the stocks gained at least 1 point you receive guarantied payout of 85%. And now imagine how much you would earn if you just bought Apple stocks on the market? 1% a month? No comparison to 85% in 1 hour that binary option trading offers. So opportunity to make high profits in a short amount of time is a definite leader in the advantages list of this type of online trading.
Short-time trading (daily, hourly) – when trading binary options investor chooses the expiry time of the option by himself. If you are a fan of long-time investments, you can choose “end of the week” and “end of the month” expiry times. However, as far as I know, most traders are attracted to getting high profits in a short amount of time, which is now possible with binary options trading offering “end of the day” and “end of the hour” expiry times. Imagine that you get up in the morning, make an Oil price growth prognosis (let’s say that you heard about the turmoil in the oil-producing countries and assumed it will affect the oil prices) and an hour later you find out that your prognosis was correct and you have just earned 85% of your investments. Nice beginning of a day, isn’t it?
Low investment amounts – probably you are not so sure in your prognosis or just don’t want to risk in the beginning – not a big deal with binary options! You can start trading with as low as $25. If you are acquainted with, let’s say stock market trading, you probably know that you need a decent amount of initial investment capital, brokers, commissions, etc. So opportunity to start trading with only $25 and freedom to choose your investment amount is definitely one of the strongest advantages of binary options.
100% online trading – Binary Options are traded on the online platforms and thus there is no need for any software downloads. That means that trading is available at any place where you have computer and internet access. You just enter your login and password and get directly to your own profile page, where you can get market quotes, read information about market movements, choose the asset and start trading!
You can lose up to 95% of your investments in a short time – before I said that one of the advantages of Binary Options trading is a possibility to make up to 85% in 1 hour. But this is only if you make a correct prognosis… So what happens if investor made a wrong prognosis? He will lose most of his investments – binary option platforms return 5-15% of the investment in case of unsuccessful trade. Not so nice, ha? If for example you have bought stocks it is very unlikely that you could lose so much (only if the company was bankrupted). Nevertheless, as I already mentioned, with the real stock market trading you would hardly get even 1% of monthly return, whereas Binary Option trading offers you 85% return in 1 hour. So when trading Binary Options you need to be aware of the fact that you can both MAKE a lot of money in a short time and LOSE money as well. The good thing about it is that you never lose more than you invested in 1 trade and here you have total control of how much you want to invest. The more you invest the more you earn, but the higher are risks. So make educated trades!
Lack of supplementary tools – major idea behind Binary Options trading is to guess whether the asset price will go UP or DOWN. So traders have not much of a choice rather than 2 options – CALL and PUT (UP or DOWN). That is the reason why during binary option trading you will not see candles, graphic elements, etc. Nevertheless while you are in a trading process you will be able to see trading graph and check whether you are in-the-money or not.
Lack of demo accounts – due to extreme simplicity of the Binary Options Trading (you only need to prognose if the asset price will go up or down) binary options platforms (brokers) usually don’t offer demo accounts which we are so used to in online forex trading. From my experience I can say that if you are new in a trading world don’t invest your money yet. Try to observe the markets, do imaginary prognoses and check whether you were right. This approach will not only help you to improve your skills, but also will help to choose the asset with which suits you most. After this you can start investing and make the real money!
Before you start trading, read my recommendations at the Binary Options Trading Strategies page