Binary Options Trading Advantages – Are there Benefits?
Binary options trading is not complicated
Advantages to Binary Options
This simplicity can be considered a negative by more experienced traders. Although for most binary options advantages far outweigh the disadvantages as they can be extremely rewarding. Just place a position – either call or put and wait to see if the asset price goes up or down. If a trader chooses a call option, then he or she believes that the price of the underlying asset will expire at a higher level than its current price. On the other hand, a put option means that the trader believes that the price of the underlying asset will decrease and expire at a lower price than the current strike price.
On most binary options platforms traders only need to click an arrow (for both call or put option), then type in the amount of investment they want to put in the asset. The amount of profit will automatically be displayed after keying in the amount you are willing to invest. The rate of return is usually pegged at 65-85%. Although this depends on the binary options broker. The trader will then need to choose an expiry time. Some brokers offer hourly expiry, but there are also daily, weekly and monthly expiry period.
Some of the known benefits of binary options trading include the following:
Binary options brokers offer 60 to 85% yield for investments which expire in-the-money. This is regardless of the magnitude of change in the price of the asset. It doesn’t matter if the closing price of an asset is $1 above or below. Or the strike price $100 above or below the current price, as long as an investor correctly predicts the direction of the price change, they will receive a payout.
Short term investment
This perhaps is one of the biggest advantages of binary options over traditional options. Now, investors do not have to wait for years in order for their investment to mature. With binary options, investors can realize profits in as little as an hour. If the trader is using a sound strategy, he or she can use it time and again as long as the condition of the market stays the same. At the same time, he or she can be assured of profits. On the other hand, if the investor wishes to utilize another strategy, then they only need to wait for the option to expire shift.
It allows small investments
Unlike other investment vehicles, binary options allows you to earn profit even with a capital as low as $20. This means that traders can easily diversify their portfolio so as to minimize their losses.
Calculated risk and reward
Because the return on investment in binary options is fixed, traders know exactly how much they stand to gain or lose. This means that a trader will never lose more than is expected, hence, risk in binary options is so much lower.
Advantage in volatile markets
Even in the most volatile markets, binary options allow people to invest at low risk. Because of the short trading times and the fixed return rate, it doesn’t matter how drastic the market price changes are, the trader can be assured of the same profit or loss.