While there are many reasons to invest in individual stocks in the traditional manner, the trading of stocks via binary options can offer a number of key advantages to traders. First, the investor’s risk is capped at a maximum amount. Thus, while there is risk involved in every type of investment, those who trade in binary options already know the amount of their potential loss prior to even initiating the trade.
In addition, trading in binary options is a much simpler form of investing altogether – especially as it relates to trading in stocks. This is because it does not require that the trader know a great deal of financial terminology, but rather it allows investors to trade with a simple yes or no option in regards to whether the share price of a particular stock will move up or down.
Why stocks are a great option
Stocks markets are one of the most popular forms of traditional investment and the ability for these markets to be traded using derivative vehicles such as binary options has made access to these even easier. Trading stocks with binary options is one of the most straightforward ways to trade, with the simple choice of higher or lower making the analysis of stocks easy. This also means that traders no longer need to arrange a stoploss or take profit level for their trades, since binary options only require that an expiry time is arranged in order to determine if the option will expire in or out of the money.
In applying binary options to stocks, trading platforms allow trades to be taken throughout the trading day. Due to the fact that these options only need to close fractionally higher or lower than the strike price means that even those slow moving stocks can be traded for up to 80% profits. This would be difficult to obtain trading traditional stocks where the degree of movement dictates the return on the investment. In addition to this, many binary options brokers also offer weekend touch trading for stocks which can earn traders up to 500% of the investment. For those who analyse individual stocks correctly, this is one of the most profitable investments available and certainly a unique return for short-term stock trading.
How to Make More Successful Trades in the Binary Stock Market
Unlike trading in regular stock options, traders in the binary options arena are under no obligation to purchase the underlying assets. Rather, they are simply investing based upon whether or not they feel that the share price will rise or fall within a certain period of time.
One of the best ways to ensure successful binary options trades is to conduct analyses prior to moving forward with one’s investments. There are two key types of analyses that are available for binary options traders to use – these include technical analyses and fundamental analyses.
Those who engage in technical analyses will generally study charts and/or graphs of an asset’s past price movements. In many cases, this type of analyses will show a pattern which – if followed by the trader – may indicate at what point the asset’s price will rise or fall again.
Fundamental analyses focuses on different types of data such as the underlying asset’s market, current economic conditions, and potential effects of supply and demand which may have a bearing on whether the price of the asset could move up or down within the near future.
While many binary options traders prefer one type of analyses over the other, in most cases it is wise to conduct a combination of both types. This way, a trader will get a much more thorough picture of both the past movements and patterns of the underlying asset, as well as an indication of market and economic conditions that may affect the future price of the entity.
In doing so, if a trader has correctly predicted the movement of the underlying stock price prior to the expiration of the option, then they will make a profit. Conversely, if the investor has incorrectly predicted the stock’s movement, then he or she will incur a loss.
Best Stocks to Use for Binary Options Trading
There are numerous stocks from which traders may choose as their underlying assets in binary options trading. These may include:
- Coca Cola
Many of the individual stock choices that are open to binary options traders are large corporations that are listed on a particular stock exchange like the NYSE. These exchanges consist of entities that are located around the globe. Depending upon the size of the company being traded, its shares may be affected only by national economics or by worldwide events.
Because of the many different exchanges – as well as differing trading hours – binary options traders typically are able to trade various stocks throughout the day and night, as well as on the weekend. This additional amount of trading time can allow binary options traders the ability to make quick profits at just about any time.
Some key aspects to consider prior to placing binary options trades on individual stocks include the sales and growth figures on the underlying company, the state of the industry and/or market that the company conducts business in, and the economic conditions of the country in which the underlying company is located. All of these factors will in some way affect the movement of the asset’s share price.
The best broker for trading Binary Options on stocks is IQ Option because it offers you a wide range of different underlyings and the minimum deposit is just $10.
Visit the IQ Option website now!
RISK WARNING: YOUR CAPITAL MIGHT BE AT RISK