Binary options offer several distinct advantages over trading with stocks or forex. The rise in popularity of trading with binary options has seen many professional traders choose to trade stocks, commodities and currencies because of the advantages and potential profits that they offer. These are particularly obvious for those who have traded traditional stocks and forex and have found that the amount of capital required, as well as the problem of being stopped-out, can impact upon trading success. This is outside of the most obvious attraction to binary options which is the level of profit which can be generated within such a short period and regardless of the degree to which the market moves in a traders’ favour.
Simplicity and low capital requirements
Binary options require very little knowledge of the underlying markets in order to begin trading and an account can generally be set-up and activated within a few minutes using the vast number of online platforms available. Not only is this access to the trading platforms straightforward but most binary options platforms will require a much lower starting deposit than conventional stock and forex brokers. Many binary options platforms will simply require an initial deposit of a little as $100 in order to begin trading. Furthermore, it is impossible to trade beyond this initial deposit which makes it a much lower risk way to trade currencies than forex which can allow trading positions to be heavily-leveraged and result in losses many times the original deposit.
In terms of simplicity, regular binary options offer a straightforward higher-or-lower option to traders. This means that traders simply have to choose whether they think a stock, currency pair or commodity is going to be higher or lower in price after a certain amount of time. Not only does this allow for new and inexperienced traders to grasp the concept of binary options very quickly, but it also simplifies the profit –taking decisions of all traders. Rather than being driven by the hope for more profits within a trade, these profits are pre-determined and fixed; this gives binary options its name as ‘all-or-nothing options’.
Profit which are unattainable with traditional trading
The profits which can be made from binary options trading are also a major reason why many new and experienced traders find this form of trading so attractive. It is very rare to be able to achieve 85-500% profit on a single trade through conventional stock trading and almost impossible to achieve this in just 60 seconds as many binary options platforms offer. 60 second binary options provide profits of up to 85% on successful trades and it is difficult to imagine a stock rising this much in such a short amount of time.
Binary options also offer a number of high-profit trading tools which include range and touch trading. These trades can often be placed during the weekend for the trading week ahead and provide profits of up to 500% if price touches a particular price level during the week, or if it remains within a pre-defined trading range.
No stops and predetermined risk
One of the skills which many traders find the most difficult is to set stop-losses which both allow the trade to ‘breathe’ and also protect trading capital. Fortunately, binary options traders do not have this problem as stop-losses do not exist and accounts for a major factor why this form of trading is so popular. This is due to the fact that all potential profit and losses are pre-determined before each binary options trade, and it is not the degree to which a trade closes higher or lower which determines profits. Unlike stocks, forex and commodities where the number of points or pips higher or lower determine profit and loss, a successful binary options trade only needs to close fractionally higher or lower than the entry price to be successful. This means that price can swing higher and lower during the lifetime of the binary option and not affect the level of profit or loss which is already known. The added advantage of this is that a binary option trade will never be prematurely stopped-out but will run until expiry regardless of where price is.