A binary option can be described as a financial option in which the payoff is either some fixed monetary amount or nothing at all. They are of two types namely the cash-or-nothing binary option and the asset-or-nothing binary option. Many economic advisers have dismissed binary options as a form of gambling due to their high risk high reward nature but ultimately, it’s down to an individual investor whether they want to risk their money.
The binary options trading market is similar to the FOREX exchange, with a few minor differences therefore is something you can quickly grasp if you put in the right amount of time and effort. Let’s take a look at 4 benefits of trading binary options.
#1 It’s very easy to learn
Binary options are a very straight forward type of trade because it’s down to making a prediction about whether a certain stock or precious commodity in the money market will rise or fall. Your returns are purely based on the amount you stake and not on the actual rise or fall of the stock or precious commodity. This is the kind of investment venture that is pretty easy for investors to learn, and you don’t need to be seasoned. Even a newbie can hack it. Your ability to make the correct predictions will primarily depend on your market research and as always, a little bit of luck.
#2 Some brokers will give you free trading accounts
Because of competition among binary options traders, investors have access to a number of incentives from some brokers such as setting up a free trading account. The benefit of this is that any money you deposit in your account is directed towards investment and not on account maintenance charges. What you should be aware of is that brokers will not offer you the free trading account unless you make a certain agreed minimum deposit. The benefit of having an account is that it gives you access to benefits such as having a demo account with fake money which you can use as a practice account as you learn how binary options trades work.
#3 You have access to a variety of investment options
The more you get a grasp of how binary options trading works, the more you will realize the variety of investment options that are available to you. The market has different assets that can be traded on and this enables you to diversify your risk. The saying “don’t put all your eggs in one basket” is very practical here.
#4 You can trade in expensive stock more cheaply
The nature of how binary options work is that you don’t directly trade in the stock itself but rather on how the stock will behave in the market in terms of rising or falling in price. This therefore allows you to be able to make trades on stock that you probably would not have been able to afford and do so at a much cheaper rate.
We trust that with this information, you have learnt something about binary options and you’ll be able to apply this knowledge in your investment ventures moving forward.