5 advantages of binary option trading
Binary Options has become an attractive choice among options trading investment instruments. Binary options show a clear difference when compared to some other types of trading options, regarding their simple trading methods and the potential to get high returns. In addition, binary options are considered as a type of option trading that is more profitable than conventional methods.
Besides being easy to learn and practice, there are still 5 advantages of binary trading that are worth considering:
1. Quickly Brings Return
Unlike other investment programs that have to wait weeks or even months for profit, binary options can provide returns in just hours, minutes, or even seconds. The trader just has to choose the expiry time that he wants to determine when the option position will end. Generally, broker binary options provide expiry time options that vary greatly. So for short-term traders who do not want to linger holding positions, short expiry time like 1 hour, 15 minutes, or even 1 minute can be the first choice.
2. Simple
Traders can get trading results, both profit and loss, without having to worry about the risk of requotes or slippage. The absence of stop loss can also be one of the advantages of binary trading, because that feature can complicate the system and sometimes it is still a debate among traders. The main principle in how binary options work is to determine whether prices will go up or down. If the trader expects the price to rise and the price actually increases from the entry position when expiry time arrives, then the profit will be obtained.
Although simple, traders do not mean it is justified not to use technical indicators or do fundamental analysis. To find out whether the next price movement is up or down, analysis still needs to be done. It's just that, in binary options there are no complex predictions about the potential for stop loss, take profit, and the like.
3. Flexible
The advantage of binary trading is very beneficial for traders who like to look for alternatives or do risk verification. With binary options, traders are not limited to one type of market. In one platform, traders can enter the forex, stock price index, commodity or to the stock market. Thus, Binary Option trading can be done in several types of markets at once, without the need to open a new account or use another platform.
4. Transparent
Transparency of binary options is closely related to the system of calculating profit and loss. Unlike conventional trading which gains or losses follow a large price change, binary options use a fixed return (payout) system whose range traders already know, even before opening a position.
For example, you open a USD / JPY call position with a capital of $ 100 and a payout of 80%. When the option expires at a higher price than the entry level, you will get an 80% profit from capital. That is, the amount you get is capital + payout, or $ 100 + $ 80 = $ 180. Then what if the price turns down and is at a lower level than the entry position? In that scenario, you will lose all your capital. Thus, the amount of loss will not exceed $ 100.
Because it is fixed, payout binary options are not determined by the price movements. Whether the price goes up by 1 pip or 50 pips, the potential profit remains the same as the promised payout. This also applies to loss scenarios. Even if the price moves to 100 pips from the entry level, the loss will not exceed the amount of trading capital.
5. Minimal Risk for Learning to Trade in Various Markets
Binary options are not the same as conventional trading, but the principle of analysis is not much different, because both aim to estimate the direction of the next price movement. Therefore, binary options can be used as learning solutions for trading in various markets. Here, traders can place positions very easily, without the need to take into account trading volume problems.
To be able to open positions on the forex and stock markets for example, traders only need to analyze each market and run it on one platform. There is no money management arrangement related to trading volume, there is also no risk of loss from floating positions. As long as traders can use capital trading wisely, the risk of trading in binary options can be minimized, regardless of the market used.
The advantages of binary trading will be even more optimal if supported by the right knowledge.
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