Why should traders trade binary options?
Why should traders trade binary options?
Binary Options trading is cost-effective
There are several reasons why traders trade options. The primary reason for trading options is that a trader has limited funds and wants to do more with less. For example, if a trader has 10 000 USD and wants to buy 100 shares of a 50 USD stock, he will have to pay 5 000 USD and spend most of his fund on a single stock.
However, if he buys a $20 purchase contract (for 100 shares), his total outlay will be only $2 000. Therefore, the investor can spend the remaining 8 000 USD at his discretion. Options trading, therefore, allows traders to earn the same level of profit as if they had invested in a more expensive market, but they spend less.
Why should traders trade binary options?
Options can protect an investor’s investment against volatility.
Another reason why traders trade options is that they can hedge their investments. When used correctly, options can reduce investment risk because they do not require as much capital investment as stocks. Gap gaps also do not affect options, so they are safer than stocks in this respect.
For example, suppose you buy shares at $50 and want to protect your invested capital from large losses. To prevent a loss of more than 10% of your investment, you would place a stop-loss order at $45. However, stop-loss orders are only valid during trading hours. This means that if the share price closes at 51 USD, but there is negative news overnight and the share price drops to 20 USD at market opening, your shares will be sold at 20 USD.
This is because the initial trade is below the price of the stop-loss order, which is USD 45. Alternatively, a put option could have provided better protection. Unlike stop orders, options are valid outside market opening hours and therefore provide continuous insurance. For this reason, financial experts consider options to be reliable hedging instruments.
Why should traders trade binary options?
Options offer a variety of investment options.
One of the key advantages of options is their versatility in offering a variety of investment options. Options can be used to create synthetic positions that offer multiple ways to achieve the same investment objective. This flexibility can be very beneficial for traders. While synthetic positions can be quite complex, options also offer a range of other strategic options. For example, about short-selling shares, some brokers charge high margin fees or prohibit it altogether.
Options, however, offer a solution by allowing traders to buy put options and profit from downside movements without facing such restrictions. This flexibility gives options traders an advantage over traditional stock trading.
In addition, options allow traders to trade beyond the direction of movement of just one stock. They can take advantage of the so-called ‘third dimension’ of the market, such as the passage of time and fluctuations in volatility. Since most stocks experience limited price volatility most of the time, the ability to capitalize on sluggish markets can be crucial in achieving financial goals.
Options provide investors with a more comprehensive set of tools for success, giving them the strategic choices they need to profit in any market environment. By using options, investors can transcend the limits of traditional stock trading and gain access to additional profit opportunities.
Why should traders trade binary options? – Brokers Review
| Broker | Bonus | Min Deposit | Payout | Review | Open Account |
|---|---|---|---|---|---|
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10$ Binary Options No Deposit Bonus | Deposit Bonus | Free EntryTrading Contests | Free Demo Account | 5$ | up to 95% | Review | Visit Broker |
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Free Demo Account Without Deposit | Free Trading Bots | Free Trading Academy | Free or Paid MT5 Trading Signals | 5$ | up to 200% for Binary Options | Review | Visit Broker |
|
50$ Binary Options No Deposit Bonus | Free Demo Account Without Deposit | 100% Deposit Bonus | Weekly Trading Contest - prize fund $20,000 | 10$ | up to 90% | Review | Visit Broker |
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Every Month One whole Day of Risk-Free Trading (the client can receive total compensation for the loss taken during one whole day of trading every month) - Almost like a No Deposit Bonus | 10$ | up to 86% | Review | Visit Broker |
|
No Deposit 3$ Risk Free Trade | Deposit Bonus up to 100% | Free Entry to Trading Tournaments | Cash Back | 10$ | up to 95% | Review | Visit Broker |
|
Free Demo Account Without Deposit | Risk Free Trades | Deposit Bonus up tp 300% | Free Entry to Trading Tournaments (Prizes up to 55.000$ / Tournament) | 10$ | up to 90% | Review | Visit Broker |
Why should traders trade binary options?