The Advantage of Binary Options Trading

In virtually every type of circumstance where you put your money at risk, there will be both advantages and disadvantages. Let’s say a job interview makes you want to buy a new tie. While buying the tie, you decide to spend far more than you would normally spend for a tie, but the tie helps you make a good impression and you get the job. In that example, buying the tie was a good investment. If after you bought the tie, you didn’t get the job, then the investment in the tie did not result in the gain you were anticipating. These simple examples of advantages and disadvantages also apply in the world of trading.

When you decide to trade different types of financial instruments, it’s important for you know what the advantages and disadvantages are for every investment. Here, we want to share all of the advantages we find in trading binary options trading.

Easy to Begin

Binary options trading always take place on online platforms that are usually very user-friendly. If you run into ones that seem very difficult to understand, there are many options available, and finding a comfortable trading home is not difficult.

No Fees or Commissions

The biggest difference in comparison to other types of investments is that in binary options trading there is absolutely no fees or commissions paid to brokers for trades.

No Spreads

Many different financial instruments are traded using a spread. A spread would mean that the cost to invest into a call option would either increase or decrease depending on the amount of traders that are already invested in them. Obviously, this would give brokers a major advantage, by allowing them to artificially set prices for call or put options that are solely based on the number of traders invested to ensure their profit is made on every trade.

Binary options have no spread. The price of an option is never set. You can invest any amount of money you want per trade and the call or put options are based on real-time market prices.

Low Risk

Because you can open a trade with as little as $5, the worry of losing a large amount of money is normally not present in your trades. Binary options usually consist of many small trades that range between many different assets. Because your gains are based on whether the price will close higher, or lower, the time that you would normally invest researching financial news and economic events is a lot less than the time you would invest if your trade was more complex, and time sensitive.

No Leverage

In the financial world, it is possible to invest without putting up actual money. Companies will allow you to leverage off of the value of your other investments that you currently hold with them, to make new investments. These uncategorized types of loans have caused many investors to suffer losses in greater amounts than if leveraging was not permitted by the company. Even though leveraging in some cases can work in an investors’ favor, it creates the possibility for a trader to make an investment based on emotion. In binary options trading, there is no leveraging, and therefore you can never lose more than the amount you have invested in the trade. When you take a position, you know exactly the amount you will lose for a wrong prediction.

Taxes

In areas around the world where binary options trading is considered gambling, it is not taxed.