8 Advantages of Binary Options Trading Over Other Forms of Investing
So you want to start investing and building up a retirement account. It is never too early to start planning for your future, but where do you start? There are so many different ways you can invest. You can buy stocks or dividends, you can invest in real estate (real est
ate crowdfunding has brought this into the mainstream in recent years), or you can trade CFDs. Forex is another option, as is futures trading. And then of course there are binary options.
Why trade binary options rather than choose another method to invest? Well, I would never suggest anyone exclusively trade binary options—or anything else. A lot of the strategies that you are going to learn trading binary options can be transferred over to Forex, stocks, or another form of trading.
But I do think that binary options is an excellent starting point if you want to become a trader. Below, I share 8 advantages of binary options over other forms of trading. All of these are great reasons to start with binary options and expand your trading activities from there as you build up funds and experience!
1. Binary options trading is ridiculously easy to understand.
If you are brand new to investing, good luck trying to make sense of traditional forms of investing. If you have a natural talent for trading, you may find other forms of trading entirely approachable, but there are whole books written for beginners for a reason.
Binary options trading makes investing as simple as humanly possible. Understanding how to spot a profitable trade does take a lot of time and research, and you can read whole books on that, but knowing how to simply place a trade in your platform is easy.
In fact, it is so straightforward I can explain how to place a High/Low binary options trade here and now in a few short numbered steps:
- 1. Open your binary options trading platform.
- 2. Pick an asset to trade.
- 3. Decide if the asset is likely to go up or down in price.
- 4. If you believe the asset will be trading above its current value when the trade expires, pick “High.” If you believe the asset will be trading below its current value when the trade
expires, pick “Low.”
- 5. Wait and see what happens.
That is quite literally all there is to it. If you picked correctly, you will win a payout, usually somewhere between 60-95%. If you picked incorrectly, you lose the trade, though you may sometimes get back 10% as an out-of-money refund.
Binary options platforms like SpotOption present you with a streamlined graphical interface which makes it a breeze to place a trade. After selecting your asset, checking the expiry time, and putting in the amount you want to invest, you just click on a button to execute your trade. It is easy as pie. Most people can learn how to use a binary options platform within a matter of minutes.
Contrast that with the complexity of many traditional forms of investment, and you will see why so many people are flocking to binary options.
2. Fees are low or nonexistent for trading binary options.
Many binary options brokers do not charge commissions for trading at all. When you trade stocks on the other hand, you will generally pay somewhere between $5-$8 as a flat fee per trade (as you might expect, that can really add up fast, especially if you are investing only small amounts of money to begin with). Sometimes flat rate fees are even higher, and occasionally you will encounter percentage-based fees instead.
One of our top brokers, Nadex, does charge fees, but they are quite reasonable. If you lose a trade when it expires, you do not pay a commission at all. If you win a trade or you choose to close out early, you pay $0.90 per contract. This actually hardly matters at all, however; Nadex pays out closer to 200% on most winning trades, which is a far cry from the 75% typical elsewhere. So even paying these low fees, you are going to make a lot of money on your winning trades.
The bottom line here is that trading binary options is affordable, even if you have a very small account. And that brings me to my next point.
3. The minimum deposit amount is typically around $250.
There are some stock brokers which will allow you to open an account with a minimum deposit of around $500, but most require you to have at least $2,500, sometimes more like $5,000 or $10,000.
Let’s be honest here: most of us just do not have that kind of money. We live in difficult times. Our economy has been hit by the recession, we are losing jobs to automation, and the jobs which are left do not pay what they used to. Meanwhile, the cost of living keeps going up and up. Finding any money to invest is hard.
So it is a big deal being able to open a binary options account with just $250. Some binary options sites require even less money to get started. A hundred dollars is a common minimum deposit amount. Marketsworld, a broker that is particularly friendly to traders with small accounts, allows you to start trading with just a $20 deposit!
4. The minimum investment amount may range anywhere from $1-$25.
Remember when I said that a typical fee for trading a stock is around $5-$8? Think about it—that is the amount of money you are guaranteed to lose on a stock trade. So now think how much you would have to invest at a minimum in order to break even, much less actually profit.
By contrast, most binary options brokers set a very low minimum trade size. Usually this ranges between $10-$25 for most trade types, but on 60 Second trades it is usually only $5. Again, most binary options sites do not even charge trading commissions, and Nadex does not charge any if you lose.
Some binary options websites set even lower minimums. On Marketsworld, where you can deposit just $20 to start trading, you can invest just a dollar!
In case you are wondering why you would bother trading so little, consider that this is a fabulous way to practice trading with real money, but without taking any major risks. It is a great way to transition out of demo.
Another great thing about binary options trading is the flexibility in trade sizes. Many other forms of investing confine you to specific lot sizes. With binary options trading, if you want to trade an unusual amount, you can. You can trade $1, or $2, or $3, or $17, or $893. It is totally up to you, which makes it easy to manage your money if you are using a system where you always invest a certain percentage of your account.
5. You can trade hundreds of assets in one place.
There are a number of brokers now that offer you the chance to trade multiple types of assets, but it is hard to beat the flexibility of binary options trading. On almost every binary options site, you can trade hundreds of different stocks, currencies, commodities, and indices. You also can trade stock pairs, where you can profit based off of the relative performance of one stock versus another.
This kind of convenience ensures that you have opportunity at your fingertips at every moment. If one asset is not performing well, another might present you with an excellent trade setup. If one market is closed, another may be open.
6. There are multiple ways you can trade.
On the same token, there are multiple approaches you can take to trading with binary options.
With many traditional forms of trading, all you can really do is attempt to buy low and sell high.
But with binary options, you have the following trade types available:
- High/Low: This is the type of trade that I described earlier. If you believe you know what direction price is headed, this is a wonderful way to profit off of the movement.
- One Touch: If you think you know not only which direction price is moving, but also how far it is likely to move you can try a One Touch trade. With this type of trade, you are betting that price will touch a certain value. If it does before it expires, you win the payout. Payouts for One Touch trades can be massive, often as high as around 500%.
- Range: You can think of this as the opposite of a One Touch trade. You are betting price will not trend, but will instead range inside a narrow channel. That channel is defined by an upper and lower value. If price stays inside it, you win the payout. This is one of my favorite types of trades, since most markets spend more time ranging than trending, and traditionally there is no way to take advantage of this. But with binary options, you can!
- Ladder: Pretty sure that price is trending, but not sure how far it will go? A Ladder trade allows you to take advantage of the opportunity for partial profits. As price climbs up or down a “ladder,” you earn a partial payout at each “rung”—a specific checkpoint along the way. If you win an entire Ladder trade, you can get a huge payout.
- 60 Seconds: For those in search of a thrilling, fast-paced approach to trading, 60 Second trades deliver. These trades expire in just one minute, and are a great way to trade if you like to follow price on a lower timeframe.
- Limit Order: Don’t want your trade to become active right away? If you want to set up a trade to automatically fire off once price hits a certain level, you can set up a Limit Order. Not a lot of binary sites offer this yet, but it is an up-and-coming trade type, and it should soon be widely available.
- Pairs trading: This is where you win a payout by profiting off of the relative performance of one stock versus another stock. Even if both stocks are falling, you win so long as yours is doing better than the other!
So as you can see, you are not stuck buying low and selling high with binary options. Even if the market isn’t moving, you can potentially win money!
Many platforms also now offer social trading, where you can copy trades placed by other successful investors on the site.
7. You can manage your trading at any time from any location.
If you were into trading before it became a common thing to do online, you may remember the olden days when you had to physically pick up a telephone to place a trade. You also might recall how much harder it was to see what was taking place with the markets.
Now all of that has changed. You can watch the markets on your home computer or your mobile device, and you can trade anywhere with an internet connection. That means that if you are sitting in the waiting room at the dentist’s office and there is public WiFi, you can trade. If you are on the subway and there is public WiFi, you can trade. If there is WiFi at your day job, you can trade there too. Binary options makes trading accessible.
8. You take charge of your own financial future by making your own trading decisions.
Nowadays there are a lot of options out there for busy investors who do not have a lot of time to spend learning how to make trading decisions. In the days before the internet, getting trading advice meant having a professional financial advisor manage your portfolio. But now all it entails is using a robo-advisor. This is just what it sounds like—a software program which provides you with investment ideas.
If you really do not have the time to learn about trading, this is the best route to go. But if you do have the time and the interest, binary options may offer you a better avenue toward wealth.
Why? With binary options trading, you are analyzing the market yourself using fundamental or technical analysis or price action. You are learning how to spot important market moves and capitalize on them. No advice from a human being or a software program can replace the autonomy you develop by becoming a genuine expert on investing. You are taking your financial future into your own hands and empowering yourself both now and in the future.
For Investors Just Starting Out, Binary Options is the Perfect Choice
In the 21st century, there are numerous ways for ordinary people to invest in a ton of different assets. With so many possibilities open to you, you may have a hard time deciding where to start.
But if you get started with binary options, you can transition into a whole world of trading, and you can do it the easy way. Within minutes of logging into your first binary options account, you will know your way around the platform. You can begin trading even with a small account, without worrying about exorbitant commissions. You can practice with a single dollar if you want to, and you can try trading all kinds of different assets using a variety of approaches.
This frees up your time and brainpower to start working on the real challenge—how to trade profitably! For that, you will need to learn or create a strategy which can generate reliable wins. While that is a lot of work, it is worth it to develop true financial autonomy. The best way to invest in your future is always to invest in yourself.