For Reasons to Consider Binary Options Trading Over Stock Trading
Arguments still lurk in investment sphere on if binary options are a good way to invest money. This is unlikely to go away anytime soon. If nothing else, the fact that binary options looks a bit like over/under betting from Las Vegas is enough reason for that argument to remain.
To be clear, binary options is essentially a game of how good you are at timing the market. And history has proven that it’s rarely, if ever, a good idea to time the market. Still, though, a handful of folks have made a fortune timing the market. Timothy Sykes comes to mind in the case of highly risky day trading.
It might be an uncomfortable truth, but binary options are here to stay. So in defense of binary options, here are some reasons to consider binary options trading over stock trading.
Binary Options Offers Fixed Risk
So much has been made about how risky binary options are, but the reality is that stock trading is a lot more risky than binary options trading. First, unlike stock trading, binary options do not require leveraging. The amount you could lose is limited to the amount with which you choose to trade.
If you invest, say $100, in a call option on the price of gold that expires in an hour’s time, you can only lose the $100 if you made the wrong call – nothing more. In essence, you’ll always know how much you stand to gain or lose right from the outset of any trade.
Easy To Trade
No, the translation of this is not that it’s easy to make money trading binary options. What this simply means is that it’s easier to get started trading binary options than stock trading. For instance, any serious stock trader has to familiarize themselves with certain terms like stop loss, leveraging, margin account, etc.
However, a binary options trader doesn’t need to get embroiled in all of these. A solid understanding of what moves the prices of assets is essentially what you need to get started.
Offers One of the Widest Range of Tradable Assets
Stock traders are almost limited to equites trading. To trade commodities and forex they may have separate accounts. However, binary option offers the opportunity to benefit from the price movement of a number of tradable assists all in one location.
Most binary options platforms offer access to assets including individual stocks, indexes, like S&P 500, Nasdaq, FTSE 100, 250, commodities foreign exchange, commodities and economic events like Fed funds rate, unemployment rate, etc.
At the end of the day, this comes with some cost effectiveness. If nothing, the fact that traders have access to such wide variety of assets without have to pay any commission or spreads is proof.
Limited Barrier to Entry Based On Asset Prices
Stock traders need to always judge the best time to buy stocks in order to stand a chance to gain. Simply put, getting to position at the wrong time increases the risk of losing. However, binary options work differently. Binary options traders don’t have to worry about the asset prices at the time they want to initiate a trade. All that matters is to choose if the price of a certain asset will go up or down.
In addition, since binary options traders are only trading against price movements without actually owing the assets, they are not limited by high asset prices. So they can make money on the price movement of Google without necessarily having over $800 or so. Stock traders, on the other hand, need the exact amount an asset is priced at to benefit from its price movement.