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The Pros & Cons of Binary Options Trading

The Pros & Cons of Binary Options Trading

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Pros and Cons Binary options trading is highly popular these days, drawing participants from every sector of the investment community to try their hands at the latest new way to trade. Obviously, there must be something rather unique going on with this investment vehicle to attract so much attention in so short of a timeframe. Beginners and seasoned veterans are both drawn to this new genre, indicating that the appeal is widespread and not some fluke of human nature. Where there is so much smoke, there must surely be a fire blazing for several reasons.

What exactly are the pros of binary options trading? Here are a few “pros”:

Pros

First and foremost, there is a potential for a quick payoff. Where else can you get a 70% or more return on your capital in hours, if not minutes? Payoffs can actually be higher, and there is always a possibility for a rebate percentage amount if you guess wrong. Many brokers also offer special weekly “one-touch” options with astronomical payoffs in the 500% range.

Simplicity is the next factor that is appealing. The decision tree is straightforward. You pick your asset class, expiration point, and amount of your position. All that is left to do is to pick the correct direction versus the targeted value provided by the broker. No other decisions are necessary, unless you want to take advantage of more complex betting strategies that your broker supports.

Ease of execution is right next to simplicity. You do not have complex timeframes to consider, leverage decisions to ponder, or correlations to find. You set a few variables, look at how other traders are betting, and then execute from a single “dashboard.”

No angst or anxiety over when to close a position is especially a benefit for beginners. It is easy to open a position in any investment vehicle, but the real test comes when it is time to sell. Most all investors stumble at this point, but binary options fix the endpoint for you. Adrenalin may flow, but you will not have to make a crucial decision late in the game, unless you elect to use more advanced features.

There are no fees or commissions. The entire costs are borne by the spreads contained within the payoff/rebate structure.

Risk management is not a problem because you set your risk tolerance at the pint of execution, based on the size of your position. There is no additional downside risk. Some brokers may vary the amount of the rebate they offer based on how close you come to the correct direction, but these amounts are just a few percentage points in the overall scheme of things.

You will never get a margin call. You can only wager what is in your account. There are no decisions related to leverage or margin, no chance that, if the market moves against you and you do not react quickly, you may lose a small fortune in the blink of an eye.

Most brokers offer a host of advanced features for more experienced traders, such that a beginner can grow as he learns the business. In other words, your mind can expand as experience grows, and there is always a higher level to ponder, once you have achieved a modicum of success at a lower level.

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At the end of the day, binary options trading offers a high payoff potential with risk fixed on the front end. The best advice is to invest considerable time practicing on a free “demo” system before risking your hard-earned capital. Everyone may not be cut out for this fast-paced trading environment. Let caution be your guide!

Binary options come in many different flavors, such as “one–touch” options where a trader can anticipate that the price will touch a level. There also are range options, where a trader can take a position on whether the price will stay within a specific range. On some platforms, traders can select their own target strike prices. There are also 60-second expiration options. These are the most difficult to end up in-the-money because the price behavior in these durations is very volatile. Many firms offer binary options that basically are set, which lock in a position until expiration, although some firms allow closing the position before expiration. Yes, binary options are exciting, offering within minutes the result of a win or loss.

Cons

One of the biggest demerits of this trading is that there is a very high probability that you might end up on the losing side. You can lose everything when the stock market goes down against your expectations. To avoid this problem you can use a trustfull Binary Options Signals Service!

The difference between the buy and sell price of the stocks is very small. It might be an advantage of some kind if you end up on the losing side. But it is perceived as a demarcation on overall profit when you are on the winning side.

Binary Options Trading is somewhat unregulated and there are always some kind of issues involved with the discrepancies involved in this financial spread betting. On Our Websites we traied to make a list with the Best Binary Options Brokers, ONLY!

As a trader you don’t have any ownership rights for assets that you purchase. The money that you invest in the trading cannot be withdrawn or exited until the expiry time of trade.

Binary Options Trading: The Final Verdict

Ultimately it depends upon you and your overall mental psyche as well as the funds that you employ in getting success in binary options trading. You should remember that this form of trading gives you the opportunity of getting a fixed deposit and it is ideal if you are risk averse. In a nutshell, with proper knowledge, skill sets and correct information, you can get the best out of this financial trading and earn handsome money.

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