There are a number of reasons why traders new and old are turning to binary options in droves. Binaries are a relatively recent development in the trading world. Their predecessors, digital or all-or-nothing options, were only approved by the SEC in 2008. Since then, they have hit the online trading community and changed the face of trading in just a few short years. Until binary options hit the internet, online trading was a considerably more complicated affair. Online forex trading currently has the largest share of online traders. But Forex trading has some drawbacks that binary options negate by their very simplicity.
First of all, when you trade Forex you only have access to currency pairs, this may not be a big deal for most traders at first, but being limited to just currencies limits the options available to you. Most digital options brokers offer trading in stocks, commodities, and indices, as well as currency pairs. Having these other assets to trade offers advantages to binary traders. This is because they can rely on correlations between assets when trading to diversify their trades. But this is the least of the advantages binary traders have over Forex traders. The way binary options work makes them a better alternative to Forex online for several reasons. First of all, binary options have preset levels of risk and reward, which means that traders know before placing a trade how much they stand to gain or lose. This means that binary traders have much more control over their funds than Forex traders. Binary operations have only two possible outcomes and only two possible choices an operator must make. Either the bet will generate a certain profit (somewhere between 60 and 80 percent), or most of the amount wagered will be lost. And all you need to decide is whether the asset you are trading will go up or down. With Forex not only do you not have this luxury, but you also buy your currency pair for a little more than the market price, which means you have to go higher for your trade to be successful, but you also have to sell it at a lower price. lower than it’s actually worth, meaning you’re at a disadvantage both on the way out and on the way in.
But not only are binary options an attractive alternative to the current status quo, their simplicity makes them much more efficient trading vehicles. The binary option is particularly useful because the length of trades is as flexible as possible. Binary options traders can select from various trade expirations, from just 60 seconds to the end of the year. This flexibility is much more useful in the case of short-term positions. The ability to precisely define how long a trade lasts is invaluable as it allows you to enter trades at the right time, benefit from momentary fluctuations in price action, and not be tied to the fortune of a given asset for longer than necessary. . Short maturities and preset risk structures also allow you to make money when an asset changes direction. This eliminates the need for long trading sessions, meaning you can earn more in one hour of intense binary trading than in a one-day Forex trading session.
Finally, with binary options gaining wider acceptance and the regulation of different brokerage companies, the only real advantage Forex had, basically a higher level of respectability, is rapidly being nullified. In commerce, as in all aspects of life, the best idea prevails. Binaries make the most sense, for all types of traders, beginners and experienced. Forex would do well to take a leaf out of the binary options playbook. Simplicity is key.