There will be advantages and disadvantages in any situation where there is money at stake or risk. A good example is if you have a job interview and you decide you need a new shirt to impress your prospect employer. You go out and purchase this new shirt and spend a little more than anticipated. The shirt might help make that good first impression and land you the job, but you get a stain on the shirt and feel you wasted your money on it when you could have spent less money on an inexpensive shirt; this is the disadvantage in this particular scenario.
Being fully aware of advantages and disadvantages is important when investing in financial instruments. Below we will discuss the advantages.
Easy to Begin
Most trading platforms are user-friendly. If for some reason you come in contact with a not so user-friendly platform there are always more options to look elsewhere.
No Fees or Commissions
In comparison the fees and/or commissions may vary in which you pay to make investments.
One of the big advantages a broker can received is a no spread instrument. Some instruments are traded with a spread meaning the strike value of a call option will be greater than the current price. The strike price of a put option will decrease from the current price level.
However, with binary options there are no spreads. The strike price of a put or call is exactly the current market price always.
Most people state that in order to concentrate they must have money riding on the outcome. This is because the minimum amount to open binary options is as low as ten dollars, sometimes less. The cost of solely focusing your attention with binary options is low when it comes to the financial and economic values.
Some financial transactions allow you to invest without having to put all money upfront. This simply means you are borrowing against some of the money you are investing, in a sense. This is called leverage within the financial circles. Huge losses have been suffered by many investors because of the leverage used to enhance the size of the investment with this “loan”.
There are no leverages in binary options. You cannot lose more than the initial investment no matter what happens to the asset, thus you know exactly how much the loss can be when you take a position.
Binary options are sometimes considered gambling and are not taxed in some jurisdictions.
Binary options are consider by some people to be a form of gambling. We disagree due to binary options trade in four assets; currencies, commodities, stocks and indices. Becoming familiarized with each asset will help understand this on a greater level to see the difference. We are not disagreeing that you can treat binary options the same way as slot machines, but many players get tricked into buying strategies for playing slots. In all reality there are no strategies that work for playing slot machines. There are proving strategies for investing in financial instruments however. Binary options traders can increase their chances greatly in making a successful trade if they make themselves available of the publicly information.
The variance with making money and losing money trading binary options is small. Even if you trade having little knowledge with binary options, breaking even with the investment is still in your favor. Taking the time and effort to learn more creates bigger opportunities and chances to making money in the long run.
Buying a second option to protect the first option is considered hedging in trading. This is an excellent strategy for binary options traders who don’t have the get rich attitude and who have a lot of patience.
Assets and Asset Classes
As mentioned previously there are four asset classes. These classes are currencies, commodities, stocks and indices. No trader is an expert in any of the four classes and you don’t need to invest in each class either. It is best to stick with the asset that you are familiar with for best results and easy understanding of the trade.
There are many different assets available in each class as well. It is almost impossible for someone to follow every asset, every day. Simply choose the assets that are most comfortable and the easiest to become an expert with.
Profits from Small Movements
Binary options are trades or investments that have two outcomes only; win or lose. If you win, then you win the measurement in the asset whether it concludes with single or multiple ticks.
With other types of investments, moving substantially is what you want the asset to do. This is because the commissions and other fees can mean no profit as the outcome is a small movement in the asset occurs. This is the difference with binary options because this never happens. The smallest movement means the same as a large movement in binary options.
Trading binary options isn’t for some people, but for some it is the ideal investment method to invest with a low amount and to turnover a profit. This is due to many reasons such as the little risk involved. If this is a method you prefer, then reading on to familiarize yourself with both advantages and disadvantages of binary trading is recommended. Having a clear understanding how the method works is the first thing to do to make a thoughtful decision of how much you will invest in binary options.
BinaryOptionJourney.com offers over 40 online broker reviews featuring assets you can trade in, free bonuses, minimum trade, rate of return, trading types, banking options, customer support info and if there’s a bonus offered to new traders. We also feature how-to guides and articles in our education area. Also look at our blog for the latest in financial news.
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