Binary option contracts are unique and have some characteristics that sets them apart from other financial instruments. Traders can trade assets in different asset classes, and the traders always have an expiry date or time. The trader is also put in a position where he knows exactly what the trade will cost him, and what he will gain or lose depending on the outcome of the trade.
There are many reasons why you should trade binary options. Binary options were licensed for the retail trading market the same year that the conventional markets went haywire after the collapse of the subprime mortgage industry in the US. Some of the reasons are as follows:
a) Less Risky To Trade
In the traditional financial markets, there are a lot of factors that traders must contend with. Leverage, margin, slippages, poor internet network and unscrupulous practices by some brokers can affect the trade outcomes, making forex and commodity trading some of the riskiest trading ventures to get into. Binary options trading are devoid of some of these factors. There are no re-quotes, no slippages and no leverage or margin requirements to content with. There are also no margin calls.
b) More Choice Of What To Trade
Some binary options brokers offer up to 90 assets. That is 90 different financial assets that can present an opportunity to make money at any given point in time. If the market saying about a bull market being in existence somewhere, you surely have better chances of finding such opportunities in the binary options market.
c) Reduced Cost Of Trading
If you live in the US and trade forex, the new guidelines issued by the Commodities and Futures Trading Commission (CFTC) will require you to open an account with at least 25,000$ for forex trading, and even more for options trading. With binary options, you can get into the market with as low as 100$. YOU DO NOT NEED AN ARM AND A LEG TO TRADE BINARY OPTIONS.
d) Better Payouts
The percentage profits that traders can earn are typically higher in the binary options market than in any other market. Payouts range from 70% to 90% in ordinary trades, and up to 500% in the speculative high-yield trades. Trades with shorter expiries can open up the opportunity to make even more money.
Unfortunately there might be some drawbacks, the OTC markets are unregulated, and there is little oversight in the case of a trade discrepancy. While brokers often use a large external source for their quotes, a trader may still find him or herself susceptible to unscrupulous practices, even though it is not the norm. What may also be of concern is that no underlying asset is owned, it is simply a wager on an underlying assets direction.