Five Trading Advantages with Binary Options

We've discussed how binary options are a viable alternative to profit from the Forex market previously in the past. However, whilst we explained how they work, we didn't go in to detail on why the options market might actually be better than the spot market for some traders.

In this article, we'll take a look at the 5 significant benefits which traders in the binary options market can realize, versus the Forex spot market. Remember – financial trading is not for everyone, so we are already assuming that you are willing to take on the risk associated with the financial Forex market.

No "Half Success"

One of the key issues with spot market Forex trading is that many people look upon their trades as "partially successful". That is – when a particular position accumulates a said profit – the gain is not quite big enough to celebrate, but not small enough to ignore.

Traders often find themselves stuck in the middle of the market in this respect. With binary options however, these half successes are eliminated. This is because an options contract either wins or loses (if you hold it to maturity), and therefore there is a feeling of total gratification if one of your contracts expires "n the money".

Easier to Understand

Binary Forex options are extremely straightforward. Profit and loss is indicated before the contract is entered in to, and the account risk is therefore predetermined. Additionally, you don't have to understand the inner workings of the Forex market to understand the concept of options. Everything is very self-explanatory.

Highly Flexible

Options can be bought on almost every currency pair known to man. This makes it far more versatile than the spot market, where many currency pairs are not liquid enough to trade. Additionally, the costs of binary Forex options trading are the same, regardless of which pair you are trading.

This means that where you might have been paying 70 to 80 pips on a spread for an exotic currency cross, you will be paying the equivalent of a 1 to 2 pip commission on every pair.

Transparent Pricing

Still on the topic of pricing and cost, as you adjust the parameters of each option, you are actually able to see the changes in price before your eyes. In this respect, binary options' trading is much more transparent and the pricing models are easy to pick up.

Any Account Size

Much like with a spot Forex account, positions are completely scalable, depending upon your account balance. If you have $50, for example – you can take out a contract costing $6, with an expected payment of $10, and only be risking 12% of your account. Or, if you have $1,000,000 – you can again adjust the trade or contract size to reflect this.