Top 3 Reasons to Trade Binary Options in a Nutshell Higher Return on Investment
Investors are looking to achieve one goal – to make profits. Binary options offer the highest return on investment when calculating the profit versus the cost of investment. While banks and professional trading firms have struggled to make even a 25% annual return on accounts, with binary options it is much easier. Why? Because binary option are not leveraged accounts and there are no margins or stops.
With binary options, you simply choose your risk level on entry. If entering a trade with a risk of $45, if the indicative expires in your favor, the payout is $100 or a net profit of $55 (excluding exchange fees). That is a 122% return on your investment. Plus, with Nadex Binary Option, you do not have to wait until expiration to exit. For example, instead of allowing the option to expire, you can set a profit target to exit with $45 in profit (excluding exchange fees). In this case, your return on investment is an even 100%.
Perfection is Not Required
The last reason to trade binary options in the list, is that perfection is not required because the total risk is paid upfront and the trader can never lose more than he paid on entry. Plus, unlike other markets where every tick is monitored, binary options have limits – time and price. Instead of being consumed with every single tick of price, investors trading binary options are only concerned with two things:
Price and Time
The strike price the trader these two components, price and time. For example, if the trader buys the strike statement Wall St 30 > 17600 by 4:15 pm New York time, the only thing that matters is where the indicative price expires at 4:15. Price could go down to 17550 by noon but as long as it goes above 17600, even by one tick, the trader makes profits. In other words, price doesn’t have to move a lot — it only needs to expire in the trader’s direction.
Trading Made Simple
Binary options has made trading simple. It is as simple as Yes or No. Using the strike statement from above, the trader decides whether he believes the Wall St 30 (E-mini Dow Jones is used as the underlying) will close above 17600 by 4:15 pm New York time. If the answer is Yes, then he buys the strike price. If the answer is No, then he sells the strike price. The only remaining question is whether the risk is acceptable. If the risk is acceptable, then he enters the trade. If the risk is not acceptable, then he bypasses the trade.
Although there are numerous reasons to trade binary options, these top 3 reasons to trade binary options are the most important ones when choosing to trade binary options over other markets.