Top 3 Reasons to Trade Binary Options

Top 3 Reasons to Trade Binary Options
Top 3 Reasons to Trade Binary Options
Top 3 Reasons to Trade Binary Options Getty Images

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.

The information contained above may have been prepared by independent third parties contracted by Nadex. In addition to the disclaimer below, the material on this page is for informational and educational purposes only and should not be considered an offer or solicitation to buy or sell any financial instrument on Nadex or elsewhere. Please note, exchange fees may not be included in all examples provided. View the current Nadex fee schedule. Nadex accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representations or warranties are given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk and any trading decisions that you make are solely your responsibility. Trading on Nadex involves financial risk and may not be appropriate for all investors. Past performance is not necessarily indicative of future results. Nadex contracts are based on underlying asset classes including forex, stock index futures, commodity futures, cryptocurrencies, and economic events.

Trading can be volatile and investors risk losing their investment on any given transaction. However, the design of Nadex contracts ensures investors cannot lose more than the cost to enter the transaction. Nadex is subject to U.S. regulatory oversight by the CFTC.