How Binary Options Trading is Easier than its Traditional Equivalent?
By Angela Sanders Thursday, October 03, 2013, 12:41 AM EDT
Binary option trading has very few variables involved during the course of the contract. You are simply speculating a price for the stock on a particular date fixing the payout amount and if the stock is trading on the said price at the date of expiry, you are entitled to the payout fixed. Thus, all you need is stock price at present, action type i.e. call or put and the final stock price at the expiry of the contract to practice binary options trading.
Traditional options trading on the contrary require you to quote the margin also in advance for winning the contract amount. The investor cannot simply quote the final imaginative value but has to have in hand the detailed directional account of the market movement too for earning the profit.
Binary Options Trading is More Sophisticated than the Traditional Trading
Binary option trading offers all the usual rules of hedging and related strategies to the investors which are normally found in traditional trading too. The former however, outdoes the latter in terms of sophistication and precision. You are having the concrete values to deal with while practicing binary options trading whereas traditional counterpart requires you to deal with trends instead of figures.
Risk to return ratio is pre-fixed in binary options trading while bringing the parties into contract. The risk as well as the return has no fixed boundaries in traditional trading style. Binary option allows you to have freedom of choice in terms of fixing the payout amount while the traditional one pays you out in proportion of the money put in by the investor. For example, you can simply fix the payout amount at $1000 even if the money put in is only $100 at the time of buying binary option but the payout in traditional trading will simply be proportional to $100 when the contract meets the expiry.
Binary Options can Pay You Rewards within a Day Unlike Traditional Trading
If you want to save yourself from the headache of thinking what the present investment value will multiply to after good five or ten years, you can simply switch to binary options trading that is functional for short durations too. Binary options trading contract can be exercised many a time within the day too; such is the shortness of time period that is being talked about. Thus, if you want to cash upon your speculation by the time market day ends, you can use binary options trading in place of the traditional one.
Conclusively, binary options trading can be looked upon as the facility for enthusiastic investors who want to play big in less time. The confidence of knowing the market trend is the main driving force that draws people towards this option and they do not want to be dependent on time factor for making profits out of the knowledge.
Binary option trading is made easier for the traders so that they are left to enjoy the uncertainty only without blocking the money for the longer periods. This is more of a ‘do or die’ situation and requires the investor to be fully equipped in all sense to play the game correctly.