6 Reasons Why Binary Options are Popular

Forex, stocks, CFDs, indices cryptocurrencies and options are the diverse range of markets for financial traders from which they can choose. If we see binary options, those are new as compared to the other financial instruments (except cryptocurrencies). Although, there are many traders who consider them as a high risk. Some will even label options trading the same as gambling.

The truth is, any form of financial trading involves risk. According to the type of financial instrument of your trading, money can be made or lost.

As more traders realize this fact, they’re turning to options trading as a way to make money. Online options brokers are now attracting millions of traders from all over the globe.

But what’s making binary options so popular? Below are six reasons.

You can make money whether the markets are trending or not

It is true that when markets are trending, many financial markets will make you money then only. For example, if you’re trading stocks, you can only make money if the price goes up or falls relative to the strike price. Also, to make a good profit, the price range must be significant.

**With options, you can profit regardless of market direction**

Binary options are much different. It is all about prediction. After a certain amount of time, you only need to predict whether the price will be higher or lower. Since options have a fixed return, a small change such as 0.001 in the direction you predicted will earn you profits of up to 90%. This comes in handy when markets are ranging. That is, the asset’s prices are experiencing small price movements.

Investing in binary options doesn’t require a huge investment

One of the reasons why options brokers are increasingly becoming popular is the low deposits they require to get started. You can easily open a binary options trading account for as little as $5. You can open your options positions with $1. With returns of up to 90%, a $1 trade can make you $.90 within a short amount of time.

Assets such as stocks and cryptocurrencies bought in exchanges require a huge investment. For example, if you wished to buy Bitcoin, you would need to pay at least $5000 for a single coin. It is uncertain that the value of bitcoin will increase in the near future.

Binary options offer a fixed return

Another reason why binary options are so popular is that you know the potential profit even before you open your trading position. This is calculated as a percentage of the amount you invest in a trade. There are many platforms that offer returns ranging from 60% to 95%.

The return depends on the assets you’re trading and volatility. This means that returns on a particular asset will change during the day. Knowing this, you can easily choose to trade during sessions where your trading platform offers the highest returns. It means that during the day the returns on a particular asset will change. By this, It will be easy for you to choose to trade sessions which will allow you to make higher returns. This ensures that even if your trades end up losing, you can easily recover these losses through several winning trades.

The profit you might earn when trading other financial instruments largely depends on the asset’s price movement. If the price moves further in the direction you predicted, the higher your profit and vice versa.

The maximum you can lose is the amount placed on a trade

In addition to knowing how much you can earn through profitable options trades, you also know how much you stand to lose even before you enter a position. The maximum amount you can lose on an options trade is your trade investment. Your trade investment will be the maximum amount that you can lose on an options trade.

If your trade is turning into a profit, IQ Option will give you a share of what you were to earn. If it was losing, a portion of your trade investment will be deducted. This is called profit after sale. For example, if you had invested $10 in a trade with an 80% return and the trade goes your way, you might decide to exit before the trade expiry.

In cases like this, you can keep the remainder as IQ Option gives you $3 to $5 as profit. If the trade was losing and you decide to exit, IQ Option might deduct $3 to $8 from your initial investment. This allows you to avoid losing the whole $100 investment.

When trading financial instruments such as forex and commodities, you stand to lose more than your trade investment. There is a chance that your loss might exceed 100% if the trade goes against you.

At this point, your broker will use your account balance to keep the trade open. That’s why it’s always advisable to use stop losses when trading such markets.

Trading options is easy to learn

Some traders will argue that options trading is hard. But this isn’t the case. Options traders will use the same charts, tools and trading strategies used by traders in other markets. In order to succeed as a binary options trader, you must learn how to read charts, use indicators, have a trading strategy and understand trading psychology. It is advisable that traders in other markets must also follow the same.

The interesting thing is that traders who have experience in other markets such as forex often find options trading quite easy.

You can earn profit in as little as 1 minute

In most markets, you’ll have to wait until the underlying asset’s price reaches a predetermined strike price. This can take seconds, minutes, days or even weeks. Binary options are designed such that you can make a profit in as little as 1 minute (Note: we don’t recommend trading short expiry times).

The reason for this is that options are set to expire after a specified period. The main thing that you need to do is to predict if the price is going to be higher or lower than the strike price upon expiry.