Traders often find it much harder than investors to navigating the financial markets. Investors have the luxury of time, and even an ill-timed investment might still enjoy a turnaround as the market cycle ebbs and flow. Traders on the other hand must get their trading decisions right on the first time move because there isn’t usually enough time for a second attempt to turnaround a losing trade.
However, traders don’t have to be at a disadvantage in the capital markets because the market has a number of trading systems designed to tip the odds of success in favor of smart traders. Binary options often evoke mixed reactions in the capital markets; yet, binary options when properly utilized could increase your chances of being a successful trader. This article provides insight on three reasons traders should include binary options in their portfolio.
1. Binary options are simple
Trading binary options is quite simple, unlike trading forex, day trading stocks, or buying and selling commodities. When you trade binary options, you don’t have to go through complex mathematical models, trading data, technical and fundamental analysis. All you need to do is to take a bullish or bearish stance on an asset (advisably an asset you understand) and place a trade on a YES/NO proposition on its performance in the market.
Irrespective of your trading experience, you’ll definitely find a broker that has a trading platform best suited to your trading experience. Beginners can simulate trading with demo accounts and many trading platforms have resource centers filled with informative articles and videos on how to trade binary options among other things. In essence, the support system available when trading binary options is unsurpassed by other type of trading systems.
2. Binary options have fast turnover rate
The second reason to trade binary options is the impressive liquidity it offers you with a very fast turnover and payout. When you trade other assets such as stock and forex, you need to wait to the markets to move in your favor and sometimes the move might not happen for a couple of days or weeks. Binary option trade on the other hand can move from start to finish in a matter of minutes or within an hour.
If you are quite adventurous, you might even consider trading 60-second options. The fast turnover of binary options helps you to make a larger number of trades during a trading session and you can easily compound your gains for more profit. Hence, you might want to consider using binary options for your short-term trading liquidity needs while you use assets such as stocks and commodities for medium to long-term trading strategies.
3. Diversify your trade across multiple assets
Commonsensical investment wisdom dictates that you should spread out your investments across different kinds of assets. In fact, you’ll be advised to diversify you assets across different sectors of the same industry. However, traders find it very hard to diversify their trades across multiple assets because it is often hard to keep track of such trades all at the same time. Traditional trading requires mental exertion in terms of focus and concentration; hence, most traders often play it safe by sticking with an asset.
However, binary options provide traders with an opportunity to diversify their trades across multiple assets. With binary options, you don’t have to worry about resistance and support levels, stop-loss, and momentum among other things. Hence, you can place multiple trades across different asset classes without having any reason to stay glued to your computer screen to watch every blip in the market. Binary options is a smart trading vehicle if you want a diversified trading portfolio.