An Insight into Binary Options and Financial Spread Betting
Trading in binary options and financial spread betting is the latest buzz word in the online trading segments and more and more traders are vying this field for taking benefit from the current market scenario.
Sometime due to this confusion, the traders are not able to gain enough returns as they should be getting with these amazing options having great investment potential. In this article, we will try to understand the concept of both these online trading types and look at both the similarities and dissimilarities between these.
As we have seen, both binary option and financial spread betting work completely differently in spite of several similarities between the two. If you understand all the aspects of these online betting forms, you will be able to get huge return of investment potential without any problem.
Understanding Binary Options Trading
Basically, binary option can be defined as a type of investment wherein the traders have to predict the development of prices of shares, commodities, financial assets or anything else where they wish to invest. In digital options trading, one is not required to buy any goods, stocks or commodities for investing, instead one simply have to make a bet on the probable outcome of the market scenario at a particular time frame, i.e. assume whether the price of the particular option will go up or fall down in coming time.
Just like your prediction, the outcomes of binary options are also two, based on whether the market will go down or it goes up. The binary options traders are supposed to select any one of the possible results and also specify the amount they wish to bet or stake on the selection option. If the prediction or assumption made by a particular trader happens to be correct, then the trader will get the entire amount staked in addition to the payout percentage specified at the time of selecting the option.
Usually, all binary options are made available for the trader to bet for a few minutes only. This is a good aspect of this form of online trading as one do not have to wait for a long time and can quickly look out for other interesting options. The main benefit of binary options trading is that it has a fixed return rate, which is usually anywhere between 65% to 85% and might even go up to 200% and 400% on some occasions.
The Concept of Financial Spread Betting
Similar to binary options trading, financial spread betting also involves betting on the probable outcome or growth of stocks, commodities, financial assets and other tradable assets. However, the possible profit or loss is not estimated beforehand, making it different from options. In this form of trading, one has to consider the current, sell and buy price of a particular asset, and then one bets on the increase or decrease of any point. The loss or win is based on the increase or decrease of the market rather than the outcome alone as is the case with binary options, therefore, predicting the potential profits and losses with accuracy is impossible.