Binary Options vs Spread Betting
Binary options and Spread betting have become two popular methods of trading the financial markets in recent times. The both exhibit numerous advantages and disadvantages.
To assist you in determining which one is more likely to match your trading aspirations and objectives, this article identifies their key features in turn.
Introducing Binary Options
1. Simple Trading Decisions – The structure of binary options allows you to concentrate on just evaluating in which direction the price of the fundamental asset will advance without pondering on the movement size. This stipulation infers that you need price to close just one increment above (CALL option) or below (PUT option) the starting value to record an ‘in-the-money’ result at expiration.
2. Built-in Money and Risk Management Plan – The binary options are designed so that you will always know exactly the profits and refunds that you will be entitled to receive at expiration even before your trades are executed. Essentially, binary options provide you with a very proficient money management policy so that you are not required to waste time and effort producing such a tool yourself.
3. Instantaneous Trading – You will be able to activate new positions immediately and with accuracy in accordance with emerging global developments by utilizing the state-of-the-art trading platform supported by your binary options broker. As such, you will have opportunity to gain as much as 85% of your deposits in minutes on a consistent basis.
4. Minimum Due Diligence Needed – The procedure to implement binary options could barely be any easier. You first need to choose a security upon which to construct your binary option; then select your preferred direction; chose an appropriate expiry time and deduce your optimum deposit. You are not even required to undertake extensive research into the historical performance and trading profile of your chosen underlying assets in order to record success.
5. Top-Class Trading Platforms – Brokers servicing the binary options business sector have spent heavily investing in the production of sophisticated trading platforms which have been especially devised to be very easy to understand and operate. Such facilities are loaded with high levels of functionality to guarantee that traders possess all the necessary tools to enable them to trade binary options as proficiently as possible.
Introducing Spread Betting
1. You can open bets on almost any topic including sports events, the financial markets and election results, etc. Spread-betting brokers create and offer hundreds of spreads on a daily basis so that you will always enjoy an extensive choice.
2. As you can activate both short and long positions utilizing spread betting, you can gain from both rising and declining markets.
3. Any returns that you secure from Spread betting are completely exempt from any tax considerations. You will also not attract Stamp Duty because you will never possess any ownership of the assets comprising your bets.
4. You will not incur any commissions or fees from your Spread betting activities. This is because your broker offers spreads that have been designed to be heavily in its favor. Consequently, this firm does not need to increase its profits by imposing additional costs.
5. Similar to binary options, Spread betting offers excellent leverage capabilities allowing you to instigate very large trades supporting by minimum deposits. For instance, if your broker supplies you with leverage of 200:1 then you could implement a $200k bet supported by a deposit of just $1k.
6. If events are moving in your favor, then you have the ability to close your bets early before expiration. This feature enables you to either minimize your risk exposure or secure profits.
7. You can restrict your level of risk when utilizing spread betting by implementing the ‘Automatic Stop-Loss’ facility. By doing so, you will be able to control with accuracy the maximum amount you are prepared to lose per bet.
8. As a minimum deposit is not needed to activate a spread bet, you can risk as small amount as you like.
9. Again similar to binary options, many brokers support demo facilities allowing you to perfect and master your Spread betting skills without exposing your own money to excessive risks.
10. As Spread betting does not attract taxation, you cannot utilize your losses to negate any tax obligations that you may encounter in the future. This is because most global authorities consider Spread betting to be a type of gambling and not as a real investment mechanism.
11. If you activate a bet structured on a certain company, then you will not own any portion of its assets. This aspect implies that you will not be entitled to any shareholder rights, such as receiving dividends or voting, etc.
12. Spread betting is not a long-term investment since each spread bet has a predetermined life expectancy as it is scheduled to expire at a designated time and date.
Binary options are presently evolving into a status whereby they will soon be classified as a real financial instrument and not just another form of gambling. Consequently, many global countries are presently very active in introducing new laws to properly regular this industry. In addition, binary options are structured in such a way that gambling mentalities will eventually only lead to excessive losses. Essentially, you require a professional trading approach to ensure consistent success.
In contrast, Spread betting is very unlikely to ever acquire the status of a proper financial instrument. As such, if you prefer gambling to adopting a serious investing attitude, then you should opt for this new type of speculation because of the many features and benefits that it offers as defined above.