Can You Make a Living from Binary Options Trading?

Although binary options, in comparison to traditional options, are new and unregulated, there has been a meteoric rise in the trade of these “exotic” options. In Europe especially, binary options trading is extremely popular and these options are widely traded in major European exchanges like EUREX.

Learning the ABC of binary options trading

With such a high growth of popularity in such a short span of time, people might be eager to try and earn a living as binary options brokers. However, as with all things, one must be careful when testing the waters with these new options. There are a number of various advantages that binary options trading has over traditional options trading. Some of these advantages are:

1. Binary options are generally simpler to trade because they only require a sense of the direction the underlying asset’s price is moving towards as opposed to traditional options which require not only the sense of direction but the magnitude of the price movement as well.
2. The risk and reward ratio in traditional options have no clearly defined boundaries and therefore the gains and or losses may be limitless. Binary options, however, have a more controlled risk to reward ratio, meaning that there are only two outcomes: win a fixed amount or lose a fixed amount.

To sum it up

Therefore, as is obvious, there are some tantalising advantages that might make one appeal to trade in binary options. However, there are also some major drawbacks as well; chief among them being that the reward is always less than the risk. Also, binary options brokers, as well the traditional brokers, have no fixed salary guaranteed to them. Any profit a stock broker makes is completely dependent on the broker’s luck, client base and a feel for which direction the market is heading towards everyday.