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Binaries vs Spread Betting: What is the Best Option?

by Agencies
25 Apr 2018 at 20:00hrs | Views
Binary options in trading has never been as popular as it is in 2018. The same could also be said for spread betting, which is something many have come to immerse themselves in via betting apps and online sites.

In the UK, more and more would-be traders are looking to various trading platforms to provide a means for them to establish their success stories from. As such, many shrewd investors scour the internet with searches such as "best spread betting platform UK for traders" in the hope of finding the key to unlocking immense financial potential. Some opt to learn while they trade, while others tend to do research before diving in to this form of trading.

What are the differences?

Binary options (despite the moderately bad reputation some have) and spread bets have distinctive differences, yet are very similar in how they work. Fundamentally, traders will predict the price movements of underlying assets and back their picks with money. There is no purchase of underlying assets, but simply a bet placed on whether the prices will go up or go down.

Binary options are classed as fixed risk, which means that there are only two possible outcomes: a profit of a certain amount or a loss of a certain amount. Spread betting works differently in the sense that there are technically no caps on wins and losses, unless, of course, you do not set stop losses points.

Binary options are attractive to traders due to what some credit as the limited risk involved. However, with minimised risk come smaller profits. Spread betting allows you to make money which grows on the size of the movement. Binaries, however, simply wins on the movement of an asset price itself. For example, spread betting allows you to bet a certain amount on each pip, so if there is a dramatic rise, you will win a considerable amount.

How to Choose Between Binary Options & Spread Betting?

As previously mentioned, there are similarities to how both operate. Both binary options and spread betting essentially give you the chance to make money from predicting on the performance of an underlying asset.

When it comes choosing what is best for you as a trader, this will depend on your goals and how seriously you want to take it. There is no doubt that spread betting is the more complex of the two, as it requires more attention to detail and consideration of the parameters of trading. Binary options are easier to participate in, but not child's play by any means.

Many traders who have moderately to majorly success in these areas tend to do a lot of research into what they are putting their money into. The advent of demo and practice accounts has also seen a rise in participants, due to the risk-free nature of how they work. A large number of practice accounts also provide educational content which can certainly help you decide what is best for you, and your ambitions as a trader.

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Source - Agencies