The ever-increasing range of tradable online financial product presents traders with a variety of choices. While choice and competition are obviously good for traders, it can lead to a somewhat daunting environment when trying to choose the best way to invest in the financial markets.
An increasingly popular form of trading is that of binary options, which are beginning to rival the forex markets. Made available to the market in 2008, binary options have grown to become a popular financial instrument for traders around the world.
Gathering a core understanding
According to data from Google, binary options took nearly half of the traffic from the traditional forex market in 2013. Although they are rising in popularity, understanding how they work is essential for all traders. With binary options, investors can profit from successful estimates of financial assets during a set period of time. With only two investment possibilities to choose from – up or down – a profitable trade only requires the minimal increment in price movement in the selected direction.
However, with so many companies starting to offer binary options, selecting one that is both trustworthy and experienced is vital. One company leading the field in breadth of product and quality of service is European-based HotForex, an award-winning foreign exchange and commodities broker. A team of industry leading experts caters to individual, corporate and institutional clients around the world, offering innovative and dynamic management of clients’ portfolio investments.
[W]ith so many companies starting to offer binary options, selecting one that is both trustworthy and experienced is vital
HotForex provides this new investment product packaged under the brand name OptionTrade, offering the same high standards of its current products. The internet, technology, mobile devices and advanced online trading platforms continue to be paramount to the widespread success of the online financial services offered at HotForex.
Binary options are a modification of a larger class of financial instruments known as options, classed below exotic options. In the financial markets, binaries are also known as digital options, all-or-nothing options, and are normally traded over the counter (OTC). As with traditional options, the outcome is determined by the price of the underlying asset at the expiry time. With digital options, the trader will never actually take ownership of the asset.
Straightforward trading
While exotic options are by definition known for their complexity, binary options are seen as a simplified version, particularly on the traders’ end in terms of functionality. The broker takes care of all the variables, and the investor is left with one primary question to answer: whether the underlying asset will rise or fall within a specific time frame. Only two outcomes are possible – making these exotic options binaries.
They are securities or types of investments with predetermined fixed returns and limited risk. An investor enters a position knowing exactly what the payoff will be if the trade is successful and the amount of loss incurred if the trade is unsuccessful. For this reason, binary options are also known as fixed return options (FROs). Essentially binary options are an alternative trading method that provide access to global markets with financial products such as currencies, commodities, stocks and indices, allowing for potentially high returns for correct market speculation.
They attract traders because of the way they allow them to make money in both a rising and falling market. Considered to be one of the simplest trading methods, the process of binary options is easy to grasp with high potential yields.
[Binary options] attract traders because of the way they allow them to make money in both a rising and falling market
The investor always knows the exact exposure and potential profit, removing any uncertainty at the time a trade is placed. The specific price movement of an asset is irrelevant for a successful outcome; only the direction is important – the volatile nature of binary options is what attracts many traders to them.
According to HotForex, traders wager on the direction of the market from the strike price by buying either a call or a put. At the time of expiry, the underlying asset will be either above or below the strike price. If a trader speculates the price will be above the strike price at the time of expiry, a call would be bought. However, if a trader speculates the price will be below the strike price at the time of expiry, a put would be bought. As long as the price of an asset is above the strike price, a call binary option is considered to be in the money; otherwise it is out of the money. The opposite is true for a put binary option.
Redefining binary options
While HotForex has been primarily focused on offering foreign exchange trades, it is enthusiastically integrating binary options into its portfolio of financial products. This is being done in line with its business strategy to continually deliver the latest financial products in the industry, as well as elevating the services through advancements in trading technology and innovation, with a strong focus on protecting client information, transactions, and funds.
Binary options at HotForex will be available to traders as a fully licensed and regulated options broker by the Cyprus Securities and Exchange Commission (CySEC), under the registered brand name OptionTrade. Some observers think that the extremely volatile nature of binary options poses too great a risk to investors. However, HotForex maintain that binary options are easily accessible to both novice and experienced traders alike, although they point out that traders should have both discipline and risk management strategies.
Concerns over binary options were addressed last year, when European regulator CySEC officially recognised them as financial instruments. Shortly after, OptionTrade became one of the first options brokers to acquire a cross-border license, ensuring a secure trading environment and the authorisation to provide this new and exciting investment service on a global scale.
Investors looking to diversify their investment portfolio with binary options will be able to trade online via a web-based platform, anywhere, anytime, without the need to download any software.
OptionTrade stands out from the crowd with numerous advantages including transactions, clients’ information and funds security, adherence to strict financial standards, cutting edge technology, dedicated client area for online account management, high liquidity, competitive risk management ratios, fast and secure payment methods and withdrawals at any time,without limits.
HotForex also provides a wide range of additional services to clients, including white label solutions and partnership programmes. The White Label solution is primarily focused for banks, financial institutions and consultancy firms tailored as per the needs of the clients.
They also offer their Introducing Brokers service, which is for both individuals and organisations that want to turn a profit from the forex market by introducing new business to HotForex.
Investors looking to diversify their investment portfolio with binary options will be able to trade online via a web-based platform, anywhere, anytime, without the need to download any software
Everything from trading platforms, transaction execution and settlement – as well as all the administration of the business – is dealt with at HotForex. Introducing Brokers benefits can earn as much as 60 percent of the net spreads based on the volume generated by the clients introduced. As an industry first, HotForex pays its IBs twice a month directly into their accounts.
A full ratio of services
The company is involved actively in a number of charitable initiatives with financial support to those in need. Born out of an intrinsic sense of responsibility, it directs its efforts through humanitarian organisations.
As of late its benefactors included the Rotary Club, the Red Cross and UNICEF who aid the less fortunate around the world. Anticipating the mobile-user of today, HotForex is one of very few online brokerage firms that optimised its trading services and products to the latest smartphones and tablet devices. A client can trade any financial product with one account and on eight different platforms. Utilising MetaTrader4 – the most popular trading platform in the industry – the firm enhanced the trading experience with interbank liquidity and fast trading execution ensuring the best trading conditions possible.
Known worldwide by traders from all walks of life with diverse investment needs and trading experience, the investment firm opens new accounts on a daily basis and is continually building stronger relationships with existing clients. At the heart of HotForex’s drive to offer the best possible trading environment is the steadfast support towards its clients and partners. Excellence in the offering of financial products is achieved through constant innovation, advanced technologies, and research and development.
The company believes this is essential to staying ahead of the curve and delivering products customised to today’s investors. It endeavours to develop ground breaking and exceptional products and services.
Binary options are merely one of the latest additions to the company’s product line-up and are certainly not the last. HotForex aims to design each product highly, with a strong dedication to satisfying the needs of its clients. By understanding the importance of investments, it will continue to aim higher when it comes to online trading, providing a state-of-the-art trading environment with the best trading conditions.
