Which is best – ETF’s or binary options?
For investors and traders alike looking to enjoy the prospect of profits on trades, they may be wondering what the differences between binary options and ETF’s are and this article will help explain which a trader should choose.
Essentially, exchange traded funds, or ETF’s, are a low-cost way to invest in stock since they contain a variety of investments including commodities and bonds.
For many traders and investors they are a tax efficient way of investing with a low-cost entry point into stocks.
The trader will take a position on whether an index will fall and rise to generate profits. This method of trading has grown quickly over the past decade and trades in ETF’s are regulated by commissions.
Binary option trading is beginning to take off
However, binary option trading is also beginning to take off with lots of traders new to the markets enjoying quick profits from their trades.
Binary option trading is a process where a trader predicts whether a price for an asset will increase or fall over a set period. The trader does not actually own any equity or fund when making their trade.
The attractiveness of binary option trading is that the trader simply has to make a decision between yes or no about the price of the asset moving. If they believe it will rise, they can ‘put’ or if they think it will fall, then they will ‘call’ the option.
It’s also easier and much cheaper to begin trading in binary options with many binary options platforms offering an initial investment figure for as little as $100.
When a trader makes a trade in a binary options
The other attraction is that when a trader makes a trade in a binary options they will know what their profit or loss will be should the price move. That’s not the case with ETF’s since they are traded like normal shares and the same figures will not be known.
In addition, binary option trading is quicker and cheaper as traders will not be paying commissions or broking fees unlike ETF traders which will see a dent being made into their profits.
The other big attraction when it comes to deciding whether to trading ETF’s or binary options, is that binary options traders can make lots of trades during the day and not run up a big brokerage bill.
They also do not need to have in-depth expert knowledge about assets, commodities, indices or even company results.
A binary option trader can make lots of trades
Finally, while a binary option trader can make lots of trades during the day they can also trade in a wider range of assets including commodities such as oil and gold which makes the prospects of making quick profits increasingly attractive to a growing number of options traders.