Binary options are a great alternative to spread betting as they offer numerous advantages which increase your ability to profit in the markets. Binary options eliminate many of the pitfalls commonly experienced when spread betting.
One of the major pitfalls of spread betting is the inability to correctly manage position sizes and stop loss levels. It is of paramount importance to have strict money management rules in place, these rules are often broken. The reason why traders break such fundamental rules is because most cannot stomach a small loss, they second guess their original bet and hope the market will turn in their favour. The culprit of this is the stop loss, this tool causes more problems than any other as the temptation to move a predetermined stop loss is impossible to fight. A trader will commonly move a stop loss further away to avoid an imminent loss, this reduces the level of anxiety in the short term but ultimately can result in a magnified loss. Some traders fail to utilize stop losses at all when spread betting, the result of this is that potential losses are completely unlimited.
Trading binary options at CloudStockOptions eliminates this problem which can be the Achilles heel of a spread bettor. With a binary option, the maximum loss is strictly limited to your premium (the cost of your trade); there are no stop loss levels to worry about and second guess. In addition, the market only has to move one pip/tick in your favor for the trade outcome to be net profitable resulting in an industry leading profit of up to 91%. This black and white approach is a major advantage, keeping one’s trading strategies simple is said to be the key to success. puts the binary options trader in control, you determine the level of risk you are willing to take and the profit level is known before the trade is even placed. In contrast, with a spread bet, the profit level and risk of loss is unknown unless a limit level is set, this however is commonly moved resulting in the same complications as the stop loss order.