Tuesday, June 10, 2014

Review of trade brokers::What Is the Role of Broker in the Financial Market







Review of trade brokers::What Is the Role of Broker in the Financial Market








Trading               on               the               financial               markets               has               been               reserved               to               a               selected               few               for               many               decades.

Only               professional               traders               with               solid               expertise               were               allowed               to               trade               and               the               investments               required               were               not               for               the               masses.

However,               since               the               internet               boom,               more               and               more               people               have               access               to               the               financial               markets,               and               the               minimum               investments               dropped               to               levels               accessible               to               anyone.

Now               there               are               many               online               brokers               that               accept               retail               customers               with               small               investments               of               below               one               thousand               dollars.

Because               of               these               new               opportunities,               many               people               have               tried               their               luck               on               the               financial               markets,               and               started               to               trade.
               However,               there               was               still               an               inconvenience               that               kept               the               large               masses               from               trading.

Trading               requires               deep               knowledge               and               understanding               of               the               phenomenon.

Every               trader               must               be               comfortable               with               the               complicated               financial               terms               like               leverage,               spreads,               margin               calls,               slippage               and               so               on.

If               you               don't               know               the               basics,               you               are               still               unable               to               trade               on               the               financial               markets.
               This               is               where               binary               options               trading               came               into               place.

Retail               brokers               were               looking               for               the               easiest               way               to               attract               new               clients,               and               making               things               less               complicated               was               a               must.

This               is               why               binary               options               trading               became               more               and               more               popular               starting               2010               and               many               binary               options               brokers               emerged.
               Binary               options               are               the               simplest               form               of               trading.

You               only               need               to               predict               the               direction               where               the               market               will               go:               up               or               down.

If               you               think               that               the               value               of               the               asset               will               appreciate               by               the               end               of               the               hour,               you               buy               a               "Call               Option"               with               the               expiry               at               the               end               of               the               hour.

You               have               predefined               returns,               so               you               know               exactly               how               much               you               win.
               To               make               it               simpler,               I               will               give               you               a               short               example:               let's               consider               that               the               Oil               price               is               97.58               $               /               barrel               at               15:00.

You               estimate               that               the               price               is               going               to               rise               in               the               next               four               hours               as               recent               news               was               released               regarding               turmoil               in               the               Middle               East.

In               this               situation,               you               buy               a               "Call               Option"               on               Oil               with               the               deadline               at               19:00.

The               profit               rate               for               such               option               is               usually               around               75%-80%,               depending               on               the               broker               you               are               using.

If               the               Oil               price               is               higher               than               97.58               at               19:00               your               option               will               be               a               winner,               and               will               bring               you               a               80%               profit               in               only               four               hours.
               The               amount               you               wish               to               invest               in               a               single               option               can               vary               depending               on               your               total               investment,               the               risk               /               reward               ration               that               you               are               going               to               take               and               the               broker               limits.

Most               binary               options               retail               brokers               have               their               limits               ranging               from               $25               to               $2,500               for               a               single               option,               but               you               can               buy               more               options               if               you               are               aiming               for               higher               profits.
               There               are               many               advantages               of               using               binary               options               trading               compared               to               classical               trading:               
               -               You               know               exactly               how               much               you               risk,               since               you               pay               the               price               of               the               option               when               purchasing               it.

You               can't               lose               more               than               the               option's               price.


               -               Many               brokers               offer               a               small               refund               when               the               option               finishes               out               of               the               money.

This               means               that               you               will               sometimes               recover               a               part               of               your               investment               (10%               for               example)               even               when               losing.


               -               No               need               for               setting               stop               loss               or               take               profit               orders.

You               know               exactly               how               much               you               risk,               and               how               much               you               get.

Binary               options               trading               is               also               referred               as               fixed               returns               trading.


               -               You               can               trade               on               all               major               markets.

Brokers               offer               binary               options               on               forex               rates,               commodities,               indices               and               even               major               stocks               like               Google,               Vodafone,               Apple               or               IBM.


               -               You               can               make               profits               no               matter               where               the               market               moves.

If               you               predict               an               asset               will               drop               in               value,               simply               buy               a               "Put               Option"               and               profit               from               the               falling               market.

This               makes               binary               options               profitable               during               crises               as               well.


               -               Minimum               investments               required               are               much               smaller.

You               can               open               an               account               with               a               broker               with               an               investment               of               only               100               dollars.


               -               Buying               an               option               take               a               few               seconds,               so               you               can               execute               your               trade               instantly,               making               news               trading               much               easier.
               Considering               the               above               mentioned               advantages,               it               is               no               wonder               why               many               people               are               choosing               binary               options               and               even               experienced               traders               are               shifting               towards               the               new               trend.









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