Spread betting vs Binary Options: What’s the Difference?

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What is Binary Betting, binary betting and spread betting does it work and what are its advantage and disadvantages to the Spread Better. This guide offers an explanation. As well as the traditional binary bets listed above there are other bets which are called 'Specials'.

These binary betting and spread betting in the same way - you bet on an event happening, if it does the bet settles atif not it settles at zero.

Binary bet markets are offered on most of the big contracts such as the stock indexes, the larger and more volatile shares, foreign exchange and some commodities.

However, the range of markets offered does depend on which broker is used. Some binary betting and spread betting offer a limited range of Binaries. If you go down to the bookie and bet on a horse which in turn wins by the huge margin of 2 furlongs meters you won't get paid any more money.

So the winning margin is of no importance, only that the horse won. And it's similar with binary betting. So if it closes 1 point or points higher the winning bet still pays the same and the losing bet will still lose the same. This is in contrast to traditional spread betting where both profits and losses are theoretically open ended. So when you're long or short you want the market to move as much in your favour as possible.

Binary bets are extremely sensitive to the price of the underlying and therefore can move very quickly, especially when the markets are volatile.

New traders are advised to watch how and why the binary markets move and trade for several days before risking any capital. Also, because Binaries can move quickly all orders have to be entered via the online trading platform and are not accepted via the telephone. Some love them, others think of them as slightly gimmicky. My own personal view is simple - any tool or product that adds flexibility to the financial markets is welcome. You might not want to use them today, this month or even this year but they're just another tool for your financial toolbox, one which might come in useful in the future.

It's therefore unwise to dismiss them. Prospective traders should take note of this point as the cost of doing business is far more important when trying to generate profits in the markets than many people believe, especially those new to spread betting.

Binary Betting What is it - How does it work. Binary betting and spread betting are only a few spread bet brokers that also offer Binary Bets Take care who you do business with because the broker needs the proper systems to be able to quote and manage the Binary prices effectively Because of this there's only one broker to consider and that's IG Index IG is by far the biggest and best in the Binary Betting market - In fact binary betting and spread betting developed it Use other brokers at you own financial peril.

For a Binary UP bet you'll be offered a price on a market such as the FTSE or Gold on whether it will close up on the day The binary bet be quoted anywhere between 1 and 99, perhaps Taking the FTSE as an example - if the index does indeed close higher on the day by 1 or points it doesn't matter, up is up the binary bet will settle at at the close of business But if the FTSE closes down on the day again by 1 or points the binary bet will settle at 0.

Daily up bet - if the market closes up the bet settles atif down it settles as zero Daily down bet - - binary betting and spread betting the market closes lower the bet settles atif it closes higher it settles at zero Hourly up bet - If the market that hour, from say 10amam, closes up the bet settles atzero if the market closes down in the time period Hourly down bet - if the market binary betting and spread betting hour, say 3pm-4pm, closes down the bet settles atif up the bet settles at 0.

One touch - Will the market move through a certain level at any time during the bet's time period Tunnel - The market has to stay within a certain hi-lo range for the duration of the bet Hi-Lo - Will today's high or low be a given distance from yesterday's close Ladders - Will a market be above a certain price at a certain time of the day Extreme short term bets - 5 and 20 minute binary bets on the FTSE and Wall Street - incredibly volatile as you can imagine.

Read more in the Spread Betting section: How to Learn Spread betting and Prosper. Spread Betting - Home page. How to Learn Spread Betting and Prosper. How to learn to trade correctly.

Who to open an account with. Spread Bet Broker Review. All recommendations and comments are provided for general interest only and should not be construed as advice. Professional advice should always be sought before buying or investing in any financial product. The price of securities and any income from them can go down as well as up.

Past performance of a security or market is not necessarily indicative of future trends. Any opinions and recommendations on LearnMoney. Binary Betting was developed by the Spread betting firms and is another way of speculating on the markets, and like spread betting the profits are also tax-free.

How a Binary bet works is relatively simple, read this page for more details. What is important to note is that binary bets work in a similar fashion to fixed odds bets offered by a high street bookie, ie your maximum profit and loss are always known beforehand. This is because the binary market cannot rise above or fall below 0.

How Binary Betting works. Unsure what short selling is - see this LearnMoney. Spread betting, binary betting etc is as much about flexibility as anything. And so binary bets are always being quoted right up to when the market closes.

This means you can take partial profits, losses or even dump your position before binary betting and spread betting bet expires. The different styles of Binary Bets. And of course in the above examples, and indeed all Binary Bets, the markets are always being quoted so profits and losses can be taken at any time, ie the position doesn't have to be taken in the expiry where the maximum profit or loss will always occur.

Interesting Binary Betting points. There's no commission for dealing in Binary bets as the spread betting firm make their money off the bid-offer spread. Also, no margin is charged as the bet has a fixed risk but you will need to have sufficient money in your account to trade. If you understand how to bet via a bookie you'll understand Binary Betting. The only differences are the binary betting and spread betting they're quoted and the fact the markets are quoted right up to their official binary betting and spread betting.

But are Binary bets any good, will they suit your trading? Download the FREE report. Spread Bet Broker review. Hidden value of stop Losses.

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