Binary Options - Financial Spread Betting Is Advantageous

May 10, 2011 - PRLog -- A simple and transparent way of betting on the financial markets is binary options. It is a financial spread betting http://www.independentinvestor.co.uk/spread-betting/ technique based on the outcome of an event that has only two possibilities as the name tells. The profit is earned by correctly predicting one of the two outcomes. As the market can only go up or down the outcome is presented as all or none regardless of the extent of market's movement. Prices are quoted as spreads which represent the fixed odds depending on the broker's interpretation of market's likely movements.

One of the main binary options http://www.independentinvestor.co.uk/spread-betting/binary-betting.html advantages is the tax efficiency point which is often overlooked by many traders. Like other financial spread betting techniques, binary betting is also free of both the stamp duty and capital gains tax. This saves the traders up to 20% of their money as compared to that in other ways of trading and allows them to make significant profits without incurring any tax liability. This is a major advantage to traders who live in a tight tax environment, with likelihood of further increase in taxes. These tax exemptions are because binary betting is considered a form of gambling.

Another notable point from binary options advantages is its flexible nature, which has been inherited from online spread betting http://www.independentinvestor.co.uk/spread-betting.  The binary bets are always being quoted even when the market has closed. This allows investors to take partial profits, losses, or have the ability to dump the bets before their expiration. For example, if a binary bet for FTSE closing is quoted at 61-63, you buy £2 a point at 63 and the FTSE is moves steadily higher for next few hours. Half of the position, i.e. £1, is sold at 83 points which makes a £20 profit and now the market goes down to a position of 24. The other £1 of investor's position is sold at 2 with a loss of  £21. The binary bet is settled at zero with no loss to the investor.

Binary options advantages also list those as no commissions and no margins. The spread betting firms make their money off the bid offer spread and therefore, there are no commissions. As the bet is a fixed risk, no margin is charged on that. However, an investor needs to have enough money in his account to trade. Finally, binary betting markets offered depend on the broker used, but normally most of the big markets such as stock indexes, the larger and more volatile shares, and foreign exchange are offered.

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IndependentInvestor.co.uk is a leading authority on financial spread betting, combining in-depth trading guides with down-to-earth tips and comparisons on the market's leading spread betting brokers. With extensive resources covering spread betting, share dealing and CFD trading, IndependentInvestor.co.uk strives to meet the needs of the modern trader, by providing practical but effective trading resources.