All kinds of traders can use something called binary options in order to trade and benefit from the fluctuations in the price of various worldwide markets. If you’ve just begun your trading journey, however, you may have a hard time understanding how such options work, especially if you want to experience these options from a foreign perspective!
A quick search of foreign binary options will reveal that you must choose a Binary Options Broker wisely if you want to decrease the risk of your trades. Here’s more information on this particular topic!
Binary Options in the US
Now, binary options that are available within the US imply trades completed via an exchange. In this case, traders are not given too much information regarding their trade. We’ll soon see that foreign binary options are characterized by full transparency.
Nadex, a Chicago-based exchange, offers US residents the ability to trade on foreign binary options. Foreign trades are done via an exchange because foreign brokers cannot solicit US residents.
A foreign broker offering binary options can legally solicit a US resident only if they are registered with a US regulatory body.
Binary Options Outside the US
First and foremost, foreign binary options follow an entirely different structure from those that are available within the US. They are sought after mainly because of their transparency.
● Non-US binary options always come with a clear expiration date, as well as a strike price. Depending on the broker they use, traders may be allowed to leave/exit an option before its set expiry date.
● The risk and payout of a non-US binary option are always fixed. The trader knows, even before entering a trade, the potential win or loss amount.
● Because of this, trade with foreign options can be done only with a buyer and a seller – namely a trader and a broker. The exchange is just the middleman. Moreover, such trades often do not involve a commission or any hidden fees.
● Brokers don’t tax commissions because they make a profit regardless of the outcome of a trade that they engage in.
● The most common and generally available trading option for US residents is the high-low one. It is often preferred by traders because it awards them with a fixed return (if they win a trade) that is not influenced by the market’s movements. They also know exactly how much they will lose if the wager they make turns out to be a bad investment.
Overall, non-US binary options are usually sought after because they provide the trader with clear information.
Traders know exactly how much they’ll win or lose, as well as when a trade expires or when it experiences its high point. Moreover, foreign brokers also provide traders with a multitude of binary options, not only with the high-low option.
The Bottom Line
In the end, it is worth mentioning that binary options, despite their benefits, do come with downsides as well. For example, most foreign brokers will not let traders exit an option before its expiry date, just like in the US.
On top of that, foreign brokers offering binary options are also usually not regulated by anybody. This increases the risk a trader takes when they make a wager on a binary option.