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What Are the Differences between Binary Options Trading and Day Trading?

trading binary optionsThere is always some level of risk when you are considering stock trading—whether you decide to go with day trading, traditional stock trading or binary options trading. Even with the support of a qualified financial services expert, there is still a significant amount of risk involved in any and all of these activities. There is also the potential of a fair amount of gain if you gamble correctly.

Binary Options Trading Is Still New

While the stock market has been around since 1817, binary options trading has only been legal since 2008. Investors and others are still discovering this booming market, and investors of all types and levels of knowledge are able to take part in the growth and maturation of the binary options market. This means it is an incredibly exciting time to be working with the stock market. With a binary options trade, you have either a ‘yes' or a ‘no' option only—you win or you lose and there is no in between. The amount that you are gambling with is fixed before you decide to move forward with the trade.

Some Similarities

Both binary options trading and day trading revolve around determining the future value of a stock, but with binary options trading, the trader sets a specific amount that they think the stock will reach in a very short period of time. Day traders are also looking to maximize value within a limited period, but they are looking to make a quick in-and-out sale with an eye towards creating the greatest gain possible within a few days.

Higher Level of Complexity in Day Trading

In general, day trading is a more complex proposition, with vast sets of nomenclature and a deep understanding of the businesses that you are investing in, as well as fluctuations in the stock market itself. There are many more variables to consider as you decide whether to keep a particular asset, sell it, or maintain it with day stock trading. Conversely, with binary options trading, your options are essentially to ‘put' or ‘call' the binary options, and whether you are ‘in the money' (winning) or "out of the money (losing) on your proposition.

A day trader has a much more complicated profit/loss scenario, which includes any number of factors such as the number of shares, contracts, entry and exit price and more. Day traders can also issue stop orders, but there is no guarantee that they can be carried out in time, meaning day traders run a high risk of loss if their stop loss order is not executed in time.

No matter if you decide to try day trading or binary options trading, you are sure to find a trading style that will work for you as well as a brokerage firm to help support your financial goals.

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