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Binary Forex Options - helping brokers add a new dimension to retail FX services


We explore why Binary Forex Options are gaining in usage amongst retail traders and investors and how the inclusion of these instruments can help FX brokers to differentiate their e-trading products and services


strongest trending segments of the global financial markets. “It is an interesting product in that even after a period of strong growth it is still in its infancy”, states Ravit Friedberg, product manager at MarketsPulse, a binary options technology provider. She notes that in many ways it is similar to where the forex space was a few years ago; there are a lot of retail traders but not a lot of larger brands out there.


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Friedberg adds: “Binary options were originally traded between institutional investors and investment banks, but since 2008 they have seen tremendous growth in trading worldwide. Binary options are a terrific product for novice traders due to the


inary options are gaining increasing attention and popularity and represent one of the


simplicity of the options, and the fact that potential gains and losses are made clear before a trade is ever placed. Binary options trading is not only very transparent but also very simple; traders simply choose an asset and an expiration time when placing a trade, greatly simplifying the trading process.”


“Tere are several distinctive characteristics contributing to the growing success of these financial instruments”, says Arik Peretz, CEO of Forex platform vendor Paragonex. First, he points to the fact that these are simple instruments to understand and trade. Tey involve a clear yet high payout structure, which is unaffected by market conditions and by the magnitude of moves made by the market throughout the duration of the position. Tere are also no costs associated with entering a trade as there is no spread to cover or any sort of carry costs.


No experience necessary


“Tis simplicity, coupled with commission-free trades and the ability to invest small amounts while still enjoying substantial gains, make binary options an excellent starting point for beginner traders, but also a great


50 | INSTITUTIONAL FX SERVICES - THE BROKERS HANDBOOK 2012/2013


opportunity for more seasoned investors to diversify their investment portfolios,” comments Peretz. “Te fixed predetermined payout structure makes binary options a superb investment for people with little time on their hands to manage and monitor their investments.”


Jonathan Shkedi, director of business development at online trading software provider TechFinancials, states that trading binary options is becoming more popular because it actually allows people that are not traders to come in and enjoy trading on the financial markets, without having any previous experience. He comments: “Tere really is only one key characteristic of binary options; simplicity. As far as experienced retail traders go, it gives them another outlet to trade through. We have noticed that with our MT4 solution, traders that are in longer term positions simply like trading binaries while waiting for the outcome of their more long term positions in Meta, either for hedging their spot positions or simply for trying another method of trading.”


Binary options are characterised as simplified forex trading,


Product Focus


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