This article is going to be looking at the advantages of Binary Betting in the financial markets and why every trader should consider this as another significant weapon to add to their financial toolbox.

Every trader and investor knows that different strategies should be used for different types of trading situations. For example, trading a high tech and volatile stock like Google should be approached in a very different manner to trading a low risk and stable share such as Tesco.

It's the same with the different financial products like CFDs, Spread Betting and Options etc. Different tools for different trading ideas and markets.

For example, if you expect a quick and explosive up or down move in a market then options would be an obvious choice. However if you forecast the FTSE 100 to fall by around 200 points next week then you would use Spread Bets with their tax-free advantage. But are they always the best tax-free tools to use?

The Disadvantage of Spread Bets – Potential Unlimited Losses

The main problem with spread bets is risk control.

Yes, with a spread bet the profit potential is open-ended but far more significantly so are your potential losses. All good traders tend to use some sort of stop loss when they place a trade but these are often no good with spread bets if the market makes a sudden and unexpected move. For example -

• Trader John might be expecting ABC shares to strongly rise over the next week

• He buys the shares using spread bets for £20 a point at 200p (he will make a £20 profit for every penny they rise above 200p and conversely lose £20 for every penny they fall below 200p)

• John believes that within a week the shares are likely to rise to around 225p due to very favourable market conditions - earning a tax-free profit of £500

• John however is cautious and so places a stop loss order to sell at 190p (potential loss of £200)

• But a few days after the trade was done and before the market opens for the day ABC company issues a surprise profits warning

• The shares which closed the previous night at 210p immediately open at 170p

• John's spread betting firm struggles to fill their clients' orders and John's stop loss gets activated at 168p

• The loss on the position is therefore £640 or £440 more than he expected

Situations such as these are the main problem with spread bets or indeed any financial product including CFDs where the amount of potential loss cannot be 100% controlled.

But what about 'guaranteed stop losses' which are offered by the spread betting firms, wouldn't they have guaranteed his loss at £200 (190p)?

They would indeed, but guaranteed stops are nothing but a form of very over priced insurance. The spread betting firms make a great deal of money from selling these kinds of stops to their new clients while their more experienced clients generally steer well clear of them. This is an important point to take on board.

One Option of Controlling Risk is to use Binary Style Betting

Binary Bets offer speculators a guaranteed fixed loss on their trades. Whatever the amount of the bet, that is the maximum sum that can be lost whatever the market or stock does.

Binary Betting brings a new dimension to anyone interested in trading the markets and should therefore be added to your financial toolbox. Are they the best 'tools' out there for every kind of financial trading? Of course not, but in certain trading environments and situations they're certainly the best tools to use, mainly because of their fixed risk nature, ie you cannot lose more than your original stake.

On our website www.BetsForTraders.com we offer many different styles of Binary Bets including -

• Around 10 different types of Binary Bets - See here for an explanation
• Four main markets to bet on, Forex, Stock Indexes, UK and American Stocks
• The ability to create your own bets using our unique 'slide bar' concept – See more details here
• Fully licensed & regulated, commission free and Tax Free

If you're new to Binary Bets, or indeed the financial markets in general, we would suggest this simple two step process -

1. Open one of our free practice accounts where we'll deposit a virtual $10,000 in your account -

   Use this facility to place various different styles of bets to test out our system. In this way you will get a feel for our trading platform, the different bets offered, and how the prices vary as the market moves around

   Whatever you do, don't rush this initial training and familiarity exercise, give yourself at least a few weeks and many 100s of bets in practice

   Whether you make or lose money is immaterial, as the key to all of this is familiarity and experience

2. Then start trading with a small sized account, perhaps a few hundred pounds -

At this stage it's still critical to keep your bet sizes really small

Perversely you'll learn more from when you lose money on trades than when you're right. It is very important to study your losses for clues as to where you might have gone wrong and use this information to improve your overall trading plan

Then after a month or so of trading with a small account look at your profits and losses. Do you feel confident, are you starting to generate some profits (however small)? If so, consider increasing your account and begin to trade with larger stakes

However if you're still struggling, keep practising with the smaller account until you have gained the necessary experience and confidence.

Summary

One of the problems that all financial brokers suffer from is clients who open accounts and immediately start to trade with too much money (large bet sizes) and not enough experience.

But by following the simple 2 step plan above with Binary Bets you won't fall into this trap, and more importantly you'll give yourself a far better chance of making some excellent profits over time.

We at BetsForTraders.com are here to help, so open the trial account, study our online Help Guides and feel free to contact our Helpdesk with any further questions you might have. We're not allowed to offer financial advice (ie, is the FTSE going up or down) but are more than happy to answer any of your questions relating to our online trading platform or Binary Betting in general.

Good luck, and we hope you can see that Binary Bets with their inherent advantage of limiting risk offer traders another great tool to add to their financial toolbox.

For more information check out our Virtual Tour (on our homepage) or contact us at www.BetsForTraders.com