Trading with binary options is something most people are well aware of already. This means that they are familiar with the classic process of trading binary options where you trade with a binary options broker. Depending on whether you chose the call or put option on a trade you want to place, it all comes down to a basic premise: you are placing trades against the broker itself.
However, it seems that we are going to be looking at binary options in a completely new light. What exactly has changed, you ask? Well, what is exciting is that it seems we have a paradigm shift in the making. Binary options trading is starting to reorient towards peer to peer exchange.
Binary Options exchange offers a whole new outlook and processes that are involved in these developments. Shifting from trading with the broker, which some see as an unfair relationship, to trading between traders themselves is a huge deal, and we are here to cover the basic details.
Binary Options Exchange principles
Certain fundamental principles of binary options exchange are the same as those of over-the-counter brokers. Traders still need to make a deposit in order to start trading. They have to place a trade based on their prediction of the price movement of an asset they chose to trade with. Based on the end result of the trade, either traders make the profit or brokers do, if a trader was unsuccessful in their prediction.
What binary options exchange markets are trying to do is basically level the playing field for traders. These markets work in a very similar way concerning protocol to regular binary options brokers, as we mentioned, but they are still vastly different. This means that on these platforms, traders are placing trades against each other, instead of the broker, which makes it easier for traders to be successful.
How to Trade with Binary Options Exchange
Binaryoptionsexchangemarkets are still just starting to take their piece of the binary trading industry. Their main selling point, so to speak, is the fact that there is no conflict of interest since the broker isn’t the one set up against a trader.
The binary exchange sets up two opposing traders that have placed a trade on the same underlying asset. One trader places a call option and the other one places a put option. So, for every trader that predicts that a certain asset’s price will rise, there must be an opposing trader that believes that the same asset will drop in price. This relationship is called liquidity and it is of the utmost importance that it is maintained. The binary options exchange leaders are well aware of this and it is only logical that they have prepared specific mechanisms with which they intend to take care of it.
Which is better?
When it comes to deciding on which type of trading is better, it is actually more important to correctly articulate the question. Different types of traders are going to feel more satisfied with different types of trading. What we can ask is not which one is better, but what is the most fundamental difference between them which can influence traders decision.
Well, the underlying difference is how exactly is the broker making money in each case. Like we mentioned before, in a regular binary options trading, traders are placing trades that will ultimately result in either a win for the trader or a win for the broker. In case a trader wins, then their profit will come directly from the broker, and if the trader losses, their invested money now belongs to the broker.
However, in binary options exchange the broker does not profit from traders loses or their wins. Their money comes directly from commissions when traders start trading. This way there is no conflict of interest and traders are set up against a more equal counterpart.
What it actually comes down to is choosing a broker that is regulated. This way, regardless of which model of binary options trading you find more appropriate for yourself, you have the knowledge that your regulated broker is legal and their actions are governed by higher financial bodies.