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Binary Options Trading Future | Possibilities and Problems

Binary options have entered the crucial moment in 2016. Like predicted during the past few years by many experts, binary options trading finally became a mainstream online trading activity. But what will happen in the future? How will the industry develop during the coming months and years? – Will more regulatory agencies catch up on binary options and finally decide to legalize it or will they instead clamp down on this form of online trading?It has been seven years since the platform for retail binary option trading first rolled out. What does the future hold? Knowing what the future holds will help you get ahead of time and in return experience greater success.

New Brokers

For a long time in the US, the North American Derivatives Exchange (NADEX) was just about the sole regulated and retail-oriented binary options exchange in the United States. However, there are restrictions as to who can trade on NADEX, so it is not an all inclusive platform. This is despite the fact that trade volumes are growing pretty quickly and some binary option platforms such as VantageFX are recording massive increases in the number of traders participating in their binary options offerings.

With this large spurt of growth, it is assured that new intermediaries and brokers providing retail clients the opportunity to trade binary options will come on stream. We have seen this in the US with the coming of Cantor Exchange, which has gone ahead to develop a trading platform for non-US citizens, thus increasing the scope of participation in the binary options market in the United States. Given that most of the trade conditions on Cantor Exchange are just the same as we have on NADEX, the coming of Cantor Exchange has been a welcome development. It is almost certain that even more players will come in to the US marketplace and offer traders even greater choice.

In other parts of the world, more brokerages are coming on stream. VantageFX, an Australian-based forex brokerage firm, has developed a binary option product which can be traded from the VantageFX MT4 platform. Some of these innovations in the area of brokerages coming up with unique binary options products are things we will see as the months and years come by.

New Asset Types

Technology and innovation is continually resulting to the existence of new trading assets. The number of assets that can be traded is expanding. There are brokers who have started to offer crypto-currency Bitcoin as an item for trading.

Today, traders are demanding more asset ratios from their brokers such as gold verses silver or oil verses gold. One thing that many brokers will never tell you is that you can succeed by scrambling for these new asset ratios. Make sure you watch out for them.

We may also start to see new binary options contracts based on new economic data releases. For instance, it may soon be possible to bet on a high-impact news release such as consumer sentiment surveys, Building Permits, ADP employment report and others, causing some selected assets to hit specific price targets or not hitting those targets. We may even see brokers setting potential actual figures for these news releases, and traders being able to bet on whether those figures will be reached/breached or not. For instance, we may see something like this:

  • News release: US GDP (final)
  • Consensus: 0.1%
  • Possible Actual Figure: 0.4%
  • Bet Type: Possible Actual Figure Attained OR Possible Actual Figure Not Attained
  • Payout: 100%

Experts are also foreseeing the probability of new binary option contracts which are based on economic data releases. For example it may soon be possible to bet on high impact news release. These include building permits, consumer sentiment surveys, among many others. These releases can cause specific assets to hit or not hit specific price targets.

Regulatory Changes

One of the most important changes that are expected to take place in the near future is the regulation of binary options in various jurisdictions. Around a year ago binary options were completely unregulated. At that time, no country on the planet had any clear rules on whether binary options are legal or not. The above quickly changed in late 2013 and early 2014 when several European countries decided to regulate binary options. The first was the European Union member state of Cyprus. The Cyprus Securities and Exchange Commission was the first European Union body to award binary options licenses. Other countries followed this as well, such as Malta, the United Kingdom, Italy and Germany. The good thing about the European Union is that member states are cross-accepting their licenses, meaning that if a broker is licensed in the United Kingdom it may also operate in Spain as well (unless, for example, Spain explicitly bans binary options – which it isn’t, by the way). In the future it’s expected that more European countries will regulate binary options. This will result in smalltime and fraudulent binary options brokers going bankrupt, as traders will learn that they should only sign up and deposit at brokers licensed by their governments. In the United States, however, it’s expected that regulatory agencies would clamp down on offshore binary options brokers. Due to the extremely complicated nature of US binary options laws, these brokers will most likely not be able to apply for US licenses. Some sources claim that certain European brokers are at this moment talking with US regulators regarding potential licensing. This, however, might take an extremely long time to materialize. It’s expected that in the future US binary options traders will lose many opportunities, as the European brokers will continue to pull out and leave.

NEW Software for trading 

Existence of new software has made trading to be easier than it used to be. The market is already faced with trading robots which have an automated software attached to browsers, This allows them to communicate with trading platforms and in return execute trade for traders operating on an automated basis.

In terms of software, there have been a few additions to the turnkey solutions available in the online binary options platform marketplace. After being dominated by the turnkey solutions of SpotOption, Tradologic and Tech Financials, new turnkey platform providers are entering the marketplace. We now have the following new entrants:

  • Hello Binary
  • Playtech
  • Nextop Asia
  • Tools for Brokers Inc.
  • Keystone (from Markets.com)
  • Phorx

It is possible that we will also see more innovation in the turnkey and proprietary platforms that are developed for the binary options market.

New Trading Types

The advent of new trading types is one thing that savvy traders should look forward to. Japan has taken the front line and has already set the ball rolling by launching a new trade platform that features exciting trade types that conform to regulatory conditions set by FFAJ. An example is the introduction of 0-100 binaries whose outcomes are spread based just as we have on NADEX.

An additional direction is having binary options trade types with extended expiry times such as the two-week binaries and the long term binaries. An extended duration to two weeks provides traders with more time to work with and greater volatility, adding to the increasing popularity of this market. On online retail platforms, we are starting to see the long term binaries which offer expiry times of up to one month and even one year.

Other Remarks

Binary trading is still a fairly new investment tool and many may shy away from it. The truth is that binary option trading is an investment just like any other. It possess its unique advantages and disadvantages. However unlike many other investment vehicles, binary options:

  • Have fast returns: for many investments you have to wait for at least six months before you start experiencing high levels of profits. With binary options it is possible to see returns right after 60 seconds. Most have an expiry date of one day or shorter.
  • It’s the easiest form of investment: all you need to do is learn a few tricks and you are good to go. What’s more is that you will be trading only on a dual basis. It doesn’t get any easier than that.
  • Have high returns: it is possible to experience a return of 70% and above.

Changes Related to How Brokers Operate

Due to the fact that brokers are becoming regulated in Europe, they will have to implement better and fairer services and products. Right at this moment binary options brokers make money by offering relatively low payout rates. In the future they might be required to offer higher payout rates to provide better winning chances to traders. Another significant development that is already taking place is the implementation of binary options contracts with long expiration times. In the past, brokers only focused on options with short expiration times, because this significantly lowered traders’ winning chances. Many (mostly European) brokers have already implemented options with expiration times up to several days and even weeks. These new options offer traders very high winning opportunities, as predicting the future movement of assets becomes more accurate as the time frame during which this has to be achieved is longer.

Growth of the Business

In Europe, the binary options market is going to continue to grow massively, especially when additional European countries decide to legalize and regulate binary options. Most of the large European brokers have even announced recently that they intend to go public buy launching IPOs. In the US however the industry is expected to decline in the short term due to increased regulatory pressure. In the long term this might however change in case US regulators finally decide to award additional binary options licenses. This however is a process that might take several years. Binary options are also continuing to grow in other parts of the world such as Asia. In Asia binary options are extremely popular in Japan. Japan is yet another country that has in the recent past legalized binary options and is providing licenses to legit brokers. So, in short, the binary options business is here to stay and will continue to grow in the future. The best part is that it’s starting to become regulated in various places around the world, which will result in safer services and will ensure that traders have the power to distinguish brokers that are legit from frauds.

Final Regards

What does the future hold for fixed payout binary options? It appears at this time that the first regulated, retail-oriented binary options market in the United States has taken root. Volumes are growing quickly and new markets for binary option plays are coming on board. With this growth there will soon be new intermediaries providing retail clients the opportunity to trade binary options. A great deal of the success of the binary option concept will also depend on whether there is a diversity of trading opportunity. Traders need and will demand to be able to trade binaries on the U.S. Dollar Index and currency cross pairs that are not yet available.

Innovations may also occur, with new kinds of underlying markets such as synthetic markets, oil/gold, gold/ silver ratios. Binaries on new economic data releases, such as consumer and purchaser sentiment surveys, and the ADP employment report, are another possibility. An additional direction is having two-week binaries. An extended duration to two weeks provides more time, more volatility, and is likely to be popular. Different forms of exotic options, such as one-touch and no-touch trading, are also possible. Importantly, as the binary option product line becomes part of the continuum of trading opportunities, the trader will also see social media respond to the field with chat room, webinars, and other forms of interactive information and training.

At this stage the binary option platforms are focused on execution efficiency. In the future, platforms will evolve and become smarter with integration to education. The smarter binary option platform will have the capability of watching the trader and will, in effect, be an embedded coach. What we do know is that binary option trading is here to stay! It is my hope that this book has helped the reader take the first steps toward building core skills for trading binary options!

About the author

David Richard

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