Advantages of Binary Betting
The advantages of binary betting are often misunderstood by experienced traders, who tend to write off binary betting immediately as an ‘incognito’ fixed-odds bet. While essentially it is true that binary betting presents a fixed odds investment opportunity, there are significant tangible advantages for the trader with an open mind.
One of the main advantages of binary betting that traders often overlook is the tax efficiency point. Like spread betting, binary bets are free of both Capital Gains Tax and Stamp Duty liability, which can deliver a saving in excess of 20% as compared to trading shares. Particularly with a tightening tax avoidance climate in the UK and the likelihood of ongoing increases in CGT rates, this can be a very significant benefit, with a real impact on your bottom line.
Another advantage afforded by binary betting is the inbuilt leverage presented by the transaction. While the leverage isn’t as wild or as straightforward as that afforded by spread betting, for example, it is nevertheless still present.
For example, a fractional one-point movement can realistically generate around a fifty-fold return on your initial stake. At £10 per point or more, this can start to mean serious money.
At the same time, the leveraged component on the downside isn’t as severe as un-tempered leverage products, and is limited to the multiple of your stake and the difference between the price point you either bought or sold and the 100/0 settlement point, depending on the direction of movement and whether you’ve gone long or short on the position.
Similarly, binary betting also allows for easier short-term speculation, at a lower price point that investing directly. Because the commission component is contained within the width of the spread and there are no further commissions or interest charges (because leverage is inherent in the composition of binary bets), it’s a more straightforward calculation for the trader.
The advantages of binary betting make it an option well worth considering for traders of all levels. Whether you’re just starting to trade for the first time, or you’re an experienced investor managing a large portfolio, the benefits of binary betting are manifold.