Future of Binary Options Trading

It has been 6 years now since the first binary options platforms for retail trading were rolled out. The question at this point is; what do we expect the future to hold for fixed return binary options?

Let’s explore why I believe the future looks bright and fully-loaded for growth in future of binary options trading.

Brokerages

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.

Asset Types

A diversity of trading opportunity and what can be traded is another area where we expect some innovation in the future. At the moment, there are four main asset classes on most broker platforms, but one or two brokers have started to think out of the box. AnyOption has started to offer trading on the crypto-currency Bitcoin. Another online binary options broker offers trading on the German bonds (BUND). Traders will soon be demanding more assets from their brokers such U.S. Dollar Index, some currency cross pairs as well as newer asset combinations such as as synthetic markets, and commodity asset ratios (e.g. oil/gold and gold/silver ratios).

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%

There is still plenty of room for brokers to create innovative asset types that can be traded. Look out for more of these in the years to come.

Software

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.

We cannot close out the discussion on binary options software for the future without mentioning the trading robots which are currently being developed. With binary options being a web-based operation, there was some initial challenge in the development of automated software for the market. However, the development of web browser extensions as we have on Google Chrome and Mozilla Firefox has paved the way for the development of a new kind of robots which can be attached to the browsers and communicate with the trading platforms to execute trades for traders on an automated basis. It is likely that as we see innovations in the kinds of trading platforms that traders can use in the binary options market, we will also see newer add-ons and plug-ins being developed for these newer platforms.

New Trade Types

The advent of new trade types is something that we will definitely see going forward. In Japan, the new trading rules set out by the Japanese binary options market regulator FFAJ have already set the ball rolling in that country. Tradologic has just launched a trading platform that features new trade types that conform to the regulatory conditions set out by the FFAJ, one of which 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.

We will also start to see various forms of binary options, such as one-touch and no-touch trading. We may also begin to see some form of social trading as we presently see in the forex market, with chat rooms, webinars, and other forms of interactive training and trade copying going on.

We will also see some smarter platforms which will be able to offer integration to education.

Regulation

We are starting to see tighter regulation of binary options and the trend looks set to continue going into the future. Regulation is not just about granting licenses, but also about punishing misconduct on the part of brokers and protecting trading entities on broker platforms. In Cyprus, which is where the bulk of online binary options brokers are located, the Cyprus Securities and Exchange Commission (CySEC) has commenced a full-scale regulatory operation which has also seen some brokers that were granted licenses being sanctioned where subsequent misconduct was discovered. In Malta and Japan, regulation of binary options has not only been commenced but new rules regarding how trades are done have been put in place. For instance, Malta now requires binary options brokers to be capitalized to the tune of 730,000 Euros before they can apply to be granted a brokerage license.

Rule changes into how bonuses are awarded and used by brokers are presently being considered. In Japan, some level of enforcement on the changes to the application of bonuses has already commenced. As the market continually evolves, we are set to see tighter and more expansive regulation coming on stream to increase market confidence.

Conclusion

The future is indeed very bright for the binary options market participants. We will thus see a lot more happening in this market in all the areas that have been discussed above. Those who have the skill in creating innovation in some of these areas can also partake of the new move to earn extra income for themselves.