Gold Magazine March - April 2013, Issue 24 | Page 64

EVOLUTION
OF A NEW MARKET

T

DOES BINARY TRADING REPRESENT A FUTURE INDUSTRY STANDARD OR IS IT JUST
ANOTHER SHORT-LIVED FAD? By Shoham Cohen

he universe of online trading platforms began in the
1990s and quickly grew
in popularity thanks to its
convenient accessibility for
retail traders. Nearly two
decades later, we have a multitude of trading
avenues due to the availability of multiple
platforms as well as thousands of financial instruments and trading mechanisms. They have
become an integral part of the global economy
and financial institutions, both large and small,
design their brokerage business around them.
As technology advances, new online trading

of success and Binary Trading is currently at
a critical point in its lifecycle whereby it will
either become the industry standard or only a
short-lived fad.
Some experts estimate that Binary Trading
could become as popular among retail end
users as the Forex market was throughout the
1990s. I believe that this new platform could
become as successful as the Forex market – especially as end users have come to und erstand
that trading simplicity is the key requirement.
The simpler the trading experience for financial
asset classes, the better, not only for existing
traders but also for the next generation of new

it a considerably safer financial instrument.
Binary Trading has a variety of contracts available: High/Low, One Touch, Boundary and
Touch/No Touch. One of the interesting elements is the expiration of the contracts, from
60 seconds and upwards.

BINARY TRADING ORIGINS

In 2003, “Binary Betting” was first introduced
in the UK and in 2005 it fell under the regulation of the Gambling Commission as it was
considered to be fixed odds betting. In 2007,
the Options Clearing Cooperation (OCC) ap-

EXPERTS AGREE THAT IT IS THE SINGLE BIGGEST
BREAKTHROUGH IN ONLINE TRADING IN A DECADE
technologies are emerging which have the
potential to revolutionize the industry. One
of the most recent and exciting products is
known as Binary Trading – a clear evolution
from the approach represented by traditional
online trading platforms.

BINARY TRADING - A DESIGN
HYBRID FROM FINANCIERS AND
GAMERS

What makes the Binary Trading market so
innovative is its DNA, which is the progeny of
professionals of two different fields of mathematics – financial trading and gaming theory.
The result is an innovative and simplified
trading platform with traits suitable for users
of both industries. Experts agree that it is the
single biggest breakthrough in online trading
in a decade and the new possibilities opening
up are almost endless. Yet, as with all new
products, the market is the ultimate decider

traders who lack understanding and confidence.
Binary Trading will attract an additional large
market segment of its end users from the gaming industry, who are attracted to the most
straightforward gamification elements of the
platform. It is interesting to note that 2012 was
a bad year for Forex in Japan and Binary Trading provided a comfortable balancing cushion.

WHAT IS BINARY TRADING?

A Binary contract is a financial instrument that
offers end users contracts in various financial
asset classes such as Commodities, Currencies,
Stocks and Indices. The contracts present a
predetermined fixed return at the beginning of
the contract. Therefore the contracts are binary
in nature because they offer only two possible outcomes, providing both operators and
end users with reduced risk when compared
with other online trading instruments. In addition, there is no leverage available, making

proached the Securities Exchange Commission
(SEC) to allow the inclusion of Binary Trading
on exchanges. In 2008, following SEC approval, the Chicago Board Options Exchange
(CBOE), the US Commodity Futures Trading Commission (CFTC) and the American
Stock Exchange (AMEX, known today as
NYSE Euronext) introduced Binary Trading
officially. Between 2007 and 2008, Binary
Trading Technologies started to emerge, identifying the future potential of this emerging
financial sector. By 2009 the North American
Derivatives Exchange (NADEX) launched a
basket of Binary Trading vehicles, marking the
start of a new era in which Binary Trading was
being considered as a financial instrument by
professionals. In 2012, the European Commission (EC) defined Binary Trading as a financial instrument under its directive.
Over the past two years, Binary Trading
has experienced a rapid growth in popularity,

64 Gold THE INTERNATIONAL INVESTMENT, FINANCE & PROFESSIONAL SERVICES MAGAZINE OF CYPRUS

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