Online trading is now arguably the most popular form of trading on a global scale, bolstered by internet connectivity and the presence of regulated online brokers. As one of the countries with the highest internet usage in the world, it’s quite natural that a country like India isn’t far behind. One of the most popular methods of online trading is binary options trading, which is starting to grab the trader’s attention.
However, many people are either unaware of the hype surrounding binary options or they have reservations regarding the legality of binary options in India.
The legal status of binary options in India
The legality of trading binary options in India is a hotly debated topic in the country. The Securities and Exchange Board of India is mainly responsible for implementing these rules. They have already imposed strict rules on forex trading in the country. The Reserve Bank of India also has a role to play in this.
The main reason why forex trading is restricted in India is due to the government limiting the outflow of INR in an attempt to reduce the nation’s current account deficit. However, when it comes to binary trading, these rulings do not apply as one is trading a derivative rather than the currency itself.
All of this means that binary options trading in India is unregulated rather than being outright illegal. However, the general lack of a legal framework to govern binary trades in India is absent. As a result, SEBI does not grant a license to any national entity to allow them to offer binary options trading. Thus, the best way for an Indian citizen to access binary options trading is to open an account with an offshore broker, which may be regulated or unregulated.
Reasons Why Binary Options Is Popular In India
Despite a general lack of awareness, the trading community in India have long looked towards the enticing prospects of binary options. The reasons for their popularity are many-fold.
Simplicity
The process to start trading binary options is relatively easy and straight forward compared to most other trading methods. The first step begins with finding a reliable broker. In the case of India, traders need to look for a reliable offshore regulated trader. Once selected, users can go ahead and make their deposit. Binary trading involves predicting whether the price of a certain currency or any other asset class will rise or fall. Once the prediction has been set, traders must monitor the market until it moves.
You Know Your Risk And Reward
While trading binary options, traders have the exact knowledge of how much profit they stand to win from a trade, and how much they are risking per trade. Unlike forex, there is no risk of leverage present which means that the amount risked will not increase. Also unlike forex, binary options traders only need to predict if the price will go up or down rather than how high or low the prices go. Success depends on predicting the right direction of price movement rather than the actual value of the asset in question.
Starting With Low Investments
Binary options trading does not require a substantially large investment from the trader to begin. They can simply start by investing small amounts as they gather their experience. The returns will be a bit low, but enough to let the trader continue. This aligns with one of the golden rules of trading ie. “Slow and steady wins the race”.
Large Returns In A Short Time
The biggest difference between binary options trading and traditional financial trading is the duration of a trade. The expiry times are much shorter in the case of binary options. They tend to produce exceptionally high returns within small timeframes. In some cases, a trader can receive a 90% return if the market goes in his/her favour. Thus, it is ideal for those traders who want to earn big within a short time.
Beginner-Friendly
Novice traders will find binary options trading comfortable as it does not involve risky and complex procedures or strategies. Binary options are available in different types which allow novice traders to choose according to their level of risks and difficulties. They can start with simple call and put options as they work their way up the ladder. Other types of options include exotic options and standard options which have their own share of advantages.
So How To Get A Trustworthy Broker?
For traders searching for a reliable offshore trader to access binary options in India, they have to conduct due diligence first. The background of the broker in question as well as how it’s regulated should always be taken into consideration. Going for a broker who is under an international regulatory body such as Cysec, or FCA will ensure that the quality of the broker is good and reliable. Many regulatory bodies implement certain schemes to protect the clients of all business entities under it.
Conclusion
Binary options trading has provided an efficient way for traders to profit off assets without actually owning them. Both the risk and rewards are known which decreases much of the stress and tension during trading. The pay-outs can vary depending on factors like market liquidity, news releases, time of day and others. Many brokers also offer over-the-counter binary options that can be traded exclusively over the weekend.