Seven years have passed since the first retail trading platforms for binary options were rolled out. The question at this point is what the people’s expectations are as to what the future holds for fixed return binary options.
We are going to explore the reason why I believe the future for binary options trading looks brighter and fully loaded for growth.
For a very long time in the US, NADEX (North American Derivatives Exchange) was just about the only binary options exchange that was retail-oriented and under regulation in the United States. However, NADEX is not a platform that is all inclusive as some restrictions as to who can trade there exist. This is despite the fact that trade volumes are increasing at an amazing rate, and some platforms for binary options are recording huge increases in the number of traders who participate in their offerings of binary options, a perfect example being VantageFX.
With this large spurt in the growth, it is an assurance that brokers and new intermediaries offering a trading opportunity in binary options to retail clients will come on stream. This has been evident in the US with the arrival of Cantor Exchange, which has now developed a non-US citizens trading platform which has consequently increased the participation scope in the market of binary options in the US. This has been a welcome development given that conditions for trading on Cantor Exchange are similar to those in NADEX. It now is almost certain that traders will be offered even greater choice as even more players will come in to the marketplace in the US.
More brokerages in other parts of the world are also coming to stream. VantageFX based in Australia has a binary options product it has developed which can be traded on from the VantageFX MT4 platform. As the months and years are coming by, a number of these innovations in the brokerages area coming up with unique binary options products are things we are sure to witness.
Another area expected to have some innovation in the future is the diversity of opportunities for trading and what can be traded. At the moment on majority of broker platforms, only four main classes of assets are available but few brokers have begun thinking out of the box. For instance the crypto-currency Bitcoin is offered for trading at AnyOption. The BUND (German bonds) is also offered by another binary options broker online. Soon traders will demand more assets such as U.S Dollar index, commodity asset ratios (e.g. gold/silver and oil/gold ratios) and asset combinations that are newer like the synthetic markets.
We may also start seeing new binary options contracts having a basis on new economic data releases. For example it may soon be possible betting on news releases of high impact such as ADP employment, Building Permits, consumer sentiment surveys and others causing some assets selected to hit particular price targets or not hit the targets. We may even see the potential actual figures for news releases being set by brokers and the traders having the ability of betting on whether they will be reached or not.
In terms of software, there are a few additions on top of turnkey solutions that are available in the marketplace of binary options platforms. After domination by other turnkey solutions from Tech Financials, SpotOption and Tradologic, new providers for turnkey platforms are entering the marketplace. The following are some of the new entrants:
Tools for Brokers Inc.
Keystone (from Markets.com)
It’s a possibility that more innovation in turnkey and proprietary platforms developed for the market of binary options will be seen.
The discussion on software for binary options cannot be closed without a mention of trading robots currently under development. Initially, some challenge was encountered in developing software for the market that was automated as binary options is an operation that it is web based. However, the way has been paved for developing of a new type of robots that can get attached to the web browsers and create communication with the trading platforms for trade execution by traders on an automated basis, this is due to the availability of browser extensions such as the ones on Mozilla Firefox and Google Chrome.
New Trade Types
The advent of new types of trade is something we definitely will see go forward. For instance, the trading rules set by FFAJ the Japanese market regulator for binary options have set the ball rolling there already. A trading platform has been launched by Tradologic featuring new types of trade conforming to the FFAJ regulatory conditions.
Having trade types in binary options with expiry times that are extended such as long term binaries and the two-week binaries is an additional direction that may be taken. Traders are provided with more time to work plus greater volatility when they have an extended duration which adds to this market’s increasing popularity. We are starting to see long term binaries offering expiry times going up to one month and even for a full year on online retail platforms.
A variety of binary options forms will start being seen such as the one-touch and no-touch trading. Also, we may start seeing some forms of social trading as seen presently in the forex market, with webinars, chat rooms and other types of interactive training.
We are beginning to see regulation that is tighter in binary options and the trend seems set on continuing into the future. Regulation is not solely about granting of licences but also getting to punish brokers’ misconduct and the protection of trading entities on the broker platforms. In Cyprus, where the majority of online brokers are based, the CySEC (Cyprus Securities and Exchange Commission) has started a full-scale regulatory operation that has seen sanctions on some brokers with licence where subsequent misconduct was exposed. In Malta and Japan, binary options regulation has not only started but also new rules have been put in place concerning how trades are conducted.
Some level of enforcement has begun in Japan on the changes to the application of bonuses. As the market evolves continually, regulation that is tighter and more expansive is set to be seen coming on stream to increase the confidence of the market.
For participants in the market of binary options, the future is indeed very bright. A lot more will thus be seen happening in this market in all areas discussed above. Those with skill creating innovations in some of the areas above can also participate on the new move of earning themselves some extra income.