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Binary Options Trading … a sophisticated trader's tool or a simplified product for the masses?

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The face of financial market trading has undergone an unrecognizable transformation, innovation and improving technology over the last twenty years has proven to be a potent catalyst to grow and develop the financial market into the world largest industry. The 1980/90's traditional pit trader would be bewildered in today's computer and quantitative strategic driven world.

The continuous development of financial derivative products is a direct result of institutions aggressively looking to differentiate themselves and maintain a competitive edge in an environment of free flowing widely accessible information.

Binary options trading previously more commonly referred to as digital options trading within financial markets, is a financial product that subsequently evolved from financial derivative innovation. Since the deployment of binary options there has been many more complexed and structured derivatives formulated, however when digital options pioneered it was regarded as a very sophisticated financial instruments and grouped in the exotic derivatives umbrella.

The fact that binary options trading was once regarded as a professional exotic traders product and is now accessible to the whole population via on-line financial gaming platforms is indicative of the extraordinary advancements in technology and innovations in financial markets. The financial gaming industry has experienced rapid growth and development, continually diversifying and improving the products on offer. To date the products offered by the financial gaming market are more tailored towards the experienced trader and financial professional, with spread-betting and CFD's being the prominent options. However a combination of continuously increasing access to information and consistent recent coverage of financial news (especially during the credit crunch) has triggered wide spread intrigue in financial markets and trading, the market has been missing a product and service to accommodate the novice trader.

Ironically its the provision of binary options trading that is satisfying this new and increasing surge in demand. At first glance it would seem surprising that a more sophisticated structured derivative would be suited to a novice less experienced trader, however whilst binary options are complex in pricing nature, the product itself is actually very simplistic and it is for this reason that binary options trading is bringing a completely new demographic to the on-line trading world.

Due to the simplicity of the products and immediate convenience of binary option platforms, traders are now able to place views on the market who previously had no experience or feasible market access. Of course these binary options were initially created to provide diversity to 'wall streets' experienced astute trader and therefore is still an attractive tool for more sophisticated traders. Binary options are often used as a preferable hedging tool to balance a portfolio or to manage the risk to a specific trade, the fact that the risk is predetermined and that the trade doesn't have to monitored makes binary options trading the perfect hedging instrument.

Just like with any market it takes time for familiarity to grow and for exposure to increase, however binary options trading is going to be very appealing to the newbie as well the experienced trader and is going to play a prominent part in the future of financial gaming.