The History of Binary Options
Binary options trading can be traced back to as early as 1974, but it wasn't until more recently that it became more widely practised or accessible. Now it is a popular investment choice for many who use options to make a second income while big investors use their knowledge and experience to make large sums of money.
Of course, as technology has become so mainstream and mobile devices have become how we interact and transact with pretty much everything, the world of binary options trading has opened to a more global and mainstream market. With a multitude of tools and educational resources available, it continues to grow in popularity.
But how did binary options begin and what made it so popular today? How has technology advanced this popular trading choice and how will it continue to evolve? We look at the answers to these questions so that you can discover more about the history of binary options and how it became what it is today.
In this guide, you will learn:
- More about the history of binary options
- How it has evolved and become accessible
- What the future may hold for the market
How Did Binary Begin
While the earliest binary options can be traced back to 1973, it wasn't until 2008 that they became approved by the US Securities and Exchange Commission for exchange trading. This coincided with the global financial crisis of 2007/2008 in which institutions like Bear Stearns and Lehman Brothers came tumbling down as the mortgage subprime market crisis took hold.
As interest rates tumbled, investors were looking for new ways to make money. This paved the way for investment opportunities such as binary options. The American Stock Exchange and the Chicago Board Options Exchange became the first exchanges to offer them for public trading. At this time, they were known as Fixed Returns Options.
Up until this point, options were only available as over the counter markets to high worth individuals or institutional traders such as banks. In the early days, options were restricted to call options with assets being minimal.
When you consider the evolution of binary options trading in just a few years, this does open up some level of excitement about the future.
When Binary Became Popular
It wasn't always easy to trade in binary options and nowhere near as accessible as it is now. There were limited assets and trade types with only a few investors having a firm grasp of what they were doing. There were also few legitimate, licensed brokers and it was less transparent as to what you were getting into. As options grew in credibility, the trade types grew and the range of assets increased.
Advancements in technology with faster internet speeds, mobile devices becoming more sophisticated and the introduction of binary options into Forex trading all helped to increase the popularity and demand. As demand grew so did the brokers that entered the market and as the competition was then on to provide the best offers, incentives, platforms and overall experience to traders all over the world.
Now, if you want to start your binary options experience, you have multiple choices when it comes to the platform you use. If you wish to trade from desktop or mobile on a browser or app, you can choose a broker that offers the best experience. There are now more educational resources, and charting and analytical tools have evolved to become less complicated.
The Story Today With Binary
Now, with so much mobile technology available, many people from all walks of life can trade in various assets including indices, commodities, currencies and stocks on the move. While traditionally, online trading would have meant being in front of a computer at specific times, mobile advancements mean that you can trade from an app wherever you are.
This has opened up the market to an increasing number of those that previously were restricted by limited knowledge or access. In addition, there are many new brokers, all who are trying to incentivise you to use their platforms with promises of welcome bonuses, the latest software and many other benefits including virtual trading on demo platforms.
You can choose to specialise in one type of option or a specific asset or grow your portfolio to trade multiple stocks, commodities, currency pairs or indices across a range of expiry times from 60 seconds to weeks. While some ‘hobby' traders do it for fun, others use it as a second or even a primary income. Across the markets, trading is accessible to anyone who wants to, when they want to.
Of course, this increase in popularity means that you, the trader, needs to be protected from the potential pitfalls of investing in binary options which have led to the markets being regulated with serious brokers required to obtain licenses from the relevant bodies.
Binary Trading in The Future
When you consider the evolution of binary options trading in just a few short years, this does open up some level of excitement about the future. Who would have guessed in 2008 that you would be able to open up your phone, swipe a screen and invest in this way?
Of course, while it is a multi-billion dollar industry, it has still not reached the popularity of other forms of trading like Forex which has been a more accessible option for longer. As technology continues to evolve and more people become aware of just how easy it is to make money with little initial deposit, it will no doubt continue to increase in popularity.
This could open up the way for more sophisticated platforms, changes to the way you trade currently could change and an even more competitive offering form the many brokers all fighting for their share of the market place. Some might say that there has never been a more exciting time to be investing in binary options.
Ben’s contributions as a freelancer to the site since 2013 are highly valued. He has a real talent particularly within short-term speculation, making many successful trades on the directions of the global financial markets. Learn more.