Traders Union research: Binary options traders show interest in prediction markets

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Traders Union research: Binary options traders show interest in prediction markets — New Traders Union research

Prediction markets are emerging as an alternative to binary options, attracting traders with new trading opportunities. According to Traders Union research, 46% of binary options traders are considering switching to prediction markets, although many participants underestimate the risks associated with these contracts.

In the study "Prediction Markets vs. Binary Options," Traders Union analysts examined whether market participants are willing to switch to new instruments, how they assess their safety, and how well they understand the financial risks involved.

Traders are willing to try new instruments

Among survey participants with experience trading binary options, 18% said they would consider switching completely to prediction markets. Another 28% are considering moving some of their trading activity, while 24% would prefer to use both instruments.

Meanwhile, 17% of respondents prefer to continue trading binary options, and 13% admitted they do not know enough about prediction markets. The main reasons for considering a switch were better prices and lower fees (24%), transparent settlement rules (21%), and the ability to close positions before an event is resolved (18%).

Opinions also differed on how prediction markets should be classified. Around 38% of respondents see them as a combination of financial trading and betting. Another 27% primarily view these platforms as a trading instrument, while 19% consider them a form of gambling.

Short-term contracts attract traders

Around 42% of prediction market users prefer contracts that settle within one day. Specifically, 19% choose events lasting less than an hour, while 23% prefer contracts lasting between one hour and one day. Another 25% favor contracts with durations ranging from two to seven days.

However, many traders do not examine contract terms carefully enough. Only 29% of respondents read the full settlement criteria before almost every trade. Another 25% usually review only the main conditions, 37% rely primarily on the contract title, and 9% rarely check the rules.

This approach can lead to unexpected losses. For example, a trader may correctly predict an event but fail to receive the expected payout if the official settlement criteria differ from their assumptions.

Prediction markets are perceived as safer

According to the survey, 44% of respondents consider prediction markets safer than binary options. Of those, 16% believe they are significantly safer, while 28% see a moderate advantage.

Another 31% believe the risks of both instruments are approximately the same. Meanwhile, 15% consider binary options safer, and 10% are unsure.

As a reminder, trading signals influence the decisions of 47% of traders.

This material may contain third-party opinions, none of the data and information on this webpage constitutes investment advice according to our Disclaimer. While we adhere to strict Editorial Integrity, this post may contain references to products from our partners.

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