Many traders use binary options as a method to hedge their investments with other asset types because they have been proven to be very effective. For example, consider that you are trading the EURUSD currency pair and you are considering utilizing a stop-loss in order to protect your account balance from suffering a serious drawdown. Instead of deploying a standard stop-loss, you could instead activate a binary option in the opposite direction to your Forex trade by using the EURUSD as its underlying asset. In doing so, you would provide a very effective protection for your EURUSD trade.
However, although a stop-loss trading strategy looks quite simple at first sight, a successful one depends on the quality of your understanding and knowledge about factors such as risk tolerance, trading asset, your trading style and market conditions.