When we hear the word binary option, there is a single thing that comes to our mind is that we have to assess that asset will be above or below a certain level at a specified time. If your assessment is right you will make a good amount of profit.
But now for those who don’t know anything about it, we are here to give knowledge about what is a binary option, how it works, is it legit or scam?.
There are some common things which you are required to know when you start anything. Whether it is trading or studies or anything whatever you like. Because what are the results you are going to get is the most important thing we should be required to know.
Because our end goal is to earn money from whatever we do. Hence, we are required to know each aspect of trading because this is the place where you can make money in seconds and can lose money in seconds.
So let us start with the basics about binary options.
What are Binary Options?
Binary options are derivatives which you can simply put on any instrument in the market. These are straightforward and do not require any complex calculations to understand. You are just required to know the basics about the company. The news announcements, quarterly reviews, global trends and company reputation. This all lets you reach a conclusion whether the price will go up or fall down.
You can trade binary options on commodity value, such as aluminium and crude oil. You can opt for a stock price, such as Amazon and Facebook. There are foreign exchange rate options, including all the major and minor pairs. Even cryptocurrencies such as Bitcoin, Ethereum, and Litecoin are on the menu.
There are a number of different option types to choose from. The most popular types are listed in the brief glossary below.
- Up/Down (High/Low) – The most simple and prevalent binary option. Will the price be higher or lower than the current price when the expiry time comes?
- In/Out (Range or Boundary) – A ‘high’ and ‘low’ figure will be set. You are then making a determination as to whether the price will finish within or outside of these boundaries.
- Touch/No Touch – Levels will be set that are either higher or lower than the current price. You then enter a position as to whether the price will ‘touch’ these levels between the time of trade and expiry.
- Ladder – These are similar to up/down trades. However, instead of using the current price, the ladder will have predetermined levels that are staggered up or down. These normally demand a substantial price move.
Next main factor is expiry time. At the time of placing the trade, you have to put the expiry time as well. Time ranges are 30 seconds, 1 minutes, 1 hour, 1 day, 1 year or so like this. You have put a time frame on your trade according to your assessment. This will decide whether you make profit or loss.
As an intraday trader you have to be more concerned towards 1 min – 5 min strategy. If your assessment is right you will make profit otherwise vise versa. Hence, every time operate with binary options after making strategy.
Best Binary Options Robot
Is trading Binary Options legal?
Despite a lot of debates and theories, there are many government and regulatory bodies who have given green light to binary options. Still there are many countries who restrict binary trading. The reason behind doing so is that there are some operators out there who are scam. Hence, some governing bodies feel that allowing them will affect their country’s integrity.
The areas where this is legal has made a regulatory body to look after such trading practices. Traders are requested to choose a reputable and regulated broker.
Scams & Frauds
Though binary options are not fake but because of dishonest brokers & cybercrime has made its reputation as a fraud derivative. In the early stages of binary trading there exist few brokers who operate to scam people. Many people made huge losses due to which it came to know that there are scammers operating out there.
Instant money promises, cold calls, celebrity endorsement, plus claims to start trading for free, videos of people saying about their earning through binary options and so much.
So it is a customer’s duty to get some quick updates about the trader they are considering or looking for. This will not only be good but also gives you some more knowledge about the trader or its platform.
|Simplicity||Reduced trading odds|
|Fixed risk||Limites trading tools|
|Trade control||Price of losing|
|Profit potential||Lack of risk management tools|
How does trading Binary Options work?
Trading binary options is a straight process. But you’re required to follow some steps given below before starting binary trading.
1. Find a broker
This is the first and the foremost step you have to take. You have to choose the best binary options broker that has all the tools you need are available. Who have good customer service & friendly platform.
There are many options which you have to consider while choosing the right broker. Few of them mainly need to consider are:
- Asset supported
- Customer Satisfaction
2. Choose an instrument
You can trade anything using a binary option. It can be stock, commodities, forex, crypto & indices. You are just required to have good understanding and information about the asset on which you are going to bet.
3. Decide on an Expiry time
Time differs from trader to trader. If you are a short term trader then you must be interested in 30 sec to 1 in time frame. And might be in the end of day trade time frame. You should choose your time frame according to your strategy.
‘The more trade you make the more profit you make’, this is the line which is said by most of the people you used to do binary. But you have to be sure about your bet, otherwise you’ll end up losing a lot.
4. Decide on size
In the binary trading system size of trade matters. The more you invest the more you make profit. But on the other hand vice versa is also true. That’s why you are required to have sufficient knowledge on the money management system. Losses can be stopped only by managing money effectively.
You have a number of different options given above which you can consider while going for your trade. Think carefully before putting any of your money to the system. Select that option in which you have best chances of succeeding. Don’t fall for advertisements of influencers showing big amounts made by them.
Binary Options Robot
Binary trading strategies differ from trade to trade. But the strategy is required because then only your trade will give the positive result.
Firstly, a strategy prevents emotions interfering in trade decisions. Fear, greed, and ambition can all lead to errors. A strategy allows you to focus on the maths and data.
Secondly, a strategy allows you to repeat profitable trade decisions. Once you’ve found out how and why that binary option worked, you can replicate it to create consistent profits.
We have already made a separate article on binary trading strategies, you can visit this to learn about binary trading strategies.
Bots & Algorithmic trading
You can also apply robots for trading binary options. There are many brokers who support robots trading. You have to look for brokers who are reliable and reputed.
The bots then do all the leg work, trading options on your behalf. The plus side is they can make far more trades than you can do manually, increasing your potential profit margin. They can also trade across different assets and markets.
There is a separate article on how automated trading took place and what are the points you are required to keep in mind while choosing an auto trader.
Even when you put trading on autopilot mode you are required to keep an eye on the system. Because technical crashes and unpredictable market changes can all cause issues, so stay alert.
There are many options which we can use to educate ourselves. Knowledge is everything. Before starting anything, get some knowledge about it, this will help you to achieve a positive result.
Few are some ways which you can use to educate yourself:
- Books & ebooks
- PDFs & instruction books
- Video tutorials & seminars
- Forums & chat rooms
- Copy trading
Can Binary Options Make You a Billionaire ?
This is the most searched question on the internet so far. And the answer for the question is Yes!. You can become a billionaire through trading but this is not easy and requires a lot of discipline and dedication.
Look at all the big traders, none of them become billionaires in 2-3 years. It took 20-30 years of their life to reach that maximum. Plus they put a lot of time and heart into reaching there. You are required to stick to strategies and procedures to work well.
First few of your trades might give a negative impression, but you should stick with the procedure and tools. No one can learn any skill in a day. Everything requires time, hence give yourself time & keep on practising your strategy.
You can keep small amounts during starting, once you get good command on things, increase the investment slowly.
You might have heard the most common phrase ‘ Slow & steady, wins the race’. So work hard & have patience in your technique.
Binary Option Brokers
- Deriv.com: Deriv.com is a new brokerage, offering options and CFDs on a simple, reliable, flexible platform. Get access to volatility indexes exclusively at Deriv.
- Quotex: Quotex offers online binary options on a range of markets with a welcome bonus for new traders.
- Videforex: Binary options are available on forex, crypto, stocks and commodities.
- IQ Option: IQ Option leads the way in binary options and digital trading. The best platform, with the lowest minimum deposit.
- Olymp Trade: Olymp Trade Offer Fixed time trades over a huge range of markets. Established in 2014, the firm now boasts over 25k active traders each day.
- ExpertOption: ExpertOption offers digital trading on Forex, Cryptocurrencies, commodities, indices and stocks. This high risk / high reward trading is only available to certain regions.
- Binary.Com: Binary.com are the pioneers of binary options. The original binary brand continues to expand and innovate their offering and remain the most trusted brand in the binary sector.
- Binarycent: Deposit and trade with a Bitcoin funded account! Binarycent accepts deposits in, and trade, 15+ Cryptocurrency types.
- Spectre.ai: Binary options are available on multiple markets, including forex.
We have already told a lot about binary options, but the most important thing we want to cover here is that binary options are highly risky derivatives. Many influencers out there are showing you the amount of profit they made. But you should not trust them blindly.
Because if binary options are this easy then no one left poor. Hence use your brain and intellect before paying your money to anyone. Don’t fall for sugar coated lies, first learn by yourself then work accordingly.
If binary options can make you a billionaire then it also has the potential to make you bankrupt. Choose wisely.