When we hear the word binary option, 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 correct, you will make a good amount of profit.
But now, for those who don’t know anything about it, we are here to know what a binary option is, how it works, it is legit or a scam?.
There are some everyday 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 will get the most important thing we should be required to know.
Because our end goal is to earn money from whatever we do. Hence, we must know each aspect of trading because this is where you can make money in seconds and lose money in seconds.
So let us start with the basics about binary options.
What are Binary Options?
Binary options are derivatives that you can put on any instrument in the market. These are straightforward and do not require any complex calculations to understand. You are just needed to know the basics about the company. The news announcements, quarterly reviews, global trends, and company reputation. This all lets you conclude whether the price will go up or fall.
The next main factor is the expiry time. At the time of placing the trade, you have to put the expiry time as well. Time ranges are 30 seconds, 1 minute, 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 a profit or a loss.
As an intraday trader, you must be more concerned about the 1 min – 5 min strategy. If your assessment is correct, you will make a profit; otherwise, vise versa. Hence, every time operates with binary options after making strategy.
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Is trading Binary Options legal?
Despite a lot of debates and theories, there are many governments and regulatory bodies that have given green light to binary options. Still, there are many countries that restrict binary trading.
The reason behind doing so is that there are some operators out there who are scams. Hence, some governing bodies feel that allowing them will affect their country’s integrity.
The areas where this is legal have made a regulatory body look after such trading practices. Traders are requested to choose a reputable and regulated broker.
Scams & Frauds
Though binary options are not fake 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, which came to know that scammers are using 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 a customer must get some quick updates about the trader they are considering or looking for. This will be good and give 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 straightforward 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 has good customer service & a friendly platform?
There are many options that you have to consider while choosing the right broker. A 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 a good understanding and information about the asset you will bet on.
3. Decide on an Expiry time
The time differs from trader to trader. If you are a short-term trader, you must be interested in 30 seconds to 1 in the time frame. And might be in the end-of-day trade time frame. It would help if you chose your time frame according to your strategy.
‘The more trade you make, the more profit you make; this is the line said by most 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 a profit. But on the other hand, vice versa is also true. That’s why you are required to have sufficient knowledge of the money management system. Losses can be stopped only by managing money effectively.
You have several different options are given above, which you can consider while going for your trade. Think carefully before putting any of your money into the system. Select that option in which you have the best chances of succeeding. Please don’t fall for advertisements of influencers showing enormous amounts made by them.
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Binary trading strategies differ from trade to trade. But the strategy is required because then only your trade will give a positive result.
Firstly, a strategy prevents emotions from interfering in trade decisions. Fear, greed, and ambition can all lead to errors. A strategy allows you to focus on 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. Many brokers support robot 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 positive of doing this is that they can make far more trades than you can manually, increasing your potential profit margin.
There is a separate article on how automated trading took place and the points you must keep in mind while choosing an auto trader.
Even when you put trading on autopilot mode, you must 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 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
Can Binary Option Make You a Billionaire ?
This is the most searched question on the internet so far. And the answer to 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 getting there. You are required to stick to strategies and procedures to work well.
The first few of your trades might negatively affect you, 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 practicing your strategy.
You can keep small amounts during the start; once you get a good command of 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
- Olymp Trade
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 it would help if you did not trust them blindly.
Because binary options are this easy, then no one is 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, they also can make you bankrupt. Choose wisely.