Investing in binary options
What is binary options?
The mainstream popularity of binary options has grown substantially since they became available for retail sales on various online platforms. Investing in binary options has become favoured because it can be done on many major assets: global indices, commodities such as oil, gold and silver, currencies and stocks of many companies.
A binary option is so name simply because there are only two ways a trade can go - win or lose. This basically means that the asset, on which the option is purchased, has to reach a certain price or level for the trader to make a profit. Or, conversely, the trader will lose his entire investment if the prediction turns out to be wrong.
Online binary options is a digital contract that is based on forecasting the price direction of an asset at a selected time interval. The goal is to correctly predict one of two possible market developments: whether the resource will rise or fall.
What is the binary options market?
Prices of assets such as currencies, gold, stocks, oil, bitcoins and others are constantly changing. This phenomenon is called volatility. Binary options commerce will make a profit from these changes. If the predictions are correct, such contracts yield about 60-90% of the stake made, the exact figure will be specified before the trade, be careful to read all the terms and conditions the broker will offer you. There are more complicated options, which give hundreds of percent profit.
Everyone can make binary options trading a regular income. The main thing is to learn to control your emotions during the dealing. The market is capable to behave unpredictably. At any time there may be unexpected changes either for the benefit or for the loss of the trader. It is important not to panic and show self-control.
What is a binary options broker?
In order to trade binary options online without any problems, you will need a broker, who will offer you different binary options contracts.
The trading process itself runs on a dealer's software, i.e. the specialized software which connects the trader with the stock markets online.
There is a lot depends on the broker. They can provide you with a professional platform, real-time quotes, analytical tools, live chats, practice accounts, etc.
It is up to each trader to decide which dealer of binary options is the best, as it is different for each person.
What is a binary options trader?
Knowing the definition of the term "trader", we can conclude that his main occupation is speculating on various assets. This may be currencies, stocks, precious metals and so on. All this is done for the purpose of increasing own capital with the help of profit.
It is not an easy job, and it requires a lot of time, effort and persistence. You have to forecast future changes, analyse available charts and follow economic and political news regularly. After all the necessary data has been processed, a decision will be made whether to buy or sell.
Brokers equip the platforms with a wide range of choices, increasing the investor's flexibility. A trader can create trading algorithms on the basis of his own vision of the market. Set of financial instruments allows using high profitable strategies. Now, lack of big finance is not an obstacle! Start investing in financial markets with a small amount and gradually increase your working capital.
What is binary options trading?
There are basic things newcomers to binary options trading should be aware of. The first thing to look out for is the type of contracts. They can be easier or more complicated, but they are all based on the same principle: you have to make a correct forecast. Let's look at the main types of contracts:
- Classic Binary Options. These are also known under another name: Up/Down. There is a difference between 'Up' (Call) and 'Down' (Put) contracts. The first one predicts that the price will go higher, the second one predicts that the price will go lower than when you bought the asset.
- "One Touch". In this contract, the trader just needs to make a forecast whether the price will touch or not. The rest of the trades in this option are not considered. The profit of the trader is guaranteed if the price of the asset even touches the set level.
- "Boundary", "Range". By entering into this contract, the trader predicts that the price of the asset will stay within the set value by the time the option expires. There is also the contract "Out of Range". The meaning here is that the price does not fall within the set value at closing.
- "Spread". When choosing this option, the trader has to predict the amount of pips movement in the value of the asset at the moment of expiry of the contract. Its advantage is the possibility to get more profits than in the case of the classic binary option.
- Pair options. When you enter into such a contract, the trader selects two assets, and makes a guess as to what will be the price at the closing of the contract. If his prediction about the asset whose price will change by more points comes true, then profit is fixed. This is more common for shares and indices.
- "Staircase". When using this option, you have to determine the levels the price of the asset can touch. It is a high risk contract, but if the forecast is correct, the trader can get multiple returns. (Above we mentioned options with returns of hundreds of percent, just this one).
How to trade?
So we know what is trading binary options is all about, but how exactly do we trade? There are so many strategies. They can be grouped in different ways, but there is one thing they have in common. Every strategy requires analysis. There are two types - technical and fundamental.
For example, strategy by the news uses only fundamental analysis, scalping strategies use only technical analysis. However, most analysts suggest using both types of analysis to make most accurate forecasts about the trend.
Technical analysis uses historical data for forecasting prices. It is not as complicated as it sounds. You just need to be able to read financial charts and use basic spreadsheets.
There are three basic tenets on which analysis is based, and for binary options too. These sayings are:
- The price takes everything into account.
- History repeats itself.
- Prices move in response to trends.
The use of this type of analysis is possible because of the analysis tools available on the broker's platform, such as various charts, line, candlestick, histograms. Other important aspects of analysis to be studied in detail are:
- Indicators. Almost every strategy uses one or more indicators.
- Support and resistance levels. A support level is a price level at which the price of a currency or other asset changes direction. A resistance level is a price level. Once reached, the price stops growing and starts dropping.
- Trend. There are separate types of trading based only on the trend. A trend is a clear increase or decrease in price for some time.
- Flat - insignificant price fluctuations without a clear general direction of rise or fall in the price of an asset. Etc.
Fundamental analysis refers to the process of making business decisions based on economic and other considerations. The essence of the fundamental analysis is to predict the future price movement of the selected asset based on the generated general market picture.
This analysis of binary options is a complex environment. It includes a large number of different elements that span economics, politics and geopolitics. And they can all have an impact on the pricing of a particular asset.
On the broker's platform, you will be able to track news and current information in the economic calendar and news feeds.
You should use the best trading method to maximise your profits. Take your time and be cautious, and start by using the demo version to get the most out of your Forex trading experience.
You need to know how to use your abilities to analyse information and look for trading signals indicating profitable trends.
Where to trade binary options?
So, above we have covered the important questions of who is a binary options trader and what are binary options in general. To start learning how to practice this kind of earning, you need a good brokerage platform. In order to use all the features to your fullest potential, you must complete the registration process with all the required details. It only takes a little time and gives you access to the accounts.
Numerous trading platforms and brokerages allow investors to trade options contracts. The place you choose to trade is decisive for your success.
Online platforms are the most efficient option for trading binary options. These platforms offer security and confidentiality.
You have the flexibility to trade anytime, anywhere, without limits. Download the mobile app, and stay up to date!
Before deciding on a trading strategy and an asset to trade, it is advisable to do some research. A test account with virtual money can help. This will give you enough to try out different assets and research the analysis tools. This will give you a better understanding of trading without having to deposit money into your trading account. This is a good option for those just starting out as a trader.
A demo account is a good option if you are new to trading. This will also help you find out if the platform is suitable for your requirements and preferences.
Once you feel ready to open a live account, bring in the required information about yourself and the required deposit, and your account will be registered.
If necessary, you can use leverage, for greater profits.
Leverage is a brokerage service which is a loan of money or securities to a trader to make a trade.
It is important to know that if you encounter a problem with your program, it will be resolved quickly with technical support. It is important to know that if you encounter a problem with your program, it will be resolved quickly with technical support. When looking for an online broker, make sure they have a complete package. Good luck in trading!