Real binary options
Global computerisation and globalisation of all processes and the development of modern technology have affected almost all areas of human life and activities.
Investments, which used to be of interest only to large investors with huge amounts of capital, have now also become available to the middle class. The form of online investing in the form of trading on online investment platforms has made it possible to join the investment market with minimal start-up capital without physically visiting banks, company offices and stock exchanges. All transactions are done online, from anywhere you like, you just need access to the internet and, in fact, a computer (or even your phone).
Online platforms allow you to work with different assets, and the most popular ones are binary options.
What are real binary options and how to trade binary options is the topic of today's review.
Binary options: history, features
Real options appeared long before the world discovered online trading. The first option contracts appeared in Holland in the 1630s, when there was a real tulip mania in the country. It was a unique case in history when tulip bulbs were bought for incredibly large sums. People, obsessed with the desire to buy a rare tulip variety, entered into a contract to buy such a bulb even before it was actually delivered. This type of deal was the progenitor of the modern option contract.
In the 1820s, stock options appeared on the London Stock Exchange. In the 1960s, there was already an over-the-counter market for commodity and stock options in the United States. Trading in US stock options began in 1973, when the Chicago Board Options Exchange (CBOE) was founded.
By the early 1990s, the OTC derivatives markets offered a wide range of options to meet various financial needs.
Option (lat. Optio, optio, desire, discretion) agreement, according to which the buyer of option (potential buyer or potential seller of the underlying asset, commodity, security) acquires the right, but not the obligation, to buy or sell. the asset at a predetermined price or at an unfixed price, but calculated according to a pre-agreed formula, at a time specified in the contract, in the future or during a specified period of time, with or without the specified event; number of payments and the frequency can also be established by the terms of the contract.
Real binary options are traded on regulated exchanges. Trading real binary options requires a significant investment of capital and appropriate legal support, as well as a physical visit to the exchange. Online binary options trading is greatly simplified, just register on the online trading platform and invest a minimum amount of a few dollars.
With the advent of online options trading, methods and approaches have changed significantly, while the essence of the option contract has remained the same.
The binary options that we trade online differ from real options only in the fact that we do not actually take possession of the underlying asset, but we have the possibility to speculate on the price of that asset.
So a binary option is a trade in which you anticipate the conditions of increasing or decreasing the price of an asset for a certain period.
Binary options are one of the most controversial financial instruments in the online investment market.
On the one hand, the possibility of excellent earnings up to 90% and the short-term technical availability of trade attracts traders. On the other hand there is a lot of negative feedback about binary options trading and even accusations against brokerage companies that binary trading is nothing more than a scam. Why does this happen? Consider below.
Cheating or a lucrative asset?
The technical availability of binary options trading in today's world has both positive and negative aspects. On the one hand, this opportunity opens the door to the world of investment for the general public who want to engage in new activities and learn new methods of making money. On the other hand, potential traders are people who have no trading experience or basic investment knowledge. Trading binary options involves correctly predicting the price of the underlying asset and opening a position to move up or down. This feature of binary contracts is often perceived by novice traders as a regular gambling bet, where you just have to guess the course of events. Online trading is based upon rather complex investment laws and is dependent upon many external (economic, political, environmental, etc.) and internal (financial performance of companies, the behavior of other traders in the market) factors. Therefore, to correctly predict the price of an asset, you cannot act at random.
Experienced traders carefully study the market using methods of fundamental and technical analysis. Online trading is not a game of chance.
Accidental actions lead to inevitable losses of the invested sum, which creates a false impression of fraud on the part of brokerage companies. In fact, studying the laws of stock trading, learning how to analyze the market and practical lessons online will help you understand how the binary options market works. By delving into this subject you will find that binary options are a great financial tool, giving you the possibility to make money.
Binary options: essence and classification
Binary options are a type of financial derivatives that allow you to trade various underlying assets, which can be stocks and indices of stock exchanges, Forex currency pairs, commodities of commodity markets.
For a trader, binary options are an excellent choice, as an option provides a fixed profit of 70 to 90% in just a few minutes. Of course, there is a possibility of potential losses, but they do not exceed the invested amount.
When opening an option contract, the trader selects the underlying asset, selects the option exercise time (expiration time) and opens a deal by choosing the direction of the expected change in the asset price.
There are two main types of options: Call and Put. By buying a Call (up) contract, a trader expects that the price of the underlying asset will rise in relation to the price at the time of purchase. When buying a Put option (down), the trader, on the contrary, expects that the price of the underlying asset will fall in relation to the current one at the time the option expires.
Also, options are classified by the type of circulation, dividing into exchange or over-the-counter. Exchange-traded options are distinguished by their publicity, standardization and clearly defined terms of execution. The clearing house acts as the guarantor of the execution of all transactions. In the case of OTC options, there is an individual agreement and there are no warranty requirements, as well as standard terms of execution.
Depending on which asset you have chosen as the base asset for the option contract, options are divided into stock, commodity, currency, and so on. The choice of the asset will also determine the type of exercise option deliverable or settlement. A deliverable option provides for the possibility of physical delivery of the selected asset (commodities, stocks, currency), while a settlement option assumes only the payment of the monetary difference in the value of the asset at the close of the transaction. It is the settlement options that are traded on online platforms.
American, European and exotic options are distinguished by the style of execution.
An American option can be redeemed any day before the expiration of the option. That is, for such an option, a period is set during which the buyer can exercise this option.
A European option, unlike an American option, can only be redeemed on the specified expiration date (expiration date, exercise date, option expiration date).
Exotic options are options that are exercised at a weighted average price over the life of the option.
Trading Binary Options
In order to start trading binary options, you have to find a reliable broker, register on their online trading platform, fund your account and start trading.
Let's consider step by step how it all happens.
When choosing a broker, make sure that the broker has all the necessary documents to carry out intermediary activities in the stock market, a license and the corresponding permissions. greatly simplified just.
Pay attention to the broker's reputation by reading the reviews of experienced traders and market experts.
Pay special attention to studying the online trading platform that the broker offers for work. It is this platform that will provide you with access to all operations in the stock market, so you should understand all the functions, and the tools provided by the platform should ensure the convenience and comfort of your trading.
Brokerage companies charge a certain commission for services it is important to find out its size before starting cooperation.
Registration on the platform
Once you have chosen a broker, register on the online trading platform.
Registration on the platform is very simple, takes a few minutes and does not require any special knowledge. Just click on the "registration" option on the broker's website, fill in all the fields of the registration form and click "confirm". Your email will receive a notification about registration on the trading platform and a request to confirm your mail do it. After this simple procedure, your account is ready.
A real account is activated by replenishing it for an amount not less than the minimum set by the system. Typically, the minimum top-up amount is just a few dollars. You can replenish your account using a bank card or one of the online payment systems presented on the platform. Just click on the option "replenish the deposit" and choose from the list suggested by the system the option of replenishment convenient for you. It will be possible to withdraw money from the account using the same options.
The presence of a demo account is probably the first and main difference between a high-quality online platform. It is thanks to the demo account that you have the opportunity to try your hand at trading by conducting test operations. On the account, you will immediately see a certain amount of fictitious funds that cannot be withdrawn. But you can use this money for training operations. Try trading on the platform by choosing a demo account. All functions of this account are exactly the same as those of a real one. Try to open a trade with options, use a multiplier. If the operation is successful, try repeating using the same logic. If, on the contrary, you see a minus on a demo account, think about why your calculations did not work.
A demo account is a unique opportunity to practice on the platform without the risk of losing real money. In addition, this account is completely free, and the amount of fictitious funds on it can be renewed, if necessary, as many times as you like. The use of a demo account is not limited in time and you can use it as long as you need it.
In addition, reliable trading platforms are equipped with an educational section. The educational section contains video tutorials on investing, from the very basics of trading to the use of complex indicators for market analysis. Be sure to take the opportunity to study these lessons. The study of video material in combination with practical test operations with a demo account will help you quickly understand all the intricacies of online trading and increase the chances of successful transaction results.