Binary Options Simple and Explained

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Risk and Money Management: How to Reduce Your Risks in Binary Options Trading

In this article, you will find out how to minimize your risks when trading binary options and earn more with smaller investments. You will also be able to compare brokers based on your risk appetite, as well as download some tips for reducing your risk and maximizing your profits.

You Will Learn:

Read these instructions all the way through, and you will save both your money and nerves. What is even more important, you won’t get disappointed with binary trading from the start and will learn the basic principles for successful trading. Below, you will find the most important info for your future business. Be careful and patient. Good luck!

Alex Ladko Binary options expert, owner of binaryoptionclass.com

Why People Lose Their Money When Trading Binary Options

Beginner traders often put large amounts at risk when investing in binary options. As a result, they lose their initial deposits quickly and get disappointed with online trading.

Most beginners lose their deposits just because they don’t follow the basic risk management or money management rules.

Here’s an example:

Sam learned about binary options on the net. He remembered he had wanted to try Forex trading for a while. However, in case of binary options, everything is much easier, and so he decided to explore binaries.

Sam invested a lot of time in finding a broker that suited his needs, he studied popular strategies, and finally made his first deposit. He selected a broker with a minimum deposit of $200 and a minimum investment of $20. So he just deposited $200 and started trading, investing $20 per trade.

After making 5 trades based on one of the strategies, Sam was twice in the money and three times out of the money. His account balance dropped to $170.

At that point, Sam thought that the strategy just didn’t work. He decided to try a different strategy and went on trading, investing $20 per trade again. After making 8 trades with this new strategy, he was four times ITM and four times OTM. His account balance now dropped to $150.

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Sam got a bit bewildered, but then he discovered that his last two trades were profitable, and so he decided to raise his investment amount, this winning his money back. He bought an option at $50 and lost, His account balance lowering to $100.

Sam went on trading without relying on any system, just switch from one strategy to another. He made another six trades, three ITM and three OTM. His account balance dropped to $55, and his net loss was $145. He got disappointed and angry.

Sounds familiar, doesn’t it? Let’s see why Sam was wrong:

    After depositing $200, Sam invested $20 and even $50 in a single trade

By doing this, Sam didn’t even think about risk management, as his risk per trade was 10% to 30% of his account balance. Even the most experienced traders never exceed 2%; otherwise, you may just blow up your account. Later, I’ll explain why. For now, just accept it as the golden rule of money management.

Sam didn’t stick to any system

He made 5 trades based on one strategy, then switch to another, and then, perhaps, to another. This is another serious mistake. In order to decide whether a strategy works for you or not, you need to make 50 or, better, 100 trades. Then you need to analyze the result and conclude whether it fits your goals.

Sam tried to win his money back by raising the investment amount, which was already high

Having made a few profitable trades in a row, which drew him crazy, and he increased the investment to $50. This is a sure way to blowing up one’s account. Keep yourself well in hand and never break the rules you set.

Binary Options: Concepts and Trading

Binary options – a popular financial tool for profit. Types of binary options, strategies and indicators for BO. How to choose the right time for the expiration of a binary option and not make the most common mistakes.

The attention of traders trading in the Forex market or on stock exchanges, recently began to attract binary options. If with traditional option contracts Since everything is pretty clear, the prefix “binary” is not completely clear to everyone. Let’s try to understand this tool and get a basic idea of ​​it.

“Binary” – what is it?

So, binary options is an option that has only two options for profitability: either a fixed percentage of profit or a loss. It is this dualism that is characterized by the name “binary”, i.e. consisting of two elements. Various instruments can act as a trading asset for a binary option: currencies, stocks, raw materials and others. The execution time of such a contract varies from a minute to several months, profitability reaches 70-95 %%. If in a nutshell to describe the principle of operation of any type of binary options, then the expression “deal-bet” is best.

Types of Binary Options

Trading binary options operates with five main types:

View 1. Binary option “Cash or nothing” / “All or nothing”

This type of binary options is the most popular among traders. At the time of purchase, he has a certain percentage of profit and price. This amount is the volume of the transaction, and it is to her that the trader risks it. Prior to the purchase of “Сash or nothing” binar, it is required to make a prediction in advance whether the selected asset will rise or fall, a Put / Put or Call / Call option is purchased (see the previous article), respectively.

If in the end, at the time of execution, the trader is right, then he receives a predetermined amount of profit, usually 70-85 %% plus the initial cost of the contract. If the forecast did not materialize, then he loses the invested amount in full. Sometimes companies make a refund when they lose in the amount of 10-15%, but this cannot be considered the rule, rather, it is just a bonus to cheer up.

View 2. Binary option “Asset or nothing” / “Asset or nothing”

The binary option “Asset or nothing” is practically no different from the above “All or nothing”. It can also be bought and sold by setting a certain level, above or below which there will be a price at the time of execution, also receive declared profits or lose the value of the contract. The difference is only in determining the profit, which is expressed in the value of the selected asset.

Which binary options are better?

Choosing binary options for trading

In fact, because profit calculation is automatic, many traders do not even see the difference between the binary options Cash or nothing and Asset or nothing.

View 3. Binary options “One touch” / “One touch”

One touch in execution and trading strategies differs significantly from the previous ones. Having all the same value and profitability, the contract also implies the existence of a certain level of asset price. Knowing him, the trader must predict whether the price reaches this mark in the allotted time period. At the same time, it does not matter at what price the contract closes, the main thing is that the asset touches a fixed level.

View 4. Binary options “No touch” / “Inviolable”

The opposite in name and meaning for the “One touch” binary option is “No touch”. The only difference is the trader’s forecast of whether the price reaches the level specified in the contract. If he believes that he will not achieve, then you should buy the “No touch” option. If at the time of closing the asset did not touch the level, the trader receives the agreed profit. Otherwise, he loses the value of the contract.

View 5. Binary options “Double one touch” and “Double no touch” / “Double one touch” and “Double touch”

These are the most complex, and therefore the least popular types of binary options. In fact, this is a modification of the “One touch” and “No touch” options – the strategy and execution are identical. However, in order to achieve profit, two fixed levels are set, to reach or not to touch which the asset must until the expiration of the exercise time of the option.

Based on your own preferences, offers from binary options brokers., as well as market conditions, it is more profitable to trade different types of binary options. Nevertheless, most traders prefer “Cash or nothing” as the most affordable and easy to understand.

Strategies and indicators for binary options trading

Binary Options Trading Strategies, if you do not go into details, are based on determining the estimated direction of movement of the asset in the terms specified by the contract, as well as the likely time to reach the specified price level. So, to get a fixed profit, you will need to indicate either the level below or above which the price will be after the time you specified, or indicate the mark near which the value of the asset will be in the near future. Your forecast options and trading strategies are closely related to the types of binary options.

Trading robots for binary options

All the pros and cons of using forex experts in binary options trading

In order to correctly predict the direction of the asset price movement and buy a binary option, most traders use forex indicators.

In fact, no special indicators for binary options not being developed. For the most part, traders use signal and arrow Forex indicators, which are adapted for trading binary options. Popular are both built-in terminal and user indicators that allow for a qualitative analysis of the asset – the direction and strength of the trend, possible pivot points, etc.

In addition, in trading binary options, trading robots have been successfully used.

How to trade binary options?

Trading binary options and trading in the Forex currency market are based on the same principles:

  • market price moves the same way;
  • with binary options the same rules of fundamental and technical analysis work;
  • money management rules are also relevant for binary options trading – it is important to determine acceptable risks and manage your capital;
  • trading strategies and forex indicators successfully work on binary options.

However, there are a number of differences that stem from the nature of binary options:

  • Unlike classical trading, Sell transactions and Buy purchases do not open. When trading binary options, only Call options (price growth is forecasted) and Put options (price reduction is forecasted) are purchased;
  • The “lifetime” of a transaction when trading binary options does not depend on the price reaching stop-loss or take-profit levels, as in Forex trading. In BO trading, a fixed option expiration time is determined, at the end of which the transaction is closed with a profit or loss;
  • accordingly, take profit and stop loss orders are not used in strategies for binary options trading.
More on binary options trading

Binary options trading – an intelligent casino for gambling traders

The minimum contract is usually $ 100. At the same time, profit reaches an average of 80%. This, of course, is not comparable with a loss in the event of an erroneous forecast, but the trader can accurately calculate the level of his losses and not exceed them if he does not want to. In addition, some brokers provide the ability to trade binary options without investments.

Quite convenient and easy to use are platforms provided by companies. Most often it is a web platform that has the required set of tools and simple forecast indicators. To some extent, this simplifies the work and it may seem that there is no need to analyze something deeply, trading binary options. In fact, this is not so. Any profitable trading requires knowledge of fundamental and technical analysis, as well as its application. Otherwise, such work turns into a casino, which is unacceptable. Therefore, for a competent approach to trading and evaluating an asset, we recommend that you analyze on your usual platform, transferring transactions to the terminal of the options broker. So, to work with binary options on currency pairs, you can use the full set of available tools of the cTrader or MetaTrader platforms, including indicators, created specifically for these contracts.

Most traders are of the opinion that trading binary options somewhat simpler than classic forex trading. Nevertheless, in trading binary options there are a number of difficulties that are associated with the choice of the expiration dates for the option, because the mistake made during the selection often leads to losses even with the analysis and correctly planned work of the trader.

Dependence of the expiration period of a binary option on the trading style

  • With long-term binary options trading (from a month or more), the process of determining the expiration date does not represent any difficulty. It is determined based on the timing of events expected in the future. It could be an expiration date. foreign exchange intervention, change in monetary policy by the Central Bank and more.
  • In medium-term trading (from a week to a month), emphasis should not be placed on fundamental economic events, but on the results of technical analysis. In this case, the best choice would be a period of two or three weeks, that is, the average life of a medium-term transaction.
  • In short-term trading (up to 1 week) it would be logical to determine the expiration period within a few days. There is one significant point – it is recommended that binary options trading be completed before Friday evening, as over the weekend some events can occur that seriously affect the market picture.
  • For intraday binary options trading, the best choice for the expiration date is the end of the trading day, since all fundamental factors have already been won back today, the market is entering a stagnation phase. When trading faster options, the guideline for the expiration dates should be the end of the trading hour.

The choice of the period for trading binary options

So what period should a novice trader choose for profitable binary options trading? Taking into account the fact that short-term options trading, as a rule, is accompanied by a lack of significant trading information, as well as a significant share of excitement, binary options are the best choice, the expiration period of which is no earlier than the end of the trading day.

To achieve more profitable and stable results when trading binary options, it makes sense for a novice trader to try medium-term and long-term trading. The use of super-short terms in binary options trading is not recommended for beginner traders, as they can lead to the formation of a gaming attitude and financial losses. The use of tick options by beginners will generally look like a game in a casino.

Dependence of signal processing time on trading tactics

Along with all of the above, it can be noted that traders often calculate how many bars an open transaction will start to work out, which also allows you to choose the expiration dates of the option. Roughly speaking, for this you need to figure out how many bars will be needed to implement the plan, multiply it by the one used timeframe and then buy the option for the resulting time.

It should be remembered that a certain trading tactic provides for different times necessary for working out a trading signal:

  • The fastest for working out a trading signal is trading by candlestick patterns – 2-3 candles.
  • Trading on the rebound from the level also implies a quick expiration time – 3-4 candles.
  • Trading binary options using breakdown certain levels require a little more time to work out the signal – up to 10 candles.
  • The longest period is trend trading, since you have to take into account a possible correction. In this case, the expiration period of the options should be chosen within 20-30 candles.
  • When trading using fundamental factors, the range of options expiration periods is very wide. For example, when trading on news, it can be several minutes, when trading on goals that the Central Bank has determined – up to a year.

The most common binary options trading errors

Any financial trading needs to be learned, one way or another, working out its strategy. We will consider the main errors and mistakes of novice traders who trade binary options. It is possible that if you take our advice more carefully, they will help you avoid some bad deals.

1. Trading binary options does not require knowledge

We have already touched upon the consideration of this error at the beginning of the article, but it will not be superfluous to repeat it. Many newcomers to trading, when dealing with binary options, find that they do not need any special knowledge in working with them – I figured out where the price would go, clicked on the button and wait. I would like to note that even the simplest initial knowledge about pricing the asset for which the option is presented will significantly reduce your losses. Not to mention the fact that, ideally, for trading binaries for currency pairs, it’s worthwhile to have a proven strategy and trading experience on Forex. One way or another, any forecasting skills should increase the profitability of your investment, reducing losses.

Bonuses for trading binary options

Binary Options: 9 bonuses to your trading account

2. Binary options – it’s almost a casino

Many players come to binary options trading like in a casino, focusing on the fact that the instrument is actually a “bet” transaction. We will not say that this is completely wrong – there is still a degree of similarity, however, some practice and knowledge in the field of analysis of exchange instruments, and luck rates turn into a well-thought-out strategy that increases the probability of winning from 50/50 to a more attractive number .

If you came into binary options trading for adrenaline and fun, then understanding the process will not reduce your pleasant emotions, but only increase it, because you will start opening deals wisely. Do you agree? Then read the first paragraph again.

3. Short-term binary options are more profitable

Yes, of course, to buy an option contract of 60 seconds and earn 75% of profit in a minute is very tempting. However, it is important to understand that making money on such short (minute, hour) intervals is not so easy, because the noise in the market can turn a profitable contract into a minus in one second. Trends over long periods are much more predictable, and therefore it is better to start with them, not to chase quick and risky profits and learn to see the market.

4. Quick transition to high rates

Quick and easy profits often give rise to euphoria among beginners of binary options trading. Having made 2-3-5-10 profitable trades in small amounts, the trader begins to think: “Why am I trifling if I can buy a contract more expensive and get more money?”. Remember, 11 trades can become unprofitable. Of course, we do not claim that this must happen, but you need to increase the contract value gradually, using about 2-5% of your total deposit. Only in this case, the profit will settle in your pockets stably.

5. Trading only one type of binary options

There are quite a lot of binary options, each of them can be used in different market situations, so you should not focus on one thing when you can use all the features of the market and binary options. It is not necessary to actively get involved in different options, but we recommend you try different options and choose the most suitable for yourself.

In general, binary options trading is characterized as more simple and understandable for beginners trading, including because it does not support the principles of margin requirements and does not require knowledge of money management. Any interested speculator can already evaluate his strength on a demo account with numerous brokers that provide this service.

Other binary options articles

FORTRADER magazine experts

FORTRADER Magazine is a large team of experts in trading in financial markets. Traders, managers, investors, programmers, testers, technical administrators – we all work for you every day for many years. Sometimes we write articles together, then the whole journal becomes the author.

Стратегии forex/cfd/бинарных опционов

Я хочу рассказать своим клиентам, что представляют собой лучшие стратегии бинарных опционов. Сразу хотела бы уточнить: сосредоточусь на стратегиях, эффективных для краткосрочного трейдинга (временной интервал — 5 минут).

Начинающим трейдерам сейчас не составляет труда отыскать стратегию бинарных опционов, с помощью которой можно успешно начать самостоятельно торговать. Однако есть полезные стратегии, а есть… скажем так, неоднозначные. Среди вторых я хотела бы отметить стратегию «60 секунд», которая сейчас очень популярна. Смею утверждать, что эта популярность незаслуженная. И постараюсь разъяснить почему.

Среди стратегий для бинарных опционов стоит выделить особую разновидность — скальпинговые. Эта стратегия была разработана в середине ХХ века биржевыми трейдерами, нашедшими новый надежный способ получения прибыли. Внутри торгового дня совершалось несколько операций, риск и прибыль от которых не отличались высокими значениями. Однако прибыль была стабильной, что делало торговлю всё более популярной. В несколько видоизмененном виде она дошла и до наших дней.

Чтобы добиться успеха в торговле бинарными опционами, необходимо точно определять, куда дальше пойдет цена актива и чем это может быть обусловлено. Конечно, все трейдеры стремятся разработать выигрышную для себя торговую стратегию. Начинающие специалисты стремятся применять готовые инструменты — поэтому я так подробно знакомлю посетителей своего сайта с лучшими стратегиями. Темой этого материала будет стратегия на уровнях Фибоначчи — стратегия, которая действительно работает и по силам любому трейдеру.

Начну с того, что стратегия – это не просто набор определенных правил, а конечная цель. Очень важно понять данный тезис до глубины души. Я торговала на самых разных рынках, общалась с сотнями трейдеров. У большинства тех, кто торгует на рынке в убыток, схожая проблема, они неверно ставят перед собой задачу.

Что же представляет собой стратегия, основанная на новостях? Для работы по этой стратегии нужно анализировать Экономический календарь, выбирать самые важные события, понимать, как они влияют на рынок — и открывать сделки в соответствии с этим влиянием. Звучит внушительно: должно быть, это сложно? Вовсе нет!

«Контракт на разницу цен» – вот как расшифровывается аббревиатура СFD. За этой формулировкой кроется вид торговли на фондовом рынке, который может оказаться очень прибыльным. Здесь рассказывается о брокерах, помогающих в такой торговле, объясняется специфика работы с СFD-контрактами.

Страница 1 из 2

Некоторые трейдеры (естественно, это относится к новичкам), считают, что опытные специалисты работают, просто бездумно щелкая по кнопкам «CALL» и «PUT». В действительности уважающий себя специалист прекрасно знает, что собой представляют лучшие стратегии форекс/cfd, и умеет применять их в деле.

Торговля forex/cfd/бинарными опционами – это не действия по одному раз и навсегда выбранному шаблону. Чтобы всегда оставаться в плюсе, нужно иметь представление о разных методах, уметь читать сигналы торговли, не пугаться слов типа «Мартингейл» и «Боллинджер», выбирать те опционные стратегии, которые наиболее уместны в конкретной ситуации, которые в состоянии принести трейдеру максимальную прибыль.

Стратегий forex/cfd/бинарных опционов очень много: в каких-то по силам разобраться и неопытным трейдерам, какие-то требуют серьезной специализированной подготовки. Конечно, нас в первую очередь интересуют простые – и при всём при том эффективные – стратегии, которые можно освоить сравнительно быстро.

В этом разделе я привожу список самых популярных стратегий при работе с forex/cfd/бинарными опционами, которые, при правильном использовании, могут принести трейдеру серьёзную прибыль. Вы можете перейти на страницу, где описывается конкретный метод, и прочитать там ее краткую характеристику, а также посмотреть обучающее видео с моими комментариями.

Best Binary Options Brokers 2020:
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    Best Options Broker 2020!
    Great Choice For Beginners!
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  • BINOMO
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    Only For Experienced Traders!

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