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Binary Options Trading Basics: Selecting Between Put or Call
While binary options trading is a lot different from most other financial market trading, it is one of the easiest means of successfully making money from the financial market. Once you understand the basics of binary options trading, you will understand that it is actually much simpler to place and win on than several other financial instruments.
Binary options trading has some pretty nice advantage compared to other trades. First, there is no middle ground as far as is concerned; you either lose your trade or you win it. Another pretty nice thing about binary options trading is the fact that you will know what you could potentially lose and what you stand to win, even before that trade is placed.
There are quite a lot of statistical analyses and other financial elements that go into binary options trading, these all point you to either want to place a put or call options with your trades. It is also important to know that all binary options trades are intricately linked to asset price movement. If you are placing a call option you are forecasting an asset price increase and if you are placing put options you are invariably predicting a price decline
To be able to successfully profit from binary options trades, the underlying assets has to be below the strike price on a put option or above the strike price on a call option at expiry.
That is why it is crucial to precisely predict the market trends or conditions when placing your trades. The market is said to be bearish if prevailing investor sentiment is not favorable to making a purchase. When this happens investors think the market will continue to fall. Under bullish conditions, the opposite is true. Investors see favorable market as prices are in an upward trend. It is in this regard that binary options became very popular as investors can make profit off both rising and falling market prices.
It was also important to mention the role of technical analysis in successfully placing binary options trades. There are quite a few traders that can be successful at trading binary options without engaging in some form of statistical analysis. This form of analysis is critical to predicting price performance and entry point over time. It should be easy for you to place a trade if you see a strong price trend in either direction. You will have to make trades by looking at historical price movement if there is no strong price trend in either direction.
When making binary options trades, it is important to look at the expiration time factor closely. A smart trader always uses recent price performance information when making trades using shorter expiration timeframes. However, in longer expirations, a smart trader uses underlying asset performance. Statistical analysis will reveal the low and high prices of an asset over a specific timeframe. Although it is likely for the said asset to go below or above this analytical lows and highs, they usually remain within the boundaries.
Smart traders will assume that when an underlying asset price moves closer to a statistical boundary, the next thing that should happen is a short-term trend reversal. It is most often at this point or near it that is a perfect time to place a call or put option. On some rare occasion, you can predict an asset price to break out of the statistical boundary. Though it is still possible to be profitable with this kind of trades, it is important to note that these trades are much harder to predict and do not happen as often as price movement within a statistical boundary.
A very crucial point of emphasis is that you should never base a call or put options on guesswork or emotions. If you feel that you do not have enough evidence to make a trade, then it is prudent to forget about trading in that particular circumstance
Binary Options Trading Guide
On this page, we will go through the basics of binary options trading. When trading with a binary option robot, you do not necessarily need to know anything about binary options investing, but it is useful to be aware of the mechanism by which option robot operates. Plus, if you are interested in binary options trading so much that you do not want to use the robot, you can do everything yourself. In addition, remember that the robot does not work with the best binary options brokers, so if you want to take advantage of every good money making opportunity, it is also good to know at least a little bit about binary options and option signals.
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TABLE OF CONTENT
How to Make Money with Binary Option Robot
Top Binary Option Robots in Russia
Claim your free binary option robot, get started with three easy steps:
- Name of Robot
- Min. Investment
- Min. Deposit
1. Your Binary Option Robot will analyse the market and decide, which asset (currencies, indices, commodities and stocks), is right to trade at that point in time.
2. The Binary Option Robot Will Predict the Price Movement
Your robot will assess a wide-range of factors, and then make a prediction on how the assets price will move, saying: Call (up) if it believes the price will rise and Put (down), if it believes the price will fall.
3. Decide on how much you want to Invest
Then you need to decide how much you want to invest in the commodity and when that investment will expire.
4. Collect your Earnings
Finally, you collect your earnings (the good part!)
What Are Binary Options?
Binary options are definitely one of the most fascinating new investment instruments. Their history goes back as close as the year 2007 , when they first got a lot of advertising with Option Clearing Corporation proposing to authorize binary options , and in the following year, with the Securities and Exchange Commission approving the listing of cash-or-nothing binary options.
The investor has two possible options: “Call” when the value of the property is expected to rise , and “Put” when the value of the property is expected to decrease. In order to prevent price manipulation ( for example: an investor makes the first binary option trade “Call” with a very large sum of money, and after that, buys a very large amount of stocks of that company, inflating the stock price in order to force a binary option investment to be successful), many brokers use a volume-weighted average of trades at the expiration time. In most cases, price manipulation would not be even possible, because the investment objects are major companies , such as Google and Alibaba Group , whose share prices are almost impossible to be affected by an individual investor .
At some point in our lives, we’ve all been affected by some type of a global financial crisis. The end result is normally devaluation of assets, recession, unemployment which negatively impact global trade and investments.
Banc De Binary observed the aftermath of a financial crisis and decided to make an investment from it. After the 2008 financial meltdown, Banc De Binary founders anticipated for a demand in simpler ways to trade in the financial markets. As a result, they designed a simpler instrument of trading that was both accessible to experienced and disheartened investors. And that is how binary trading began. Today, they are quite a number of binary option platforms that offer on-line trading. What’s more is that you can use a binary robot trading software which will do all the trading for you.
Binary options trading is a fun and exciting way to invest.
Binary Options Defined
So, what is a binary option? A binary option is an investment tool that makes profit from price movement in stocks, currency pairs, among other commodities. This trading investment is so simple in that it gives traders only two possible options: yes or no. It is the dual choice that resulted to the name ‘binary’ or the commonly used term ‘Call’ or ‘Put’.
Now that we have already established that profits in binary trading are derived from price movements, it is important to understand the trends that result to these movements. Trading can be easy but identifying the patterns that lead to a successful trade can prove to be a daunting task.
The global market is never constant, it keeps changing. If you want to make the most out of your trading, you probably should identify strategies that will make use of these changes. Read through to discover some of the strategies that you need to look out for.
1. Look Out for Breakout
A breakout normally occurs when prices trade within a close-fitting range. The main idea behind breakouts is to identify a price range in which the present price will ‘break through’ as it moves towards a trading range. This means that you need to identify a potential break out level and further anticipate for it to prevail in the market. The stronger your breakout level, the more likely you will experience a strong move.
When looking out for a breakout level, you also need to identify a market’s momentum. This means that you need execute your trades in times of low liquidity. This is usually towards the end of the market when the volume is stronger.
Key considerations for a breakout trading strategy
- It is important to adhere to correct timing in order to avoid whipsaws and pullbacks that normally arise from a break.
- Identify the right market for trading. Use currency pairs because they tend to have more breakout opportunities as compared to other binary assets. What’s more is that currency pairs carry the levels volatility required in breakout trading. Breakout requires an asset that shows a considerable amount of movement during a set period of time. As a result currency pairs works best.
- Avoid early anticipation of a break: wait until your breakout level confirms.
- Remember that defining your breakout level will highly depend on the type of asset you’re trading and the time period that has been set.
Beware of fake outs: this is simply a break out that is not real. There are times when the market tends to test a resistance or support line. In such an instance, the price can briefly shoot above or below and right after go down again to generate a spike. Avoiding a fake out largely depends on experience and an authentic trading system. It is important to note that choppy markets are characterized by fake outs. Smoother markets on the other hand are less likely to generate them.
Basic situations in a binary options trade. Tom and Jim are basically “betting “against each other.
2. Watch Out for Retracements
A retracement is defined as a price reversal that usually takes place within a larger trend. A trend is generally seen as the direction of a market or the direction of a price asset. The key point here is that these price reversals are temporary. They do not imply to a change is a larger trend like breakouts.
If you open an asset chart, you are likely to see a retracement. Even in a strongly trending market, you will notice little peaks or dips which counter the general movement before resuming its course.
How can I use a retrace to my advantage? When you have spotted a trend, it is important to wait for the first retracement to complete before entering a trade. A completed retracement tests resistance or support which further acts as a confirmation of a certain price direction.
Let us say you are interested in buying gold probably because you believe that its price is going to skyrocket. Your immediate reaction is to place a ‘buy’ on the binary option for gold. However, when price retraces you will find yourself loosing. There is also the possibility that you’re misinformed about the trend; the signal you are observing might be a fake out and not a break out.
On the other side, you can wait for the initial retracement to happen and right after enter your gold trade. This way, you stand a better chance of making the right move since the counter movement will have been tested by the market with support being held firm. It is good to understand that you will still be faced with retracements ahead. Even the strongest of trends is usually faced with minor retraces.
3. Identify Support and Resistance Levels
Identifying support and resistance levels is one of the most reliable strategies in binary trading. A support level is defined as that level that keeps the market from attaining lower levels after it has been rejected at least twice. Resistance level on the other hand is defined as that level that prevents the market from attaining high levels after being rejected at least twice.
There are normally three things that happen after a market has hit a resistance or support level:
Knowing what the market is likely to adapt to after attaining these levels makes it easier for one to design a trade strategy based on that information.
You can only identify support and resistance levels through plotting. This allows you to see where the price is hesitating upon current levels. It also allows you to see other future areas where price might likely hesitate at. These levels are commonly termed as “pivot levels”. Pivot points can also help one to figure out the most viable expiry time for a specific trade.
How can one trade by using support and resistance levels?
For an upward trend, the price has to go above the resistance level. If it does not go higher than the resistance level, it will either maintain its position above support level, form a range or take a downward trend. You can go a long way when prices go beyond resistance level. This is because it forms another peak which is usually higher than the previous level.
For a downward trend, the price has break right below the support level. If this does not happen it will maintain its position above the support level, form a range or adopt an uptrend. With a support level you can go short when prices break below this point. When a price breaks below this point, it goes lower to form another support level which is lower than the previous one.
Points to note:
- The more a price is tested at a certain support or resistance level without attaining a breakout, the stronger that resistance or support level is.
- When support levels are broken they become resistance levels and when resistance levels are broken they become support levels.
4. Recognize Market Conditions
One strategy that will take you far while doing binary trading is recognizing and interpreting different market situations. The binary market can be highly compared to the weather, it comes in different patterns. One time it will be smooth sailing, the other time it will be choppy and unpredictable. Listed below are the various examples of a market condition.
- a) Ranging Markets
This is a type of market that keeps moving back and forth between higher highs and higher lows making it difficult to attain a breakout. It can be tough to profit from a ranging market but there are different types of trading that could feasibly help you become profitable. These include:
Boundary or trade ranges: they are designed to help one profit when price is trading within a particular range or channel. When you are range trading, what you’re basically implying is: price won’t go beyond the defined range boundaries. If indeed price does not go beyond the set boundary then you make a profit.
No touch trade: this type of trading implies that price will not touch a specific set value at a given time period. If price touches the set value, too bad because you lose. You win the trade when price does not touch the given value. Payout usually depends on how close the set value is to the current market value for a specific asset.
- b) Trending Markets
This is a type of market that is characterized by prices moving towards an obvious direction through a systematic and well-defined fashion.
The dominant movement in a trending market is upwards and downwards. Profits can be made by spotting trends as they develop.
- c) Chopping Markets
Many people confuse chopping markets with ranging markets. They have some similarities but unlike a well behaved boundary market, choppy markets feature whipsaws, spikes and other various forms of misdirection that can easily trap an unwitting trader.
The easiest way to identify a choppy market is through trading bars. A choppy chart is characterized by lots of bars that are coupled with relatively short bodies and long wicks. When you identify long wicks it means that the market has been testing high and low prices but is still facing too much resistance or support to move anywhere.
Is it possible to profit from a choppy market? In rare cases it is but most people don’t trade on it. The wisest choice is normally to wait until things smoothen again.
5. Use Trend Signals
How can one spot a potential breakout? Through using methods that easily identify breakout signals. Basically, a trading method identifies when to enter trade based on fundamental indicators, events and price changes. A trading method can also help identify the best trade. Listed below are some of the prominent trade methods that can be used to identify trend signals.
- Technical analysis: this is a trading method that revolves around technical analysis. You are simply required to plot indicators on an identified chart. This will help to spot breakouts.
- Fundamental analysis: it involves looking at important events, new releases which can drive price movement towards a particular direction.
- Price action: this is simply the process of identifying certain formations in bars or candlesticks that signal the ability of price to break out from its range.
Tips and Tricks that will get you Ahead in Binary Trading
Apart from binary strategies, there are a few tricks and tips you can add up to your sleeves to make sure you always make the right trading choice.
Find a working strategy
There are numerous strategies out there. Finding one that personally suits you can prove to be a daunting task. It will involve the process of testing numerous systems and strategies. When you identify one that works, stick to it as you continue learning all the ins and outs of it.
Stick to longer expiry dates
It is normal to want everything to happen “now”. Have you ever heard of the saying that ‘good things happen to those that wait.” This is more true when it comes to binary trading. Markets have a lot of noise and it can be easy to get tempted to trade on smaller time frames.
This can work but in most times, the trade usually goes right for a while then it takes a turn towards a downward trend..This happens all the time and it can be very frustrating.
Trading with longer expiry dates cancel out the option of listening to market noise. However, this is not to say that you should never use short expiry dates. With experience and the right strategy, a short expiry time can have its moments.
Put your Emotions in Check
Statics indicate that the biggest reason why most traders fail is because they never take charge of their emotions. Trading psychology is a difficult aspect to overcome and it might take years before you can fully function out of emotions.One tip that will help you is to always
go with what you know rather than that gut feeling.This means submerging yourself more in the learning process in order to make decisions on facts rather than intuition.
Identify the right broker
Identifying the right broker is essential in making a successful trade. There are numerous traders in the market and it is up to you to identify a legitimate, reputable, trustworthy and professional broker.
Some of the things you need to look out for when identifying a broker include: withdrawal times, customer support, tradable assets, payout percentages, regulation among others. At the end of the day, a broker should fit within your needs and preference.
Practice makes perfect
If you want to become a master in binary trading, it boils down to three things; practice, practice and more practice. You don’t have to use real money when practicing. With demo accounts you can trade without spending a dime. Try back testing by using various historical charts while identifying different assets and at the same time looking for trading opportunities. Try and find out what will happen if you followed particular entry rules within different market situations.
In order to achieve success, it is recommended that you present yourself at a trading market for at least one hour a day. During that time you can make up to three or more trades. In the first few months it is important to dedicate yourself to learning.
Don’t fall in love with just one asset or strategy
The market is never constant, it keeps changing. So is the assets behavior. Committing yourself to just one strategy or asset is setting yourself up for a pitfall. For you to succeed, you have to be dynamic and rational. When a market change occurs be ready to adjust it to your trading performance. Make sure you do your homework right by looking out for all the adjustments needed for your daily trading routine.
Binary options trading is sometimes extremely fast paced.
The Future of Binary Options Trading
It has been seven years since the platform for retail binary option trading first rolled out. What does the future hold? Knowing what the future holds will help you get ahead of time and in return experience greater success.
According to experts, the future appears to be bright and fully loaded with opportunities for growth. Some of these opportunities include:
New Asset Types
Technology and innovation is continually resulting to the existence of new trading assets. The number of assets that can be traded is expanding. There are brokers who have started to offer crypto-currency Bitcoin as an item for trading.
Today, traders are demanding more asset ratios from their brokers such as gold verses silver or oil verses gold. One thing that many brokers will never tell you is that you can succeed by scrambling for these new asset ratios. Make sure you watch out for them.
Experts are also foreseeing the probability of new binary option contracts which are based on economic data releases. For example it may soon be possible to bet on high impact news release. These include building permits, consumer sentiment surveys, among many others. These releases can cause specific assets to hit or not hit specific price targets.
New Trading Types
The advent of new trading types is one thing that savvy traders should look forward to. Japan has taken the front line and has already set the ball rolling by launching a new trade platform that features exciting trade types that conform to regulatory conditions set by FFAJ. An example is the introduction of 0-100 binaries
Use of software and technology
Existence of new software has made trading to be easier than it used to be. The market is already faced with trading robots which have an automated software attached to browsers, This allows them to communicate with trading platforms and in return execute trade for traders operating on an automated basis.
Binary trading is still a fairly new investment tool and many may shy away from it. The truth is that binary option trading is an investment just like any other. It possess its unique advantages and disadvantages. However unlike many other investment vehicles, binary options:
- Have fast returns: for many investments you have to wait for at least six months before you start experiencing high levels of profits. With binary options it is possible to see returns right after 60 seconds. Most have an expiry date of one day or shorter.
- It’s the easiest form of investment: all you need to do is learn a few tricks and you are good to go. What’s more is that you will be trading only on a dual basis. It doesn’t get any easier than that.
- Have high returns: it is possible to experience a return of 70% and above.
With that said, it is time to learn how binary trading actually works. If you play close attention to the strategies mentioned above, you may be surprised with the amount of money you will be able to earn. What’s more is that we’ve provided you with some tricks and tips that will help you get ahead.
If you want to know the main differences between binary options and forex trading, I recommend you to read the following article:
- Binary Options vs. Forex (Differences explained . You will also learn which one fits you better and why . )
How to trade with binary options? A simple four-step guide.
Step 1: Choose the trading asset. First, you have to choose your preferred trading asset. You have hundreds of different options at your disposal, such as stocks, currencies, commodities and indices .
Step 2: Choose the direction. Next, you need to select a direction. If you believe that the price will increase, select “call,” but if you believe it will decrease, select “put.”
Step 3: Choose the desired investment amount. You need to choose the amount you wish to invest. This can be anything from a few dollars to tens of thousands of dollars.
Step 4: Choose the expiration time. Select the time when you want your investment to expire. This can be anything between 30 seconds and several months.
After this, you just need to wait and see if your investment went right.
Example of a binary options trade
The starting price of gold is $1,167 at 12:30 p.m., with an expiration time of 60 minutes.
If a trader thinks that the price of gold will close at or above $1,167 at 1:30 p.m. , he/she can buy a “call” option contract on that outcome. If a trader thinks that the gold price will close at or below $1,167 at 1:30 p.m. , he can buy a “put” option contract. If the value is more than $1,167 at the expiration time, the “call” investment will win , but if the value is less than $1,167, the “put” investment will win .
How do I earn money using Binary Options?
Earning with binary options is easier than you may initially believe. You just need to know if the value of the trading asset is more likely to move up or down. Remember that not every trade needs to go right; it is sufficient that you make a profit in the long term. Please check out the following simple example of how to make money with Binary Options.
Step 1: Choose the right trading asset
This is the main point of Binary Options trading. You should start thinking about what trading asset could be the most suitable for you. Do you have first-hand knowledge of some asset? Do you have a strong view on what direction the value of a particular trading asset will change? Do you have friends or relatives who have strong knowledge of some trading asset? If so, can you use it in your investment?
If you answered yes to any of the above questions, you know where you should start. However, if your answer to all questions is no, then you have in front of you a little bit bigger task, but the reward is also in the best case really good.
How do I find the right trading asset without prior investment knowledge?
One of the most important factors is to follow the financial news . Is there something happening in the world now which you could benefit from in your binary options investments? You can also explore what trading assets brokers are offering and which would be fastest for you to learn. Alternatively, are there any trading assets that you are particularly interested to learn better?
One of the advantages of binary options is that you can make big profits from the mere fluctuations in the value of assets. For example, if the value of gold rises and falls back and forth from one day to the other , but it remains within a few percent of the same range in what it was a year ago, you will still have the opportunity to earn large sums of money, if you have correctly anticipated the direction of the change. On the other hand, if you had invested directly in gold , the value would be close to the same one that existed a year ago .
Step 2: Choose the right trading strategy
Binary Options Strategy Articles:
As a binary option investor, you have a number of different strategies and options at your disposal . I recommend trying several different strategies and use the most profitable . Once you have learned how to productively use one of the strategies, you can gradually increase other ones into your repertoire. This way , you will always have several different options for obtaining as high yields as possible. Next, we will discuss the ten most popular and profitable strategies.
Strategy number one: Binary option pairs
In binary option pairs trading , you have two different trading assets and you need to know if either value will increase compared to the other within a desired period . This is a particularly good strategy in situations in which you think that a specific event will raise the value of another trading asset and decline the value of another . Even if your guess would go a little bit wrong, and the value of both declines, you can still win if that which you originally though would decline actually declines even more .
Gold vs. Silver is one of the most popular trading pairs
Strategy number two: Long-term binary options
Long-term binary options are similar to stock investing. The expiration time may vary from a few hours to several days and even months. This is my personal favorite strategy. It is ideal for individuals who invest larger amounts of money and want to carefully analyze the trading assets before investing.
Strategy number three: Sixty-second binary options
Sixty-second binary options are the precise opposite of the long-term binary options. They are a short-term form of investment in which the risks are considerable , but if you learn how to make profit with them, only the sky is the limit for how much money you can earn with them. Sixty-second options are suitable for investors who are able to accept the fact that if they want to win a lot of money , they have to be willing to lose a lot from time to time.
Strategy number four: One touch binary options
When you are trading with one touch binary options, you make profit when the rate goes above or below the set target price. On the plus side is the fact that once you hit the target price, your investment cannot go wrong , even if the value of the asset changes in the other direction strongly thereafter.
Strategy number five: Binary options ladder trading
Ladder trading means what the name suggests: you have many different levels, each of which are paid a certain percentage of yield. This form of investment is suitable for those cases in which the investor believes he knows which direction the trading assets value will follow , but it is not sure at all of how much value eventually will change and in what time frame.
Ladder trading is an excellent strategy for skilled investors. You can get very high returns in a short time.
Strategy number six: Pinocchio strategy
This is one of the clearest and simplest strategies. When the value of the trading asset rises, it is expected to fall next , and when value of asset falls , it is expected to rise. The investor always invests in the opposite direction of the market trend. It operates under the assumption that markets often overreact to certain news, and because of this, value changes momentarily more than it should change, correcting itself, sooner or later.
Candelstick charts are an excellent tool for for those that uses pinocchio strategy
Strategy number seven: Support and resistance lines strategy
Support line is the point of which value does not change lower and the resistance line is the point of what higher value does not rise. These often apply particularly in certain commodities, such as the value of coffee or sugar. When values are sawing a certain range within the framework, it is easy for the investor to benefit, when he discovers that the value is approaching one of the two levels and will most likely will go in the other direction very soon.
Strategy number eight: Trend strategy
Trend strategy is also a very simple strategy, and something that both novices and experienced traders often use, considering it is really good and functional. In trend strategy , you invest in the market trend ; if it is rising, you place a “call” investment, but if it is descending , you place a “put” investment . You can use support and resistance lines for help to assess when the trend direction changes.
Strategy number nine: Martingale & anti-martingale strategy
Martingale is a strategy especially and frequently used in gambling . In martingale , you always double the bet when the investment goes wrong. This way , you make profit even if you just get one of those investments to go right. Martingale is really a high-risk strategy ; you rarely lose when you use it, but when you lose, the amounts tend to be big . The reversed version of this strategy is anti-martingale. Through it, the stakes are only doubled when the investment is correct ; wins are rare, but the sums tend to be big . Please read more about the Martingale strategy on the following article:
- Binary Options Martingale Strategy (Can you earn tens of thousands of dollars using it? All the secrets of this strategy are now being revealed for the first time.)
Strategy number ten: Fundamental analysis
Fundamental analysis is often used in stock trading ; it focuses on the determination of the real value of the investment object , based on various economic indicators , such as : the overall economic picture, the profitability of the industry , and future growth prospects. Making fundamental analysis requires a lot of time and effort, but the end results obtained can be generally utilized in various ways.
You can also mix the strategies as desired . For best results, I recommend you to first study a single strategy properly.
Step 3: Choose the right broker
Choosing the right broker is extremely important, as there are some dishonest operators on the market who are trying to ruin the reputation of honest ones by acting unethically. We only mention the most honest and reliable binary option brokers on our recommendations . If you only invest on our recommended brokers and open accounts through our links , you can have peace of mind and more time to focus on the most important thing : making money by investing. Our number one recommendation is IQ Option , as they have the smallest minimum deposit ($10), the best trading platform and the best bonuses.
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.
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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.Best Binary Options Brokers 2020:
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