Binary Options Foreword
Trading doesn’t bring so desirable and necessary income? Don’t want to risk your funds anymore? Don’t believe that it is possible to earn money using Forex for these purposes? – The way out of this situation is very simple. Furthermore, there is absolutely no need to be afraid of unknown losses thanks to a new and innovative kind of trading – binary options.
Binary options are a comfortable and effective financial instrument with a high level of profitability. Only one point of discrepancy in a price of an asset gives a result which can be immediately seen on a balance in an on-line regime right after the deal is exercised. This being said, the payout percentage for an exercised option varies from 65% and up to 95% depending on a broker you choose to work with.
One more pro is that fixed amounts of money for trades give an opportunity to work with fewer risks while buying and selling options that are binaries as well as have an effective control over the investment portfolio.
How Do Binary Options Work?
First of all, it should be added that binary option is sort of a trade for making which one needs to predict the movement of the price for any of the market assets within a certain period of time. For example, a trader can suppose that the cost of a dollar will be higher or lower relatively to Euro etc. That’s the reason why the option is called “binary” – because there are two possible ways of outcome: either win and get the invested money back plus a payout commission or lose and not get anything back. In simple words, traders should just predict increase or decrease of the price. What can be easier than that?
In case if the prediction comes true at the moment of expiration, then a trade can be considered as a successful one and the income can be received and on the contrary.
In fact, the principle of binaries trading is general for the whole financial market and is used in regard to any assets, be it currencies, shares, commodities or indexes. Yet to make trades directly with market assets, investors need to invest pretty big sums of money, therefore, no everyone can afford it (especially if we are talking about people who just want to start their career in this particular industry). Another situation is with options that are binaries because here minimum deposit is only $5.
To trade options, there is no necessity to purchase the asset, it is more than enough to buy just a contract, which is by the way cheaper. So, for instance, you buy an option for stocks of a large company for $5 whereas the price of one such share is more than $500. In other words, with the help of options it becames possible to make money in a way that was impossible earlier.
What can Binary Options Give you?
- Control and management of risks – in situation with binaries, you know for sure how much you might win or lose before the trading process begins. Binary options brokers don’t charge any additional commission when you lose. Trading options supposes predicted profit and minimum risk;
- Buy a contract, not an asset – as it was mentioned above, this trick is needed to avoid high price barriers;
- Get high income – its size depends not on the price discrepancy but on the fluctuations of investments direction. The profit varying from 71%-85% can be easily received when one point is changed. The likelihood of getting high profit increases repeatedly;
- Easy work and pleasure as a consequence – this kind of making money is considered to be one of the easiest because no special education is needed. It means that you need less information and data to begin working with assets. Apart from that, there is no need to learn difficult schemes and diagrams and spend much time for research. Such variant of work is definitely clear even on intuitive level, consequently even a beginner will easily cope with it. Plus, don’t forget that while trading, you need only to guess/predict in which direction the price moves;
- Receive simple hedging of a portfolio – binary options trading is connected with the majority of strategies and concepts on Forex without any problems and issues. Trading operations can be made more often and short/long positions mean simple portfolio hedging;
- Comfortable trading – the platform or how it is also called – software allows clients perform on international markets right from their home by simply pressing the buttons. Moreover, with the development of technologies, there appeared mobile apps due to which super active investors, who cannot live without trading, have a chance to open new positions, check, monitor and watch their trades from any place of the globe and at absolutely any time;
- 24/7 – binaries are traded every day (without any exceptions), 24 hours a day and without days off and holidays;
- Quick profit – because of short-term trading, it is possible to make several deals a day, thus getting big income;
- Basic instruments – here everything depends on your experience, knowledge and practical skills. Mainly, novice traders start with only one instrument, whereas professionals easily cope with a few, thus increasing chances for a positive outcome;
- No commissions – as a rule, short-term trades are imposed by a pretty considerable commission which very often “absorbs” the bigger part of the profit. In case with binary options, this will never happen as they are free from any kind of imposing;
- No risks – a lot of brokers offer an opportunity to try and test your skills with the help of a demo-account where you can master your knowledge, create own individual strategies and not being afraid of losing money;
Taking into account all the above-mentioned points, it becomes clear why binary options have got such a high popularity among traders of all levels worldwide. Yet there are still some who doubt its high efficiency because of rumors regarding binaries similarity with gambling.
Binary Options is Gambling?
It is necessary to shatter a myth that options that are binaries are some sort of a casino. It is absolutely not like that! The first and most important its advantage lies in the fact that a trader always knows what sum of money he might win (if the prediction comes true) and lose (if the prediction goes wrong). Unlike stock exchanges, here a trader should do only one thing – determine whether the price will be above or below the current one at a certain period of time. Basically, all a trader should do is to “catch” one discrepancy in price point in an established in advance interval.
Another point that differs options from gambling is that in case of gambling, a person relies only on his/her luck, whereas binary options predictions are based on strategies, analysis and research of the market etc. Consequently, the chances for winning are much higher compared to those of a gambling. In simple words, binaries are not a casino but work that brings satisfaction and material benefits at the same time due to your professionalism and not luck.
“I Will Be Lucky, Won’t I?”
Very often, novice traders make one huge mistake – opening of a big quantity of spontaneous traders without using methods of market information, data, analysis and research. In such a manner, they kind of turn the trading process into a game where a trader increases level of risks. There are no hesitations that using technical or fundamental types of analysis, the result will always be positive and more predictable, rather then just relying on luck. For this very reason, all kinds of analysis along with accurate and precise descriptions of how to work with them are so necessary to learn, understand and later implement. Don’t think that groundless and random opening of trades will ever bring you any experience as well as potential profit. Most probably everything will be on the contrary.
Why we have chosen exactly this particular strategy for description and explanation? The answer is very simple – because this concept came into the binary options sphere right from gambling. All due to its principle which is the following – increasing of an investment after each loss-making position supposes that sooner or later you will win. NOTE***Remember, increasing of a trade investment is a risk that should be controlled by risk management and correct and proper market assessment.
A possibility to fix losses is a very significant skill that will definitely help you at the early stages of your career. But don’t forget that trading is not a passive investment and the risk of a loss – is a part of a trading process that is unavoidable. It is simply impossible to win all the time. Therefore, you should be fully and completely ready for not only positive but also negative results and as a sequence undertake all possible measures to avoid big losses and under no circumstances should you try to win back the money using Martingale strategy.
Short or Long-term Trades: Which One to Opt For?
Temptation to earn 80% from invested money within an extremely short period of time is more connected with passion and gambling rather than deliberate and steady approach to buying and selling. It is important to realize and understand that for trading in such kinds of options, working capital should be equal to the right classification of risks.
Why? Because chances for reasonable reaction within short time-frames are minimal. That’s why if binary options trading for you is not any similar to playing a roulette, but a good resource of profit, then it is highly advised to start with buying long-term options. Of course, it automatically means that you will not receive profit here and now, but will have to wait for a few hours, which in their turn will increase your chances for victory, thus the income will grow and skills improved.
One of the most important parts of the trading procedure is of course a psychological factor and an ability to trade in a rational way. A calm trader is the best trader. Here, emotions are your enemy as they directly influence on the condition of your account. Trading operations are simple for performing, yet again not in a psychological manner. The difficulty lies and is based on the fact that it is sometimes too hard to make a decision as nobody wants to make a mistake that might lead to considerable losses. That is why, the decisions that are made in a not stable psychological state are not logical. The best solution in such situations would be to separate actions from emotions. If you are still nervous, worried and not emotially stable, it is recommended to use all methods you know to calm down, relax , drink a cup of tea or maybe even have a break. Never let emotions get an advantage of you and never deviate from a chosen strategy.
How to Choose a Good Broker?
It is not a secret that everyone who comes into the binary options industry has only one aim on his/her mind – to have a stable income. But to have this stable income, one needs to opt for the right, trusted and reliable broker that will help in this process by providing multiple exceptional features and functions, wide array of assets, instruments, bonuses, types of options and accounts, high payouts, educational materials and many other things.
But how to select a brokerage company that would withdraw the earned money without delays, lies and cheating? Not all companies are capable of boasting a good reputation, therefore before making a final decision, spend some time and follow these rules:
– make the process of a broker selection accurate and precise (try to get as much information about it as it is only possible due to reviews, Internet, consultations with managers, TV, newspapers, successful investor’s advises etc);
– don’t open an account with a fake name as it will definitely make the withdrawing process more complicated because of a verification process;
– read broker’s rules of cooperation carefully and attentively;
– check the conditions of bonus proposals;
Other factors that should be checked:
– who is a supplier of broker’s quotations;
-availability of licenses that will determine whether the broker is regulated by governmental bodies/authorities or not;
– availability and possibility to open a demo-account;
– free educational resources, materials, books, video-lessons etc;
– availability of a customer support;