This is an in-depth guide to understanding binary options.
Binary options is simply a financial opportunity where the payoff is either monetary or nothing depending on a predetermined term.
In this kind of trading, you can earn thousands of dollars within minutes, and in the same way, you can lose your life savings before you are even able to mention “Jack Robinson”.
This article will help you understand the business of binary options, thus, you will be better equipped after reading this.
You will find it very easy to read through the post, here is a list of everything I will cover. Click on any to take you directly to its content.
- What is a Binary Option?
- What is a Bitcoin Binary Options?
- History of Binary Options
- How to Trade Binary Options (Illustration)
- Best Binary Options Platforms
- Binary Options Robot
- Merits And Demerits Of Binary Options
- Is Binary Options a Scam?
- Vital Tips On Trading Binary Options
What is a Binary Option?
Binary option is known as a financial product in which the outcome is usually a fixed monetary amount or nothing at all. This outcome is usually a result of a “Yes or No” proposition.
Binary options could either be cash-or-nothing or asset-or-nothing, by this I simply mean that you could get involved with cash or you could use an asset.
For instance, let’s say the price of a given commodity or asset is $55. An investor (James) places a $100 wager that the price will either go up or down within a set time.
If James stakes his money that Yes, the price will move up in 5 minutes and it does, he will automatically receive the payout based on the term agreed with the broker.
But if the price drops against his decision, he loses all the $100 invested.
That’s Binary options, in a nutshell, keep reading to understand the full details.
What is Bitcoin Binary Options?
There are hundreds of markets that we can trade binary options in. These markets fall into five major groups;
- Indices, and
Binary Options are usually traded in USD, however, some binary options brokers now base their trading currency on bitcoin.
Hence we could say that bitcoin binary options are binary options traded in Bitcoins or that in which you can fund and withdraw your money in bitcoins.
It is possible to make thousands of dollars in trading Binary options if you know what you are doing, it is also possible to lose all your money.
This short video shows what is possible with binary options. This is how you can make thousands in USD in munites if you know what you are doing.
History of Binary Options
Binary option is gotten from Options trading. Options trading is not new to society, although it has been some sort of business for elites and was practice almost without regulations.
Things became different when the Chicago Board of Trade introduced the first structured trading opportunity in the year 1971 and formed the Chicago Board Options Exchange (CBOE). It turned out to be one of the biggest organizations of its kind and presently it is the biggest method of options trading worldwide.
As time went by, there were tremendous adjustments in the regulations binding Option Trading which led to drastic improvement. A safety body known as Options Clearing Corporation (OCC) was created to ensure that investors abide by these regulations. Finally, Binary options evolved from these standard procedures with the aim of initiating a more feasible investment principle with lesser complications.
In the year 2007, OCC adjusted its guideline to give room for binary option to be bartered on major stock exchanges. It was finally approved by the US Securities and Exchange Commission (SEC) in the year 2008. This was done in order to legalize the classification of binary options as a tradable contract in foreign financial markets. Binary Options was first offered publicly by American Stock Exchange in May 2008, followed by CBOE.
Recently, binary option has gained popularity with the trend of Bitcoin being initiated as one of the funding sources of binary options, although some trading platforms use currencies or assets such as gold while others now use bitcoin.
However, due to regulations and policies platforms like expert options and Olymp trade which not to be addresses as binary options or options company but fixed time trade or fast online trading company.
How to Trade Binary Options Using “binary.com” as an Example
Firstly, you register with binary.com by logging into the site and entering your email address, then choose a password. Most brokers will give you a demo amount to practice with before you can begin to trade properly.
You can participate in the live market but you cannot cash out the money made with this demo amount. It is just for you to practice and perfect your trading skills before facing the real deal. Expert Option gives you $10,000 in the demo account.
Trading Binary options is quite simple. The steps are as follows
- Select the market you want to trade; BTC/USD, USD/EUR, USD/AUD, etc
- enter the amount you want to make the trade with
- enter the time range (this can be as short as 5 seconds to as much as a week)
- select call/higher/up/arrow pointing up or put/lower/fall/arrow pointing down (the term used depends on the broker you are trading with, it is always indicated with arrows going up or down)
For example, let’s say James wants to trade the BTC/USD market. He enters $100 as his trading amount and selected 1 minute trading time. If BTC/USD is at $7,000 and he chooses ‘CALL’, James will make about $173 after 1 minute if the price rises above $7,000 or lose all $100 if it falls below $7,000.
Similarly, if He chooses ‘PUT’, He will make $173 if the BTC falls below $7,000 after 1 minute or lose all $100 if it rises above $7,000.
Best Exchanges To Trade Binary Options
I have outlined 5 top platforms to trade Binary Options;`
Binary Options Robot
Some binary options platforms have provisions for robots and 3rd party robots. It is quite obvious that the purpose of your investment is to make a good profit. With trading robot software, trades can be carried out automatically online.
Trading software has a very high chance of winning since they are programmed to study carefully before predicting. You could trade successfully using Binary options robots without having prior knowledge of the platform or binary options trading. However, it is still not a guarantee of making a profit.
Merits And Demerits Of Binary Options
- It is totally independent of the current price of the market (e.g. Bitcoin/USD), it only cares about an increase or decrease in the price of the asset (e.g Bitcoin).
- You don’t need any special expertise skills before you can participate
- Payouts are generally high and could be up to 88%
- If you develop a winning strategy, you can have a steady inflow of income.
- It is a pure gamble
- Can be quite addictive if not properly checked
- Up to 95% of investors lose their money.
Is Binary Options A Scam?
Binary options including Bitcoin binary options itself is not a scam. However, some brokers are out there to scam you. Note that when you trade binary options, you are trading against the broker, therefore some brokers do all they can to cheat traders.
If you are a regular trader, you will notice that you can make a profit trading in the demo account of some brokers like Binomo and lose money when trading the real account. To be on the safe side, stick with the brokers I recommended above. You must always remember that this is a form of gambling too and success is not guaranteed.
Also by statistics, 95% of those that trade binary lose their money.
Vital Tips On Trading Binary Options
- Trading Binary options is not attached to any hidden charges or costs.
- The amount payable on any trade is clearly stated before trade commences.
- You can only lose the amount you have staked in a position, that’s if you eventually lose out on your trade.
- Trading binary options is quite risky and it’s only advisable to stake what you can afford to lose.
- To be on the gaining side in binary options, you must win most of the trades you place in the market.
- There are different trading options in the industry but the easiest is the Up/Down trading option( e.g. Bitcoin Binary option)
You have read it all on my binary options guide.
I am sure you are well informed by now. You can open an account with a binary options broker within the next 2 minutes and start trading. Most brokers give you a demo account loaded with at least $1,000.
I hope the above has given you an insight into binary options?
Do you think countries like the U.S have done a great job to ban Binary options from its jurisdiction?
Have you had any experience trading binary options?
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