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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.
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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
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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.
Binary Options Bonuses
If you are comparing various binary options brokers with one another, you may have noticed one thing. This is that many of them use bonuses as a sales tactic.
What Do Binary Options Bonuses Really Mean for You?
Now, these bonuses vary from one another but they do certain things in common. For instance, there is no denying that they all appear to be quite alluring. It can be quite easy to want to join a binary options broker that is offering an incredibly generous bonus. Nonetheless, you need to ask yourself the question what do binary options bonuses really mean for you? This article tackles the relevant elements for you:
Types of Bonuses
Now, the bonuses themselves can come in different forms. This typically depends on what a particular broker is willing to offer in exchange for your registration. One of the most common types is the welcome bonus. You receive this when you first sign up with the broker. It could be in the form of money to trade with or just an amount added to your account. This bonus is no longer applicable once you have become a regular trader with that broker.
Just as popular is the deposit bonus. This is more of a continuous reward. Each time you deposit a certain amount of money in your account, the broker will provide you with a percentage of money. The benefit of this, as you can imagine, is that you get to continue receiving additional money.
Then you have the risk free trading bonus. This is not a tactic that is widely adopted. Even if it is, it is usually reserved for account holders with high deposit minimums. Nonetheless, it is an enticing offer as it allows you to make a certain amount of trades completely risk free. This means that even if the trade ends up out of the money, you still get all of your money back.
There are some brokers that allow you to register with them for free – no deposit required. Instead, you can place the money into your account only when you wish to start trading. On occasion, a broker will provide you with an incentive if you can prove that you have referred another trader to that site.
The Hidden Details
What many traders fail to realize is that every bonus has its own set of terms and conditions. Essentially, they all come with a catch of their own. Now these special circumstances depend on the broker that you are signing up with.
A shared trait, however, is that you are not simply allowed to withdraw the bonus whenever you feel like it. You typically have to conduct a certain number of trades and have a specific amount of money in your account before you can withdraw this money. On certain occasions, you may not be able to withdraw the money at all. Instead, you may be required to use it to place trades with.
It is quite common to find a set of terms and conditions just for the bonuses. It is important to thoroughly examine and understand all of the strings that may come attached with the bonus. This is the best way to avoid any confusion or any unpleasantness later on.
Should You Take the Bonus?
One thing that you need to understand is that you are not obligated to agree to bonus. If you wish to, you can waive the bonus. Now, it is completely up to you if you want to do this. You will need to weigh the pros and cons involved with such a decision. It also depends on the type of bonus that is being offered and the restrictions that places on you.
This should help you to understand what binary options really mean for you. As a result, you should be better equipped to determine whether it is right for you or not.
Binary options no deposit bonus
Binary options no deposit bonus 2020
Usually Binary options no deposit bonus is the best way to start live options trading risk-free. In this case, Broker provides some free cash-bonus to test their platform and trading environment where no cash money needed. Some promotion allows you to withdraw Profits you made through Binary Options no deposit bonus. Get all the available Binary options no deposit bonus 2020 listed here.
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Best of Binary Options Bonuses
Binary options bonus offer is the convenient term for cooperation and constantly meet all the customers need. The trading bonus is determined by the use of charges by broker and investor and is divided into two special compensation groups:
- Broker bonus for trading
- No deposit bonus
For calculation each type has its own requirements and characteristics also with the time, condition and size that depend on the company brokerage and with customer’s co-operation.
Trading Bonus and Its Main Feature
Many brokers serve their clients with some reward and provide them with some special charges for certain actions. These are highlighted:
- Initial binary options deposit bonus
- For each deposit further there is trading bonus
Every broker does not provide with polices of such charges so for that you need to be sure that you selected the company that provides with opportunities to his clients.
Mostly on the first deposit bonus is applied and there are number of conditions that the broker put forward to be performed and to receive with the bonus you must;
- You need to complete with the process of registration.
- You fund your trading account.
- You need to confirm with the registration data.
After completing all this procedure, you will receive with bonus in account and the bonus size may be fixed or depend on the deposit amount. Certain percentage of amount paid is given to clients by broker and can get the compensation with some percent of the initial deposit.
Binary options trading bonus can be possibly withdrawn after fulfilling all the certain conditions of the brokerage firm as it is normal because no one gives money like this only. Trader should work with a deal on bonus and then withdraw with that certain amount but sometimes from the main account there is only a gift and money cannot be removed and for the traders who wisely allocate for their funds and fully control with their work is not suitable for them.
Get Best Actual Binary Options Bonus
To start a career as a trader deposit bonus is the good opportunity and you just need to allocate money wisely and you will be able to control the risk with the level of each transaction.
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No Deposit Binary Options Bonus
No deposit bonus binary options brokers offers very rarely. For additional charges it is a special kind and it is not necessary the balance to replenish of trade but many of the traders in the beginning of work with the deposit cannot replenish and this is the reason that becomes the reason of rejection for any investors.
Trading no deposit bonus is usually a king of a gift for most loyal traders. But in this case the development activities of the broker are going to directly meet the clients in the binary option fields.
You need to complete the simple process of registration to get the bonus gift and that money will be credited to your account but you need to remember after getting money is that
- The money cannot be directly transact to the real bank account and provide with the platform of binary options.
- Such type of fees is given just once and during the operations unsuccessful the money will spent to continue with the investing facilities.
- It is necessary for the trader to make transaction to withdraw possible funds that is accrued by broker with profits and to withdraw often you have to deposit minimum amount.
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Why should take the bonus
This calculation can be used at its discretion. Among the other areas it is identified:
- Control the risk level, and the increased deposit plays a good helper role for allocating proper funds.
- Profit growth; in the field the bonus allows to increase the binary option transactions to get enough income. For losing trade it is the easiest work.
- Introduction to the platform of trading; with bonuses you can easily work with the methods and strategies of trade to finalize the weaknesses and learn the nuances.
- Deposit to way out for negative value. Broker can use your extra money to change the account status of yours and sometimes the trader can go into negative and bonus will help to restore with the balance in positive for the trading activity.
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