Investing in binary options
What is binary options
Money dealing - trading on the stock market - stands out among the types of earning on the global web. Online binary options trading is a lucrative form of financial commerce. This approach to stock trading has become the most popular due to its high returns, affordability and simplicity.
What are binary options? It is a type of exchange contract, which is used to profit from price movements of assets (currencies, shares, commodities) in the world's financial markets.
The assets upon which we make our forecasts may be currency pairs, stocks of different large companies, commodities, gold, silver, oil, etc. In world practice, there are bets even on weather changes. There are a lot of offers on this market and therefore the player is required to know the basic options of the contract:
- Up/Down. This is one of the most widespread types, in which you only have to predict the direction in which the value of the asset will move. The profitability in this case depends on the currencies you choose to trade, the time frame of the event, and the market situation, and can be up to ninety percent.
- Range - here, the player is offered to predict the value of the fund for a certain period of time. Your profit in this case depends on a lot of factors, which include the time of the fund's value movement, the expiration time of the binary options and the market situation. In the contract you enter into, you need to set the boundaries of the currency price movement and the time that the value of the currency will stay within your selected range. In case of the expiration of the given time, the value of the currency does not go beyond the specified limits - then the player has won.
- Touching - this is the most profitable type, because it is not enough to specify the direction of fund value, but you need to specify the value of the fund for a certain period of time. And even if you guessed the direction of the value of the selected security over a certain period of time, the option will be considered successful, because you managed to guess the direction of the security within your selected range.
Binary options expiry dates
Binary brokers offer a large number of expiry times to choose from, ranging from ultra-short (as short as 60 seconds) to expiry times of a month or more. Differences in expiry times have a big impact both on the amount of profit a trader can make and the investment risk. It is therefore important to choose expiry times with care.
Expiration time is the time limit, until the expiry of which the trader's forecast should be realized. In this case, the user will make a profit from the contract. The expiry time is most often the last term of the contract.
We distinguish between the following types of options by expiry times:
- Short term options (they are often called turbo options, their duration is normally 30 sec., 60 sec., 120 sec., 180 sec., 300 sec.).
- Intra Day Binary Options (normally ranging in length from 5 minutes to 1 day).
- Long term contracts (these are options that last from 1 day and longer).
The way of investing in binary options depends on the choice of expiry time. Namely, the strategy and the analysis tools you will apply.
What is a binary options broker
With the emergence of the private binary trading business came the need for brokerage companies. When you set out to learn how to practice dealing, the first thing you think about is with whom and where to trade binary options. For this, there are special brokerage sites, which provide you with a trading floor, different assets for which you can buy an option and also the possibility to analyse the chosen instrument.
What is a binary options trader
This word - trader - has just recently appeared on our lips due to the great spread of Forex and those same binary options. In fact, a trader appeared when the financial market in general - more than a century ago. It is a person who tries to profit from the trading process on his own initiative.
A binary options trader is a speculator who trades online and tries to profit from the price movement of the underlying asset in relation to time. That is, his task is to make a profit on a binary option trade, which can be made on the broker's trading platform. The role of the dealer is to analyze the current state of the situation in the market and to conclude transactions in a timely manner.
What is binary options trading
There are a lot of nuances in option commerce. You have to understand the different terms involved. For example:
- Percentage of Profit - is the percentage of his bet which a trader will get as a result of a winning bet. Usually the percentage ranges from 70 to 90%, depending on the broker.
- Call options - trades to increase the price of an asset after a certain time set on the broker's platform.
- Timeframes are timeframes in which we look at price movements, using charts or news. The most popular timeframes are from 1 minute to 1 month.
- Trend - A trend is a trend in which market price is rising (uptrend) or falling (downtrend).
- The strike price of the option is the closing quote itself, which determines whether your bid is in the money or closed "out of the money". And so on.
Understanding what is binary options trading can be helped by a trading platform.
It is easy to use and does not require complicated configurations or methods. If you want to trade, you don't need to be an expert. You can test trading without any investment until you gain some experience with the system, which is a demo account. You can practice your trading skills and learn how to manage your investments, as most trades are made in real time through the platform.
Beginner traders can be trained on free platforms, which apply basic metrics when making trades. With the help of video tutorials, you will learn a lot! No additional software installation is required.
How to profit from binary options
For a lot of traders all over the world, trading binary options offers an easy and comfortable way to make money. Many people think that luck is enough. After all, you just need to guess the price direction. But that is not the case. To make a stable income and not rely on luck and the volatility of the asset, you need to make an analysis. There are 2 main types of analysis.
- Fundamental analysis, represented as an economic calendar. One of the popular types of fundamental analysis is trading on the news. For example, when news about the profits (financial statements are published) of a certain company usually leads to significant changes in its share price. Fundamental analysis is better suited to predicting prices for longer periods of time (days, weeks, months).
- Technical analysis is the most common and one of the most efficient ways of predicting price movements. In brief, you can draw various levels, channels, trend lines, moving averages, various indicators etc. It's possible to build up a trading strategy based on these tools. The technical analysis works on small-time intervals (minutes, tens of minutes, hours), and on larger time periods (days, weeks).
Also, experienced traders will advise you to follow a strategy. You should know exactly when you should open a deal and when you should not.
A strategy is essentially a set of specific rules by which a trade is opened. An effective strategy is based on certain technical analysis tools: indicators, support/resistance levels, trend lines, etc.
Trading binary options is known for its simplicity. The trading platform is easy to use and does not require complicated configurations or methods. If you want to trade, you don't need to be an expert. You can test trading without any investment until you gain some experience with the system, which is a demo account. You can practice your trading skills and learn how to manage your investments, as most trades are made in real time.
Where to trade binary options in South Africa
So, if you already know what is trading binary options and what investing in binary options means, you can think about making options as your regular income. The first thing you need to do is to register on the platform and try out your first bet.
As soon as you begin your account, you will have a wide range of features on the broker's platform. These include a functional mobile app, a user-friendly terminal, chat, real-time quotes, charts, news, etc.
So if you are planning to trade in South Africa, you may be interested in joining the binary options trading platform.
By registering a demo account, you will trade the same assets and instruments as in a real account. You will not risk losing your money if a trade is unsuccessful. The system will automatically credit virtual money to your demo account. You can work with these funds as you wish, monitoring results and planning your future strategy. Make sure you understand what is the binary options market and what its dynamics are, until you actually start investing cash.
Real Trading Account
To register a live account, you will need to make a deposit in a convenient way into your account. After that, you will use it for trading. So, be careful not to deposit all your money in one go, because trading always involves some risk, and you should start with small amounts.
If necessary, you can also use some leverage. Leverage is a special service offered by a brokerage company, which involves lending additional money to an investor so that the client can open a position.
Trading binary options is easy when you know how to manage your risks and take calculated risks. Online trading platforms allow you to trade anywhere in the world at any time. You should also be aware of your trading goals and objectives. Good Luck!