As its name indicates, a binary option can present two outcomes once expiration has been reached. It consists of betting on a rise or fall of a specific underlying asset in a certain period. When the contract expires, it may happen that the prediction has been correct or not. If so, what has been stipulated in it is earned. Binary operations are a highly volatile financial instrument that’s why you need binary brokers to help you out.
What are binary trades?
For beginners binary options are high-risk financial products to speculate on the movement of different assets (currencies, commodities, indices, shares). One of the variables to take into account in binary options is time and the type of asset. For example, “Oil binary option will go down in the next 3 minutes”.
How do binary options work?
Binary options allow you to go long or short for brief periods, 1 hour, etc.) we’ll explain in this article below.
They work almost like the standard options; you don’t have to choose them. You do not bet, as in conventional options, by combinations of price and term, but, leaving the time fixed, you bet only to go up or down (hence the “binary”).
However, this seems like a simplification that facilitates the operation; in reality, it is an excellent trap since the price has the habit of entertaining itself, often doing the opposite of what you think for a long time until, in the end, it evolves to your favor. Deadlines always add difficulty to the game.
How is it operated?
You have to choose the asset where you are going to operate, for example, EUR/USD, and you also have to select the option’s expiration, for example, 30 minutes. Then you have to decide between Call or Put. If we believe that the price in 30 minutes will go up, we will choose the Call option; standard ink will go down from the current price, and we will select the Put option.
If we invest 100 euros, for example, and decide on the Call option and the price goes up, we will have a profit of 180 euros, but if we decide on the Put option and the price goes down, we lose the investment. If the price remains at the same level as our investment began, we will keep the same amount of 100 euros.
Difference between Forex and binary trading
Both are investment forms but do not have the same risk or the same possibilities of profit. In Forex, the investessentialn asset because he has the purchase contract, unlike Binary OptionA helpful ich, is a betting contract that does not move the prices of the agreement, and the investor does not own assets. As for purchases, the first operates only with currencies, while binary operations, in addition to working with coins, also work with other assets such as raw materials or shares of large companies.
In Forex, contracts can be kept open without any term and with a much higher capital because the market is enormous. In comparison, in binary operations, they are carried out in a limited time, and the money can be less or equal to start obtaining Profits.
The reality of binary options
The reality of binary options is that, however you put yourself, you still compete against the always tough market.
It is still as difficult to win with binary options as with futures, stocks, ETFs, CFDs, or any other product (in fact, with options, it is technically more difficult).
In addition, they come standard with a problem that makes them useless: they are exorbitantly expensive.
Binary options are popular, not because they are a good product, but because they invite the idea of easy money like no other, something that you and I know very well does not exist.
They are just like turbo warrants were a few years ago or, even earlier, standard options or operations with mackerels. They are variants of trading invented to attract those who are believed to be able to get money out of the market without effort when the truth is that the market is an expert in getting money out of those who are not very prepared.
They are designed to bring fresh (and delusional) money to the market that might not otherwise come near on its own.
That is the real reason there are many “success stories” but almost no solid training on how to make good use of binary options: After-sales service is not essential. They only seek to attract you, not give you a good product.
A helpful guide to binary trades
Examine your current state and ask yourself why you are trying to learn how to trade binary options. It is usually for two reasons.
[A] You need money
[B] You are not in a hurry, but you want to learn how to earn extra money through trading
If you are in case [A] , trading is the last place you should go. In financial markets, until you learn (and it takes at least a year to l, earn), you lose money, not win. And if you’re in a hurry to win, you lose even faster. Please stay away from trading because right,t now, it is not your place.
If your case is [B] , then you have much more efficient alternatives than binary options. Ifintendntent on very short-term (intraday), gradually consider indices or Forex futures.
If you don’t need to tartrate real-time, with the chart dancing in front of your eyes, which I highly recommend you avoid at all costs, you should know that you can make as much or more money trading on daily or weekly carts using stocks and ETFs mainly ( and if anything, CFD). This will allow you to learn much faster, e, more accessible, naturally real-time charting, and, of course, binary options.