Investing in binary options
What is binary options?
The availability of the internet makes investing in binary options accessible to everyone. The apparent simplicity of trading options can be misleading, and novice traders take this type of trading lightly. This simplicity greatly contributes to the fact that many people see binary options as an alternative to gambling machines, but it takes a serious approach to make stable money with options.
Binary options are an exchange contract, which is needed to profit from fluctuations in the value of various assets. In fact, such options have a number of advantages.
The trader can choose absolutely any asset that is traded on all the financial markets, starting from currencies and ending with stocks, CFD contracts, oil and so on.
In addition, when using binary options, the price of the asset will be fixed, the trader will know the expiration date, which is the time when the deal will be closed, and the financial result of the outcomes will be known. Incidentally, the trader will also know the potential profit, which cannot be said about Forex trading and other financial markets. As a rule of thumb, the profit averages between 60% and 95%. It all depends on the broker and the terms of the contract.
What is the binary options market?
The stock exchange is a great source of possibilities, which can be used by almost every reasonable person.
To be successful, one has to have professional skills, experience and, most importantly, persistence.
The global mistake all beginners make is to skip the theory and knowledge, they want to get their hands on a ready-made tool and make money here and now. In fact, you have to clarify for yourself what online binary options are, learn what is meant by an option, learn the types of options and the mechanism of your interaction with a broker.
What is a binary options broker?
A broker is a professional financial market participant. He or she has the right to make transactions and operations with securities on his or her own behalf or on behalf of a client, at the client's expense. A good broker must have a licence, and they must have more than one. You should also obtain a sufficiently high rating and recommendations from regular clients.
Brokerage platforms that give you a platform to implement your plans are hugely popular today.
In other words - this is an intermediary between you and the exchange or other traders. This platform gives you the opportunity to choose an asset and the amount you are willing to invest in buying or selling that asset. On the broker's website you will find useful features, such as news, trading conditions for assets, real-time quotes, live chats, training section, etc. You become a full-fledged market participant by registering with the broker, and you can trade.
What is a binary options trader?
Anyone who trades at the exchange market can be called a trader. Therefore, it is not enough to set a goal to become a trader. You should strive to become a successful trader. There are some factors contributing to it.
- Knowing how to make good forecasts. This important aspect includes application of this or that strategy and understanding of principles of price movement. To make good money on online binary options trading, an investor needs not only good instincts, but also deep knowledge and a lot of practical experience.
- Managing your capital and possible risks. The successful trader must be able to calculate the ratio of risks to the desirable profit by himself/herself with a high degree of objectivity. As a rule, the higher the expected profit, the higher the risk probability. This skill is especially important when it is necessary to save capital.
- The psychological aspect. This component is not the last in the matter of getting income from trading. It is important to analyse your strengths and weaknesses related to the psychological component, for instance, the ability to control yourself or, on the contrary, excessive excitement.
- Trading binary options with a serious approach. You can't take trading as a game. It's important to take it seriously. It's important to accumulate and multiply practical experience, knowledge, and improve your performance.
- Gradually increase the volume of investment. While experts advise beginners to start commerce with small amounts, you should gradually increase the amount of your deposit as you go on. This is due to the fact that it is impossible to increase the income without it.
- Interest in trading. In spite of the seeming obviousness, this aspect is very important. If you have no interest in the case, and you act only because someone advises you, with a greater degree of probability, it will not lead to success.
So now that we've clarified the concept of trading and who is a binary options trader is, you can take a closer look at exactly how to trade and where to start. Remember that you can always use a demo account to practice your skills without losing money. So don't wait too long to decide, sign up now and get started!
What is binary options trading?
First of all, a trader has to select one of the investment assets available at the broker used. It can be a currency pair, stocks, indices or commodities. It is done quickly, in 2 clicks.
Next, select the direction in which the quotes of the underlying asset will move, and set the expiry date (the time at which the deal is to be concluded).
Now press one of the two buttons: Call or Put. The Call button is chosen if the investment asset will rise in value after the expiry of the selected time period. Conversely, the Put is responsible for the decrease in quotes.
Once the binary option is initiated, it is expected to expire. For example, if the expiry time was 5 minutes or M5, after that time the player will either make a profit on a successful prediction or lose the money invested.
How to analyse binary options?
To make good money with these options, you must make more successful guesses than failed trades. That is, literally, you need to understand where the price of a particular asset will go.
This is not the easiest task for every trader. Only from outside it looks very simple, but in fact there are many difficulties, with which the two types of analysis can help:
- Technical analysis - analysis of price charts.
- Fundamental analysis - analysis of economic news.
There is almost no overlap between these two types of analysis: when there is important economic news, technical analysis will not work, because the market is ruled by the crowd. Therefore, technical analysis should only be applied when there is no major economic news and its impact on price movements.
Technical analysis itself includes a number of tools for predicting price movements:
- Candlestick Analysis - A method of predicting by candlestick patterns.
- Indicator analysis - analysis based on the use of indicators.
- Volume analysis - analysis of trading volumes.
- Non-indicator analysis - extended candlestick price analysis.
All of these analyses can be performed separately or combined with each other - complex analysis.
Binary Option Types
The modern market has generated a large variety of contracts, each of which has its own characteristics and features. Let us review the main ones that you will find on the platform.
- "Up/Down" can be applied everywhere: during the trending price movements or even during a flat. All that matters to the trader is that the price at the time of expiry moves in the direction of the prediction made, by at least 1 pip.
- A "One Touch" is an option that will close in profit if the price reaches a specific point before expiry. It only takes one touch for a trade on this option to close in profit.
- The "No Touch" option is the total reverse of the "One Touch" option. The purpose of this option is to make a prediction in which the price will NOT touch a certain price level.
- "Boundary" or "Range" - an option that allows the trader to earn if the price, at the time of closing the trade, is in a certain range - between two boundaries.
- "Spread", like the "Outer/Lower" option, is based on the principle of determining the direction of price movement. But it's not just the direction, but also the strength of the movement itself that is important - so that the price is 10 pips higher from the point at which you bought the option, for example, at the time of expiration.
- "The Ladder” is a high-yield option, but also a complicated one to trade. The returns on this option can be as high as 1000-2000%. It's when the broker offers the trader a "ladder" or a grid of levels with varying returns. And the further a level is, the higher the returns.
- "Pairs”. The peculiarity of this type is that it has a unique underlying asset. In fact, it combines 2 assets. An example of a classic asset in this type of binary options is "gold/silver". That is, there is a prediction of how far the exchange rate of gold against silver will change.
Beginners are usually recommended to work with the classical digital option. The reason is that it is simple to understand and trading with it requires only market analysis.
At the same time, more experienced traders can use "Pairs", "Touch" and turbo options. The latter have terms between 30 seconds and 5 minutes. They require not only some trading experience, but also a good reaction time.
Where to trade binary options in the Philippines?
It is very important for any trader to understand what is trading binary options is all about. It is a broad concept that includes buyer and seller interaction, different terms, concepts and strategies.
Once you have grasped the basics, you can register with a broker in the Philippines, this will not commit you to anything, and you will have the platform in front of you. You can get familiar with it and try your hand at a demo account.
Signing up is easy, and it won't take you long. You just click on the "register" menu and follow the broker's simple instructions. Then go to your email to receive a confirmation link from the broker.
You will also be able to download a mobile app to make using the platform even more convenient.
A virtual account, for trading binary options online, provides all the tools you need to evaluate and monitor your trade. This is just like a real trading account, except you don't make any profits or losses, and everything stays on a test trading level.
Once you open an account on the platform, you will be credited with a virtual sum, on which you will learn to trade.
Experienced players use the demo account to try out new strategies, of which there are many in binary options. Beginners simply familiarize themselves with the platform parameters and gain experience. It is very convenient, give it a try!
You can also open a real account with a minimum deposit. This will allow you to make real trades and make deposits and withdrawals. Don't start with a huge amount at once, it is better to gradually build up your investment portfolio.
You can also use leverage if you need to. This is a service given to you by your broker which allows you to trade using borrowed funds.
At the same time you need to continue your development, study the market more deeply, learn new areas for analysis, get acquainted with analytics and always strive for perfection. Good luck!