Investing in binary options
What is binary options?
Binary options betting is a type of trading that offers traders new and exciting opportunities by which they can make serious money quickly in the market. A binary option is so named because the trader has only two possible outcomes: either at the end of time his/her option will be in the money and the trader will make a profit, or the option will be out of the money and the trader will lose all or part of his/her investment.
Online binary options are very simply to interpret - there is only one condition for the transaction: the price will rise or fall over a certain period of time. If the condition is met, you make a profit.
What is the binary options market?
Investing in binary options differs from most other forms of trading in that you do not actually take any rights to the asset. Instead, you invest a certain amount of money into predicting that the price of an asset will move in a certain way.
For example, if you buy an option with a rising (Up) condition and the price rises at the end of the trade, i.e. the condition is met, then you make a profit. If the condition is not met, you lose your investment. To better understand the concept, you can start by using the demo account on the platform and place a bet with virtual money.
Because forex trading involves making predictions about price direction, you cannot trade on just one stock, but you can choose from many. You can trade on the stocks of certain companies that are listed on the stock market or on market indices. You can also use any commodity, such as gold or oil, or a currency pair, such as EUR/USD, which is quoted on the foreign exchange market.
Before entering the binary options market, binary options traders need to be confident in their financial and money management skills. A great support for this is a brokerage platform, which can teach you the basics of trading with the help of thematic videos, as well as provide you with necessary and up-to-date information. Web trading platforms offer users trading information as well as a place to place orders and view quotes in real time.
What is a binary options broker?
If you are a trader and want to profit from your business, you should examine your brokerage trading platform well. It is important to make sure that the software is user-friendly and includes all the tools you need. It is not advisable to bet by putting your money in the hands of an unprofessional or amateur broker.
Also, be sure to check that the broker is licensed and that the website is complete, that technical support is available, and that the analytical tools such as charts, signals and the option to place pending orders (stop loss and take profit) are all available.
Important features that a broker can provide you with are:
- Account Control. Here you can make deposits, transfer or withdraw funds, view the history of your transactions and analyse your trades. Evaluate the performance of your portfolio with detailed account analysis.
- Mobile App. Almost everyone has a smartphone these days, and having a trading terminal in your phone is very convenient. Everything you look for in an ideal trading platform is now also available on your mobile phone.
- Analysis section on the platform. Ability to use fundamental and technical analysis.
- Live chats with other traders with whom you can discuss anything.
- Fill and withdraw your account the way you want.
- Professional terminal with an intuitive user interface. And so on.
What is a binary options trader?
To become a successful trader, you need to take a proper approach to binary options trading. Knowledge, experience and the ability to keep a cool head are equally important.
Also, a trader should keep in mind the rule of risk management. Do not leave all the money in one bet. And bet only with the money you are prepared to lose. We are not talking about the entire amount of the deposit, but every single bet. That is, it should not be a large sum for you. As long as there is always a risk and be prepared that you can lose.
Knowing how to make good predictions is also an important aspect, it includes applying a particular strategy and understanding the principles of value change. To make good money trading binary options, an investor needs not only good instincts, but also deep knowledge and a lot of practical experience.
What is binary options trading?
So now that you know who is a binary options trader and what they do, it's time to get into the nitty-gritty of the process. Binary options are based on one principle, but there really are a lot of different contracts. They have different execution conditions.
Nowadays there are dozens of binary contracts and strategies of work with them. So here are the classic options, which are easier to understand for newbies.
Types of binary options:
- Up/Down - Classic. It's the base of binary options. Exactly this type shows the whole point and simplicity of this money making method. The idea is to determine whether the price of the selected asset will move up or down. Then it is up after 1 hour, 2 hours or 5 minutes and click the appropriate button. Everything is very simple.
- Touch and No Touch. The main task of a trader is to determine whether the price reaches the level predetermined by the broker, for a certain period of time or not. The standard conditions for these options are as follows: the deal is considered profitable, if the price at the time chosen (hour, day or week) touches a level, and it does not matter where the level is at the moment of the deal closing.
- Boundary or Range options. A type of binary options where the broker sets the border at a certain level from the current price. The trader has to decide if the price will stay in the range or go out of the range.
- Pairwise options. Quickly gained popularity, despite the fact that it is quite complicated in analysis. This type implies that the trader opens deals on two assets simultaneously. So, to make a profit here, it is necessary to analyse not one but two different assets. And it is not just to predict the possible future price movement, but to determine which asset will change in price more.
- Stairs. Probably the most profitable types of binary options today. There are many levels, located near the price and from each other. The trader's job is to determine which way the price of the asset will go and the likely level it can reach. And other.
If you have chosen the furthest level, then the price, reaching the first or second level, is fixed as a profit. Therefore, if it goes further in your direction, you can take all the profit. If the price reaches at least the first level and turns around, then at the end of the option you will still make a profit, in the amount fixed at the first level.
In addition to the division by conditions, all binary options are divided by expiry time. They can be from 60 seconds(turbo options) to 1 year or more.
Which trading tactic should I choose?
So what is trading binary options ? It is a combination of great conditions at the broker platform with the smart work of the trader. The work includes getting knowledge about the trading assets, ways to analyse them and also developing a trading strategy, based on your own knowledge and preferences.
As a binary options trading strategy for traders, it is extremely important to use effective tactics that help to generate high profits. However, a dealer's success does not only depend on what plans he uses, but also how he uses them. The same plan will show up differently in different hands.
There are different types of strategies available in the market. You should not rely solely on one or a few selected strategies when trading.
To get a stable income, you should use:
- Fundamental analysis (statistics, news, reports, news notes, etc.). This is the basis for the so-called "news strategy".
- Different methods of risk management.
- Technical analysis (charts and indicators). On the platform you will see the best indicators that bring results to traders around the world.
- Volume analysis. It describes the market situation. It is also used for confirmation of price behaviour.
Whatever strategy you choose, we would advise you to start by using a demo trading account to get to know the ins and outs of trading, without risking your money.
Where to trade binary options in Pakistan?
It can be difficult to figure out how to trade binary options in Pakistan. Nowadays, the most popular trading venue in the world is the World Wide Web. This has attracted millions of people who have turned into investors using brokerage platforms.
So, to enjoy all the benefits of the trading platform, you need to register an account. To do so, visit the broker's website. Follow the instructions on the homepage. You click on the registration button and fill in the details that the system asks for. Then you wait for the confirmation letter to your e-mail, after which you can open an account with the selected broker.
After registering, the client must choose the type of account he would like to have.
Demo Account, as a starting point in your career
It is recommended that investors set up a demo account with a trading company before they can trade using real money. Demo accounts are opened on trading websites to get a first-hand understanding of how binary options work.
An investor will use virtual money instead of the money traded in traditional markets. A demo account on a trading platform is completely virtual and allows a trader to test all the strategies that they intend to use in future trading.
Once you decide to open a brokerage account, you will need to make the required deposit. This will normally be a small amount of money and should be within everyone's reach. You can trade small amounts when you first start trading. As you gain more knowledge, you can trade larger amounts. Once you have gained more trading experience, your account can be expanded.
You can also use the leverage feature when trading.
Leverage is a special service offered by a brokerage company, which involves lending additional money or securities to an investor so that the client can open a position.
A trader should be careful when choosing a reliable trading platform. As there are many firms offering trading services, only the best ones can guarantee security and reliability. It is advisable to choose a company that has a lot of experience in trading and has been in business for some time.