Binary options are a type of financial derivatives that allow you to trade various underlying assets, which can be shares and stock exchange indices, Forex currency pairs, and commodities markets.
What's happened binary options for a trader? This is a fixed income instrument with potential losses. This is the biggest advantage of such a derivative. In just a few minutes, a trader can earn from 70 to 90%, and in case of failure, he will not lose more than he invested in one trade.
Another feature of these deals is the time limit. Any contract has its own period (the so-called expiration or execution time). When opening an option, the trader himself indicates the period, it can be a minute, 5 minutes, ten... and up to half a year.
- There are two main conditions - Call And Put. By purchasing a Call (UP) contract, a trader expects that the price of the underlying asset will increase relative to the price at the time of purchase. When buying a Put option (DOWN), the trader, on the contrary, expects that the price of the underlying asset will fall relative to the current one at the time the option expires.
In addition to these classic deals, today there is large number others, interesting and profitable. Among them are such as One touch, Border, 60 seconds.
Binary options scam or how to get a cup Robbinson
“Binary options are a scam!” That's how they shout numerous reviews about binary options. And this is true if the trader has chosen a low-quality broker, a young one, without a reputation as a broker with a dubious history. For lately many such offices closed down with traders’ money, and since brokers were not regulated by anyone, the money, of course, went away along with the brokers. But it’s still strange to say that binary options are a scam if you yourself chose a broker without any basis.
The second story is the most common. The person did not analyze the asset or simply did it on a quick fix, after which the price went against his forecast and he lost money. The first thing a trader wants to do in this situation is to blame everyone around him. " I lost money even though I analyzed the market! And all because binary options are a scam!“The person doesn’t stop there, but begins to persistently look for evidence that the broker’s price does not coincide with the market, that he did this, and the broker did that...
But all professional traders know that the price of all brokers will always differ by several points; this is a technical feature of transmitting data from the exchange, whose charter says this. But even this small difference does not always help and a person, without explanation, boils down to the fact that the broker does not list him on the stock exchange. But who spoke about that, what does the broker bring to the exchange? After all, you are not buying shares, but only a contract for the difference in price.
What are binary options really - a game or a job? If you analyzed the asset, opened a trade and the price followed your forecast, you will earn and receive your real money. Choose reliable and reputed brokers and you will never have to doubt your trading.
And still, most people have strange behavior, even Buffett lost money on stocks, was he really saying at that moment that “stocks are a scam.”
You may not have heard, but there is an international championship in stock trading in the world - World Cup Trading Championship or . It was there that he broke the record with 11376% profit. 10 years later, his daughter Michelle showed there impressive result V 1000% and took first place.
If earlier only futures and stocks were traded at this championship, then in 2014 the Robbinson Cup was won by Alexander Derlinger trading binary options:
He achieved the highest profits in 716,8% in just 26 calendar days.
Binary options and how to work with them
Suppose that the market receives news that the number of users of the famous social network increased over reporting period. How will the market react to such an event? Of course, by an increase in the value of this company’s securities. What should a trader do in such a situation? Buy binary option Call(subject to price increase) and receive income.
A real example of trading. As an example, let's take the purchase of a contract with the underlying asset eBay shares at the broker:
After we have selected the asset, we will indicate the end time of the transaction:
In our case, we are confident that eBay shares will continue to grow in the near future- we pressed the button UP:
If by the time the transaction is closed ( in 18 minutes), price of the underlying asset ( in our case, eBay shares) increases, then the condition of our option will be fulfilled and we will be able to earn 70% of the investment volume.
And this is possible even with minimal price fluctuations, even if the price rises by at least one point. The main thing is that at the time the transaction is closed, the price of the underlying asset is higher ( since we bought the UP option) than its value at the time of purchase (strike price). And here are the results of our transaction:
The shares increased in price, from an investment of $70 we returned $119, of which $49 was net profit:
What are the advantages of binary options
- One of the main advantages is that they allow you to earn money even with minimal investment. To purchase a block of shares, significant sums may be required, amounting to tens of thousands of dollars. With binary options, you can trade stocks with as little as $25, for example.
- The advantages here are obvious. Another important advantage is accessibility. Brokers offer fairly simple and intuitive platforms through which you can make transactions. It will only take a couple of minutes to master the trading terminal, after which you can independently buy this or that contract.
How to make money on binary options
What does it take to make money? Actually, not much. Find a suitable broker, make a minimum deposit and open a trade. In any case, even without any knowledge, everyone can successfully sell a contract once.
The advertising slogan of many companies providing services in this market is the offer - “Binary options are easy.” Naturally, there is nothing complicated here. Trading terminals are built in such a way that it is not difficult for even a beginner to understand them.
How to earn money?
The difference between earn and earn is that the latter refers to permanent income. To do this, a trader must not only master the basics of binary options, but also learn to analyze assets and apply the results of their findings in practice.
Most often, traders work with the so-called technical analysis, processing the information they receive from the chart and various tools that are used in technical analysis.
In any case, in order to earn money, that is, receive regular income, you need to think through a strategy, or even several, with the help of which you will make decisions about opening transactions.
Where can you buy binary options
We already said above that there are specialized brokers who offer trading services. Today, their number has exceeded 100, which indicates the great popularity of these derivatives; as they say, supply strives to keep up with demand.
How to find your broker?
Those who want to start trading binary options sooner or later face the question “Which broker is better?” It is quite difficult to answer this right away. After all, there are a lot of criteria by which you can evaluate the same company. In addition, a lot depends on the financial capabilities of a novice trader.
Avoid brokers with no regulation and low visibility. Working with the best is a good trader's habit.
How do brokers earn money?
It's very simple, brokers make money on the difference between losses and profits. Situation - two traders opened transactions on Google shares at XX dollars. One indicated a growth forecast, and the other a fall. One lost $XX, and the second trader made a 70% profit. As a result, the broker was left with 30% of the difference in deposits. Multiply that 30% by tens of thousands of transactions per day.
Video about what binary options are
Summing up
In this article we answered the question of what binary options are and how to work with this tool. Such contracts really allow you to get a fairly high profitability in a very short time.
At the same time, you can trade anywhere. This is online earnings, and you are not tied to your workplace. The main thing is that you have a computer, laptop or any mobile device, connected to the Internet. Convenient, affordable, professional, profitable.
If you find an error, please highlight a piece of text and click Ctrl+Enter, and we will definitely fix it! Thanks a lot for your help, it is very important for us and our readers!
Binary options on stocks are very popular among traders today. And there are more than enough reasons for this - moderate volatility, good predictability of price movements, sufficient liquidity, less (compared to other options) exposure to price surges, and much more.
But in order to receive sufficiently high incomes, it is necessary to use profitable strategies on stock trading, which we will talk about today.
Stock trading strategies and binary options - let's start with important concepts
Today, trading in stock markets is the most preferred type of trading. And this is not surprising, because stock markets, when compared with commodity and currency markets, are even more predictable in technical terms. And in the trading terminals of each broker that provides binary options for trading, there is an excellent base of shares of various corporations, enterprises, banks and companies. But not everyone knows how to trade them.
Let's start with the fact that a trader is, first of all, an investor, so the first thing you should understand is what an investor needs to know to profitable trading shares.
At the same time, it is not a fact that you will earn good profit they will not give you shares, for example, of Australian or Chinese companies.
Of course, an investor needs to be able to navigate financial statements and. Study the market, look at the history of stock quotes and compare them directly with the financial statements of the company you have selected. All this will help you develop profitable stock trading strategies.
Calculations of stock prices using examples of different companies for binary options trading
Let's look at a couple of examples. So, Commerzbank AG published its financial statements, in which, although there was an increase in profit compared to the previous report, it was actually lower than expected in the forecasts. For this reason, there was a decrease in share price of this bank. The value of the bank's securities fell and those investors who entered into transactions to sell its shares were able to earn at least 400 from $100.
Next example. Germany's largest airline, Lufthansa, announced that it is reducing the number of its flights to some destinations. After this news came out, the company's share price has dropped sharply. And again, those who bet $100 on a decline were able to earn at least $6,000. There are thousands of such examples, and all of them will show how the release of important news and the publication of economic reports of companies affect the prices of their shares.
Let's go in order...
- The first step is to determine the direction in which the stock price will move.
- Next, you need to select the type of binary option.
For example, taking economic income statements as a basis, you see that for many days the price of shares of the company you have chosen has remained at almost the same level. In this case, you can use binary (Touch/No Touch), setting the level that you think the stock price can or cannot reach. If the stock price does not exceed the level you specified during expiration, you will make a profit.
Also, do not forget, when analyzing price charts, to monitor the support and resistance lines in order to choose the right level to set.
If the news release will contribute sharp growth or a fall in the value of an asset, then you can use binary options with higher rates of return. For example, when the Apple company announces the release of a new product, then, as can be seen from history, there will be an increase in the value of its shares. But here it’s up to you to decide which type of option to choose. The main thing when choosing options is to adhere to the sequence: depending on the current position in which the shares on them are located.
Basic strategies for trading stocks on binary options platforms
To stabilize profits on binary options when trading stocks, you need to follow a clear strategy. To do this, experienced investors recommend using, in addition to economic reporting and news releases, some other trading tools:
– reading the tape,
– and so on.
Using all these tools, you will be able to conclude more transactions and, accordingly, receive more profit.
Stock options trading strategy using levels
Perhaps the simplest strategy for options trading in stocks involves the use of critical support and resistance levels. If you use this tool correctly, you can make money quite easily. Everything that is required from a trader, draw this on price chart these levels and wait until the asset price approaches one of them. As soon as this happens, we open a position. In the example below, you can see how the CALL option is opened.
We are waiting for the trend to rush upward:
Tape-based stock trading strategy for binary options
The next type of strategy for trading stocks on binary options platforms is based on reading the tape. This strategy in the best possible way Suitable for minute trading (60 seconds) of options. In the example below, you see a graph of the price movement of the “BIDU” stock along an upward trend. If you watch the “Time&Sales” feed, you can see that most orders are opened for purchase, so at such moments it is necessary to open the “CALL” option.
Besides this, financial liquidity directly traded asset, can be significantly increased and expanded due to the inflated percentage of payments for such types of options as “One Touch” and “Range”, allowing, under some circumstances, to receive at least 700% of profit.
Binary options in stock trading strategies - some tips from professionals
As you know, bad or, conversely, good reporting by companies can lead to either a fall or a rise in the value of their shares. Moreover, these processes can take place over several days or weeks – up to a month, until the next statistical economic report is published. Therefore, many professional traders recommend using long term strategies in stock trading on options with an expiration period of at least 5 days.
Although, if you use a tape reading strategy, you can trade on minute options. Professional investors also urge you to always remember the rules of money management. Do not allow yourself, even with the highest percentage of accuracy, to increase the transaction size by more than 5% of the volume of your trading deposit.
Also, in parallel with this, in order to diversify risks, it is recommended to focus your attention on shares of companies from various economic sectors.
For example, banks transport companies, heavy and light industry and other macroeconomic areas. This is how you can increase the size of your depot, even when misses occur.
VIDEO REVIEW:
Trading shares of famous companies in binary options
Binary stock options refer to a specific contract that is concluded between the seller and the buyer. Based on this agreement, the buyer has the right to purchase or sell various types of underlying assets at a set price. It is determined at the time of execution, the duration of the contract, and also during its completion.
Under a stock option, the seller will be able to receive a fixed fee from the recipient, which is defined as a premium. The acquisition of an underlying asset by a trader is implied by , and comes into effect upon the sale of the underlying asset.
The process of carrying out transactions with binary options, which are carried out on the stock market, have many serious differences from the classic options for buying and selling.
According to many researchers, binary options on stocks allow for active filling of the market and become quite popular at certain periods of time, in comparison with classical and well-known elements and trading tools on the stock market.
The main factors that significantly distinguish binary stock options from classic options or regular options are the following points:
1.When determining short term actions the investor will be able to receive instant income from transactions with this type of options. This type investing involves a more flexible way to invest in stock options
2. When investing financial resources In vanilla or regular options, the investor pays for the contract itself, with the result that the amount of return is determined by the difference between the profit received and the payments made under the contract. When considering binary options, the investor receives income, which forms his profit.
3. By purchasing binary options, the investor disposes of them before the expiration of the contract, which creates the need for the investor to make a more prudent choice when purchasing an option.
At the same time, it differs significantly from trading standard options due to the presence of high additional risk when making transactions and placing bets on options.
The advantage of stock options is a certain guarantee - insurance against losses, since regardless of the outcome of the transaction, the seller will always be able to receive a minimum amount equal to the value of the option, regardless of the outcome of the transaction.
In this case, for the trader important nuance is the formation of a decision on the upcoming or predicted indicator of changes in prices for stock assets for which the transaction will be made. According to average estimates, the return on stock options varies between 65%-85%. A certain amount of profit is formed depending on the type of broker involved and the types stock market.
The stability of income generation is influenced by various factors, but the dominant role is given to the duration of the contract for a particular stock option. In other words, getting quick and regular profits is possible if you trade. It is this nuance or feature of binary options that influences newly invested investors and stock market participants who prefer to invest in stock options in order to obtain maximum profits.
