Mini Guide Binary Options.
IMPORTANT NOTICE : Binary options in Italy and throughout Europe from 1 July 2018 are prohibited in accordance with the guidelines of ESMA, the European Securities and Markets Authority. Brokers will no longer be able to offer their customers binary and digital options. The information presented here is for information only.
1. Introduction.
Binary options are the easiest and fastest method to make online trading.
With binary options the whole complexity of the speculative investment world is reduced to two factors, upward or downward, win or loss. From here the concept of binary.
Although it was developed in the 70 binary options have been successful only thanks to the Internet: large investors fact they never find attractive for low risk included. Only in 2009, when already online trading, especially with forex, was very popular, binary options are “exploded.”
A binary option is a very simple concept to understand, even if we find it cheap and very complex financial mechanisms.
It all begins with an asset, which can be a currency pair (Forex), stocks, commodities or indices, and there is speculation materials on their value, that is, investors must decide if the asset value increases or decreases.
In reality behind this “goes up or down,” it comes to investment upwards (put option is bought at the price now to sell when the price goes up) and bearish (call option is sold at the price now with the obligation to repurchase at the end of the contract, if the value goes down there it is the gain).
So far there is nothing new compared to other investments, the novelty of binary options is that all the uncertainty is precisely limited to the expectation value, while other factors such as time, risk and reward are known already before investing.
This is the great innovation of binary options. You choose what to invest, how much, for how long and everything else is automatic and known from the beginning.
A binary option because once the time out is an automatically closed position and possible losses are only on the capital while the account is not touched. Similarly, based on the percentages offered by the broker and the type of option, even before you invest know how we can earn.
Let’s see a practical example.
Purchase a binary option on the pair euro / us dollar by focusing on the euro upside. In the options platforms everything is very simple because often the choice between upward and downward is expressed graphically with an arrow pointing up and down.
I decide to buy an option at 15 minutes, that is my prediction must occur within 15 minutes. It invests EUR 10 and the return is 50%.
If after 15 minutes the euro actually rising I gained 5 euro plus of course the capital that is returned to me so I have in my pocket 15 euro. If the euro does not rise, I lose only 10 euro.
Obviously the example with the low numbers serves to simplify things and help understanding, but just imagine that for example by investing 100 Net income, excluding the capital that still back in our hands, is 50 euro, 200 euro is on € 100.
Who would not be within 15 minutes happy owner of 100 or 200 euro more?
And especially to those who do not like to invest knowing that potential losses are quantified at the beginning?
That’s where the success of binary options.
Ease of use, calculated risk, low investment, short time. Compared with the online trading with CFDs launched before the online options (and still exists), where you have to decide when to open and close positions without ever being able to accurately estimate the gain and losses, which can affect the entire investment account is a nice security for all those who feel insecure and fearful to invest.
Thus the options have opened up the world of online trading to a new category of investors who would otherwise have remained out of the financial market and completely unaware of what is happening.
Let’s say some sort of financial democratization!
After this introduction we pass to the types of binary option and how to invest.
2. Various types of options and investments:
Since they were born binary options have quickly started to diverge. The main feature is the time: short-term or long-term options?
It is always playing with the unpredictability of the market and try to dominate it with their knowledge. Determining where to go a trend within a certain time is not a gamble but it requires unique capabilities, is intuitive, both financial and economic culture, both intuition and instinct.
The most famous binary options are those that turbo to 60 seconds. An investment that lasts just a minute. Choosing asset, the direction of trade (rising or falling / call or put), invested capital and via.In a minute once you know the outcome of the trade. Usually the options strategy to 60 seconds is similar to that of “scalping” known in other types of trading and investment: you make many small investments in a short time and bet on those.
To make money with options to 60 seconds in fact you have to play on swings rapid and abrupt price, but since it’s really a situation where it is not easy to move, it’s never convenient to point around the capital of one option but rather to focus just on many.
This strategy may work in the lateral market stages, ie in which the price movement is very stable, and therefore the oscillations are repeated at more or less regular intervals within the same range.
In case of high volatility options to 60 seconds is for thrill seekers and knows really see in the market mechanisms …
There are also options to 120 seconds, 5 minutes, 10, 15, up to a day.
Based on the platform of the time slots can be longer or shorter.
These options when the only prediction to do is choose the direction of the trade are called “top / down” and are the first type of binary option, but there are other types, with different levels of risk.
Here are a few types:
Options one touch (in Italian “Just touch or not touch”):
The broker sets a price and it is expected if the value will touch or not touch that price.
interval Options.
You choose an interval between two prices and you must determine whether the value remains within the range or outside of it.
Options builder.
Some brokers offer a kind of insurance on losing trades, with a percentage return on even gone bad investments to limit losses. In some cases, the trader can decrease or increase the rate of return. Obviously the higher the insurance on losing trade the more you lower the gain on the winning trade, and vice versa.
Classic Options.
This kind of option at the moment are only in the broker’s site IqOption and look more like the normal stock options. There is always the binary option simplified mechanism, but you can decide whether to close the option before maturity to take an extra profit. They are also called “American” because they are linked to the New York Stock Exchange.
The interval options and those one touch binary options are high-risk, which obviously have higher returns.
The type of option and strategy obviously depends on the trader. There is a final and definitive strategy that ensures the ultimate success for binary options and easy money.
Choosing the type of option depends on your level as a trader and the available capital to invest at high risk with little capital means or be very sure of his prediction on the trend or get to spend a little money in troubled investments.
Certainly high risk means high return but do not be fooled. High risk means the risk of losing is high, so only those who are sure to know how to follow the market movement can have a go.
High-risk options have indeed been introduced precisely to attract traders and experienced investors who early saw in top-down options something too easy and simple to be interesting. As we shall see in the next chapter, beginning some of the doubts and criticism leading binary options just came from the most experienced traders.
3. Frequently asked questions about binary options.
Below we report some of the more frequent questions and doubts about binary options. The purpose is to indicate to the beginners the right method of approach this investment tool by not believe buffaloes web, giving in to advertisements that promise miracles but also to avoid panic and fear in those who intend to invest seriously.
3.1 Binary options are a way to make easy money?
If by easy you mean that it is possible from the comfort of anywhere even while waiting for the bus, you. But we can not forget that “there is a possibility” and not security. In fact the real easy money are those that gains in certainty: work 8 hours a day and take the salary, sell a car and take the money.
Binary options are an investment. Which means that it is possible to make money without seemingly too tired physically, especially thinking in the long term, but it does not mean that the moment you buy an option or open an account you will automatically have an extra gain money without doing nothing.
3.2 Because there are sites that promote things like 3000 Euros per month without working, or the like then?
As mentioned binary options are an investment. Which means that you can also earn 3,000 Euros per month from home, but you can also lose them if you are the unwary. Sites that promote certain things usually sell online courses and try to push all the propaganda about the possible positive effects.
If you think about it, if you make investments from 50 € with a 80% rate of return on a winning option, and you can make over a 100 month winning investment, you will have in your pocket € 4000 earnings (must then also consider many investments of forgiveness). And because of course you may also invest more, more often and with options that offer higher rates, the ability to earn there.
The sites that promote well but do not tell the whole truth. Sometimes it is just affiliated brokers who earn about your subscription, other times it is the brokers themselves or as mentioned courses and software. If you promise 100% chance of success then beware: the success in trading depends on traders not to obscure secret techniques.
3.3 There are safe methods to win?
First of all this is not to “win” since it’s not a game. It is to predict the value of an asset, providing trends and market reactions in a given period of time. Our money at that time do not go into a game but they enter through brokers who own assets in the global economic and financial circuit.
Given the complexity, as already mentioned “methods” are not “do-10 Click here, write this word here, choose this asset here and away” because we are talking about the real world and fast changes. If you invest on the Euro you may have a safer way to know in advance all political and economic decisions that affect this value? Unless you are not the President of the ECB can not, you know some news and predict what can happen. So much so that even when Mario Draghi can predict 100% what happens to the Euro after its decisions, because the market reactions are always very emotional. And still he could not speculate why insider trading is a crime.
3.4 Binary options are a lottery?
Paradoxically both detractors who are excited about the binary options using this definition of lottery. They speak of binary options as a gamble and try to apply traditional methods and patterns of the game.
If you want to apply the rules of a gambling with an investment you’re welcome to do so. Basically it is as if you go to buy a house without looking at her, without seeing the documents, without any certainty that it exists. Eventually even that might be a good exciting game like roulette, in any case, the fact remains that you’re burning all the possibilities for maximizing the return on investment!
Binary options are not a game for the simple fact that you’re investing money that you can get back together with a profit thanks to your knowledge of the market. Just as when you buy a house you think he bought at a low price and then be able to sell in the future at a higher, but do not have the certain knowledge that this happens, it is an option the same thing (although you can also invest in downward in this case). You have the tools to make your prediction of the houses on the market in 10 years and calculate whether of cost, taxes and maintenance, and be able to repay you earn by renting or seeing, but you’re not sure if in 10 years there is a collapse of the market. Of course the more you are good at business and know the industry, the more chance you have of making the center.
The binary options trading is the same: you have the tools to make a forecast, the greater your earning potential. It is not certain how to make heads or tails.
3.5 It ‘true that some binary options platforms have a bug that makes you earn money if you know it?
These legends have circulated the internet very often in bad faith by those who seek to lure unwary and sell some kind of phony solution. If there was a bug that earns a lot of money by repeating simple operations or installing other software to be used together with the platform:
It would not last forever because the systems are updated and constantly checked. those who would discover would make a lot of money and would not need to sell the solution to someone A second point in time where the bug is discovered, exploited by someone and that someone does it on a website and a marketing campaign to promote it, the problem would be solved Even if it were possible to take advantage of it for a while you’ll never know when the broker realizes it and will freeze the funds for fraudulent activity. If you are using software to crack somehow a platform’re breaking the law, so even if it were possible it would be illegal.
3.6 What are the trading signals?
Trading signals are forecasts made by brokers or through experts and through algorithms that alerts users to market trends. Here too it is not 100% sure but straight tips to have a direction and maybe compare our forecasts.
3.7 What is automated trading?
Are there any software that automate the purchase of options is based on the preferences of the trader is based on the market trend. Not a lot of sense because at the moment the best trader is the human mind. No computer has ever won in the bag Warren Buffett. It is not just a matter of statistics but of the human capacity which is called intuition.
3.8 I read that binary options are a fraud, is not it?
Binary options are a scam to those people who believe in the preceding points, “free” money without doing anything, online lottery in the trading, buying improbable courses or software … how naive spend money on money and investing randomly or according to the wrong information … and lose everything.
Indeed those who buy courses that talk about options such as a lottery, unique and established methods that apply to all who do earn 100% of the time, bugs and software, then it has been cheated.
For those who invest knowledgeably the options are not a scam. Although the trade goes wrong there is no scam behind, only a prediction error.
3.9 How much money do you need for binary options?
Many of options sites have a minimum deposit of € 10,15 or 20, which allow you to open an account and invest, buying options in some cases to 1 euro or 50 cents even.
Of course, before we talk about gains in these cases we just want a nice, because even gaining 50-60-70 on a trade of one euro, will be earnings of 70 cents.
Surely, however, it is a good way to familiarize yourself taking home the small satisfactions and stay motivated. The advice is to always start with a demo account and then move on to real money with small investments. If our traders will demonstrate good skills on the field, then it is time to increase gradually,
3:10 What does “social trading” spoken of lately?
The trading company was officially launched by AnyOption broker with CopyOp brand but most likely will soon become a trend. The company combines the trading trading to social networks, that is, the way that they should have: sharing and mutual exchange.
The CopyOp platform enables trading with public profiles where others can see our trading and follow, in order to allow beginners to learn from the most talented and experts to exchange information.
4. Become binary options trader.
After the doubts and the most common myths about binary options were explained, if you came up with this section it means that you are really motivated to do trading with this magnificent investment tool.
Congratulations, soldier (or soldier)!
Now we’ll have an example of how does a real Trader Binary Options, imagining the various operations that need to fulfill to become a good trader and start earning serious. We take it for assumed at this point that you’ve already read the previous chapters and have them included.
4.1 The choice of broker.
Here too, attention to marketing. It usually gets on the broker with the highest welcome bonuses. Not that it’s a bad thing, but before looking to the broker, given the huge amount of advertising that’s out there you must first check that the broker in question is among those legally authorized to operate on the market, with the CySEC certification and also the ‘authorization CONSOB.
The risk without these certificates is running into scams or that the site is suddenly obscured by the Guardia di Finanza in Italy and not being able to access you will lose your money.
After checking the safety you can go look at factors such as welcome bonuses, minimum deposit amounts of assets and types of option, informational materials for traders, extra bonus … from this point on is a matter of taste. Read and understand all notes and explanations as appropriate, regarding the bonus release conditions, the taking of gains, to the payment methods and customer service.
4.2 The opening of the account.
We have mentioned earlier, in Chapter 3, paragraph 10, of what you need for trading. You have to start gradually, first should open a demo account if you have not done trading, then invest little, minimal, do still practice and only when you feel confident to invest seriously.
Starting on the first day with 1,000 Euros without knowing what to do is not a wise choice.
4.3 The asset.
We have before our beautiful platform that tells us to choose an asset, at one time, the direction of trade. What do we do? How do we start?
First you choose the asset. The question to ask is: what asset is easier to follow? For example if we are fans of Apple and we know everything that goes on in society because a lot and we follow with our knowledge of technology we can also make predictions on how the market will react to new products of the bitten apple, and what will make the competition.
In such a scenario, one can predict what will happen to the shares of Apple. The price of assets (stocks, commodities or currencies) is based, basically, on a very simple principle: supply and demand.
Most people want something more will be the price you are willing to pay for it. Less people want something, and even try to get rid of selling, the more we lower the price.
This happens every day, every hour, every minute, every second on the financial markets. Right now millions of transactions are active on world markets, sales and purchases, entire packages of shares, tons of raw materials, currency reserves … or fractions thereof and derivatives, just as binary options.
So if for example you’re sure that with the new Smartphone launch the latest generation of Apple, this will make a bang, you can probably expect that the company’s shares increase in value, and you can invest in this way.
Usually the actions are not recommended for beginner traders, however, because very volatile. The main currencies and some commodities such as metals are more stable, easier to understand and suitable for beginners.
It is not hard to see why: the value such as the Euro or the US Dollar have a very large extent influenced by decisions of central banks and governments and only major economic events like the crack of a large bank or large corporation, this shake currencies. For this reason, following the Central Bank’s policies, debt management, elections and decisions on economic and welfare policy, usually you can do much more simple predictions.
Same thing happens with raw materials: the price of gold, for example, is established every day by 5 investment banks and then the listing will be decided by the market reactions. If a country with large gold reserves decides to nationalize the mines, then the price of gold will certainly increase for immediate shortages. The former can also be agricultural in nature materials: for example wheat. If a drought destroys the crops of a great country exporter of wheat, then the price will rise.
When talking about stocks or indices but it’s all more complicated because there are so many microfattori more difficult to follow which provide follow as possible a large corporation and the related industry, provided, however, that these companies are influenced by larger factors such events political, economic, meteorological.
The shares of such companies may go down in price if the CEO who until then had given excellent performance suddenly resigns, or if one just named is not very pleasing to some of the major shareholders that remains in the minority on the board of Administration and decides to sell its shares … at the same time may go down in price after a bad round marketing campaign, a campaign of boycott, a defective product, as well as a political problem a key country for the company, as one major markets or a country where there are a majority of the production facilities.
The actions therefore have greater complexity and greater need of information.
4.4 Information.
Once you’ve chosen your asset is the time to start the trading session … studying. At least half an hour of the major world events is needed whatever the chosen asset, because as they say “the flapping of a butterfly’s wings in Brazil can cause a hurricane in the United States.”
After you go to study specifically the assets chosen if such is the Euro, we check all the main news about the European Union, the European Central Bank on the economies (eg Italy), especially in countries where they are expected approvals of new laws or elections.
And since a monetary asset operates in torque (ie must invest speculating on its value relative to another currency) must then inform other.
As mentioned earlier beginners often invest on Euro and US Dollar. The trend of the US dollar is easier to understand because there is only one government and not all eurozone governments.
From here you can begin to predict how the two values ​​will behave during a certain period of time. The euro will rise or fall against the dollar in the coming hours?
Refer to major world events as said earlier it helps to understand what can happen.
For example, if we know that yesterday the European Central Bank has decided to grant aid to crisis-hit countries like Greece and Italy, but Germany is opposed, is not enough information to know how to react markets could react positively seeing a salvation of ‘Eurozone in crisis, negatively or seeing the disappointment of the main area economy.
Let’s say you tend to (for example) we focus on a generally positive reaction. On the dollar, however, it has not happened nothing relevant so we have to refer to the Euro / Dollar previous report to the ECB decision.
If the dollar now worth less and we expect further upside then we think we are confident in our forecast, but having had a look at global news perhaps we can find some other signal: wars in the Middle East, major events in the major competitors in the US, China and Russia … although we do not know the official US reaction (possibly due to the different time zones) we can predict that these events influence the currency.
For example winds of war can have a negative impact on the markets. Usually one of the first reactions are “safe havens” that is, investments that do not lose value quickly, such as gold, which has always been valuable over time. In these cases it is likely that many investors sell dollar reserves to acquire gold. This can bring down the dollar’s value compared to the euro, confirming the initial forecast.
The scenario above is not real. You do not have to take word for word what is written. It serves to make it clear how complex the investment world. Some traders would agree with everyone, others would do fierce objections, because everyone then bases his interpretations and observations on different facts some might take as a reference similar situations in the past while others economic and mathematical models.
Even the mathematical models can be used, making use of technical analysis: There are many tools, often included in trading platforms that help to understand the trend of the trend through the statistics. Looking at the charts and some recurring shapes on them, you can predict events that are repeated over time.
Technical analysis can be a tool for more extra to see whether the predictions made by current events knowledge and intuition are confirmable by other methods of investigation.
Relying only to graphics and the statistic is dangerous, given that the probability does not mean certainty, as well as just to ask your intuition for a beginner is risky because until you experience the flair can go far wrong.