Cryptocurrency trading and binary options

What is crypto trading?

How do we trade crypto? Is it the same as trading stocks? Or is there a difference? Let’s find out!

When trading crypto, you take a position against the dollar or any other crypto.  You have to buy or sell virtual coins on an exchange, and can store them on a digital wallet such as CoinPayments. Even if you don’t own these coins, you can trade them. How, you may ask?

Well, through CFDs (contracts for difference). A CFD allows you to take long (buy) or short (sell) positions. Let me explain by giving an example. You want to trade BTC or any other coin?

You can buy (go long) when you see the crypto is going to rise. Similarly, you can sell (go short) if the crypto falls. With leveraging, it magnifies your profits or losses. So, to have exposure to the market, you need to have deposited funds.

Crypto trading illustration

But your profit or loss is dependent upon your deposit size. So, what should you do? You should thoroughly know markets and assets to ace crypto trading.

What are binary options?

Binary means having two options. Either yes or no. Is it risky? Well, why don’t we get to know these options better?

Binary options are options in which you make predictions about currency or other assets reaching a certain value by a certain date (the expiry date). The prediction is either a yes or a no.

When the binary option expires, you receive a previously agreed profit if your prediction was correct but you lose the amount you invested in the option if your prediction was wrong.

Binary options illustration

Oh, there is another thing to keep in mind. Once you make a decision, you can’t undo it. Once binary options come into effect, they operate automatically. So, you have to keep calm and make smart decisions.

How do crypto binary option work?

Now you know what crypto and binary trading are. Let’s talk about crypto binary options and how they work. This is the juicy part of the guide. So, buckle up!

Cryptocurrencies trade on several decentralized exchanges. Bitcoin or other cryptos are just underlying assets in binary options. That is, you do not buy any cryptocurrencies, only the binary options contract from the broker.

HOW DOES IT WORK?

Bitcoin and other cryptocurrencies are volatile. That means the price changes quickly and hops around a lot. It is not uncommon for cryptos to fluctuate by 20 percent per day against the USD.

As you are aware, the price of binary options must be higher or lower than your entry point. If the market moves so quickly, there is a greater probability that the price will move more points in your favor. So, that’s how crypto binary options work.

What are some of the best platforms for crypto binary trading?

In the last section, I mention what crypto binary options are. In this section, I’ll talk about where you can trade them.  I’m talking about some of the best platforms. Let’s find out more!

With the world being taken over by the surge in cryptocurrency trading, you must choose the best trading platform. Here we present to you some of the best trading platforms available. You shouldn’t be looking for IQ Cent if you are looking to trade on the best crypto binary options platform.

1. IQ OPTION

IQ Option isn’t just perfect for novice traders and experts in this industry. It is a fantastic tool for individuals who need to master their trading. IQ Option was founded in 2013 by Dmitry Zaretsky.

It has its headquarters in St. Vincent and Grenadines. The platform permits over 250 currency pairs, more than 50 forex pairs, and trading in shares, stocks, forex, CFDs, and commodities. It also offers multiple account options, so you can pick the one you need based on your requirements.

IQ Option offers a demo account to test and develop your trading skills. The platform is easy to use and offers a copy-trading option too. You can learn more about the broker in our in-depth review. 

IQ options platform

2. QUOTEX

Quotex is a relatively new trading platform. The platform was developed in 2019 and owned and managed by Cypriot Financial Holding. The company has its headquarters in Seychelles.

Quotex offers over 25 currency pairs, multiple cryptocurrencies, and commodities like oil and gold. The platform offers one of the best payout rates. The platform is unique with its transparency, advanced tools and techniques, and superior quality.

The broker provides 24/7 support in multiple languages with quick and accurate feedback. The platform is easy to use and offers a demo account at sign-up. You can learn more about the broker in our in-depth review.  

QUOTEX platform

3. POCKET OPTION

Pocket Option was established in 2017 by a group of talented IT and fintech experts. Gembell Limited is the owner of the broker and has its headquarters in the Marshall Islands. It offers more than 100 trading assets, including commodities, cryptocurrency, currency pairs, and many more.

The platform has a payout rate of 95 percent and offers a demo account on sign-up. You can learn more about the broker in our in-depth review.

Pocket Option platform

4. BINOMO

Binomo is a top-of-the-line trading platform with high-quality tools and analytical services. Binomo was established in 2014, with its headquarters in St. Vincent and the Grenadines. The platform offers more than 70 trading assets, including cryptocurrencies, stocks, indices, etc.

The platform has a payout rate of 87 percent and offers a free demo account. Binomo offers up to 110 percent bonuses, depending on your account type. You can learn more about the broker in our in-depth review. 

Binomo platform

5. OLYMP TRADE

Olymp Trade was founded in 2017 and has been a well-known trading platform. Smartex International is the owner of the broker and has its headquarters in Russia. The platform offers 13 trading assets like currency pairs, indices, stocks, etc.

The platform has a maximum payout rate of 90 percent. Olymp Trade offers its new users a 100 percent trading bonus. You can learn more about the broker in our in-depth review. 

OlmypTrade platform

What are some of the best crypto binary options strategies?

So much for the platforms, now for the key question. How are you going to trade on them? You have to apply some strategies. Let’s find out some of the best strategies available for crypto binary options.

It’s always best to have a plan by your side whenever you are trading. Why? Because starting a trade without having a strategy can lead to losses. So here we present some of the trading strategies.

1. THE STRADDLE STRATEGY

You can use the straddle strategy combined with market news and events. Trades are usually placed before an important event or announcement. It is a trend-following strategy. The straddle strategy is popular among traders as one of the most reliable, even in an unstable market.

2. THE MFI STRATEGY

The Money Flow Index (MFI) strategy is one of the best strategies to gain profit in a short period.

The MFI is based on technical asset analysis by analyzing supply and demand.

The strategy compares the sales and purchases of the asset and draws a value between 0 and 100.

If the value is low, traders are looking to sell the asset, and if the value is high, it means that traders are looking to buy the asset.

3. TREND TRADING

This strategy is helpful for both beginners and experienced traders. Once you learn about trends, you can predict the highs and lows of an asset.

For example, if the trendline is going upwards, the prices increase. On the flip side, if the trendline goes downwards, the prices trend downwards.

4. RAINBOW STRATEGY

This strategy comes into play in combination with the signal strategy and staying up to date on the news and events of the market you want to trade.

It utilizes essential signals to make dependable forecasts about the asset cost by utilizing different averages over various periods. A different color represents each period on the chart, hence the name Rainbow Strategy.

5. CANDLESTICK STRATEGY

In this strategy, you follow the candlestick patterns. There are reversal and continuation patterns. By identifying them, we can predict the movement of the price.

What are the best indicators for binary crypto options?

Indicators are the trader’s predictive tools for market trends. They are not the holy grail, but they do help a lot. Want to know more about these indicators? Here are some of the best-defined indicators for crypto binary options.

1. MOVING AVERAGES (MA)

The most commonly used indicator is the MA, or Moving Average. This indicator smoothes out the average price movement by removing fluctuations. MA gives valuable and helpful insight into the market trend.

2. AWESOME OSCILLATOR (AO)

It is commonly referred to as AO and was first used by Bill Williams. The indicator helps the trader choose the best crypto binary trading options. It compares current price momentum with previous momentum readings.

3. AVERAGE DIRECTIONAL INDEX (ADX)

The Average Directional Index specifies the most robust market trends. It helps with more chances for profit and less risk of loss. It is the most easily understood indicator compared to the others.

4. RELATIVE STRENGTH INDICATOR (RSI)

The Relative Strength Indicator follows a range-based strategy. This range generally starts from 0 and stops at 100. It indicates the market’s oversold and overbought condition.

5. PARABOLIC SAR

The Parabolic SAR indicates the directional market changes. It is a math-based indicator. The indicator is presented as dots on a chart, either below the asset value (indicating a potentially bullish trend) or above it (a bearish trend).

Pros and cons of binary crypto options

It’s crucial to understand that all gains and losses depend on the fluctuation of prices. For this, you should know the pros and cons of crypto binary options. It will help you in avoiding losses. Without wasting any further time, let’s dive in.

PROS

Low probability of losses

There is a significant risk involved when trading binary options. But wait! Don’t lose hope and step back. Know that you have complete control over how much money is at stake. The agreements you’ll trade usually won’t have a substantial negative impact.

Risk management

Management of risk won’t be a critical concern right away in this procedure. You can monitor, record, and change the degree of risk based on your preferences. You shouldn’t enter large trades until you have the funds to risk hundreds of dollars. Just act wisely, and you’ll be sure to ace the trading!

Easily comprehendible

Trading binary options is simpler than conventional trading.тIt will be exciting, simple to learn, and profitable for traders of any capacity. It can consequently become a popular option for many online traders.

Trade regardless of market conditions

Basic financial trading methods may have limitations due to market conditions. On the other hand, binary options allow you to profit both during price increases and price declines. As a result, you can access several other trading strategies.

CONS

Some don’t have demo accounts.

Practicing with ‘pretend’ money first is reassuring if you’re planning on making real-money deals but are wary of the risks. But some online brokers provide no demo accounts for practicing trades.

Few tools for trading

Most brokers won’t give you information resources to help you make decisions. It is simple to get overwhelmed, given how quick-paced and risky this trading is.

Uneven distribution of profits and losses

Contrary to conventional trading, you risk losing all your capital if you lose.

FAQs

Do all crypto binary options brokers offer a demo account?

Not all, but many binary option brokers offer a free demo account. Trading and learning on demo accounts is highly recommended before trading in a live environment.

Is there a best crypto binary options strategy?

There is no specific strategy, formula, or hack to ensure you always achieve great results. However, some strategies can help to improve your trades. For example, it’s very important to understand and learn about the trading charts, the industry, and trends to help you trade efficiently.

Is there a specific age to trade crypto binary options?

Although there is no specific age to start trading binary options, you must be at least 18 years old to open a trading and bank account, where you can deposit or withdraw funds. Otherwise, you have to trade on someone else’s account.

Is trading crypto binary options legal in my country?

It predominantly relies upon your brokerage, where it is located, and what your country’s rules and regulations are. For instance, trading is legal in many countries which accept brokers from a wide range of nations, but in the USA, the broker and the trader must be in the USA to trade binary options.

Do I need any specific software to trade?

It depends on the brokers you are using. Some brokers support MetaTrader to trade, whereas some have their desktop or mobile application, which you need to download to trade.

Does trading crypto binary options guarantee money?

In one way, yes. Suppose you have the proper requirements and skill set. You should have a firm grip over your emotions, know money management, and know about charts and technical analysis.

Are there books available on crypto binary options trading?

There are only a handful of good books available. However, many good books are available to learn about the technical analysis of charts and markets.

How much can I make trading crypto binary options?

It is the most-asked question, and there is no specific answer. The amount of money you can make depends on your knowledge, skills, and performance. The more time and money you invest, the higher your chances of earning more.

Do I have to pay taxes on my earnings?

Whether you have to pay taxes depends upon the country of residence and the rules and regulations there. Each country has different laws, so it is hard to answer this question precisely.

FINAL THOUGHTS

So, there you have it! Now you know what crypto binary options are. Make sure to have a trading plan when you trade crypto binary options. You can combine fundamental and technical analysis for trading crypto binary options.