What are binary options, and how to work with them?
First, let’s talk about what binary options are. I will going to discuss what binary options are and how you can use them.
Binary options are financial instruments in which you can invest.
There are two outcomes in binary options; profit or loss. Like other markets, trades happen in two directions; upwards and downwards. You select the asset and select any timeframe. And voila!
You have placed a trade. Here, the profit margin is not like the other markets. It relies on several factors like trading volume. As a rule, if more traders sell, the profit margin goes up also.
Are you still confused? Don’t be! I’m going to explain this with an example. I’m taking EUR/USD as an example. Let’s say the pair is trading at 1.1450.
It means you require 1.1450 dollars to buy one Euro. The profit on the traditional platform is 50%. I’m predicting that in 20 minutes, the pair will go upwards. I’m gonna open a buy position and invest 1000 rubles.
After 20 minutes, the pair did grow 50%. And I got an astounding 500 rubles in my account. On the flip side, if the rate fell below 1.1450, I would have lost money. One thing you must note is trading financial contracts happens outside the exchange.
But there is nothing wrong with it. Otherwise, retail traders could not enter the market. Because for stock options trading, it is necessary to have a suitable situation. And also a deposit of tens of thousands of dollars.
However, I’m going to give a shoutout to trading platforms. You can start trading with only $10. You shouldn’t risk even a small amount if you didn’t analyze charts.
Technical analysis is the most critical aspect of trading. And you have to master them to succeed.
Binary options chart
How long will it take for a beginner to master binary options trading?
So, how long will it take to master binary options? Well, let’s find out!
You can find many stories regarding binary options treasures. You can read that people have become successful in just two days.
And they started to make significant sums. Well, you shouldn’t fall for the trap. You don’t have to believe everything you read or watch in a video. If it were that simple, then we all would be millionaires in a matter of months.
So, before you jump in, understand that there’s nothing easy about it. Financial markets are a whole universe that lives by its laws. Even pros learn to improve their skills day by day continually. Learning how to enter the market does not take much time.
But to understand and predict the market moves, you have to give some time. Therefore, the main goal of a novice trader is to achieve this result. However, even if you make this, there’s a risk of not getting your profits. The fact is many brokers don’t pay money to their users.
Or deliberately lead them to drain the deposit. So, to avoid this, you need to choose a reliable trading platform. Binarium offers a modern and functional platform with several financial assets and analytical tools. The trading platform has been operating since 2012.
It targets the Russian-speaking audience. The minimum deposit here is only $ 10. The withdrawal is available from $ 5 and takes place on the day of application. Binarium regularly holds promotions for its customers.
For example, you first deposit a bonus of 100% of the deposit amount. In addition, there are tournaments for traders with substantial cash prizes. It happens as part of the trading platform. You can even participate for free.
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Basics of trading short-term financial contracts
Many binary options brokers offer free basic training. But they are limited to specific instructions. Like “where to click and open a deal” and “how to deposit money on deposit.” You need to look for other sources for a deeper understanding of profitable trading.
You can study articles on stock trading from professional financial analysts. And apply the knowledge gained in practice. Over time, you will learn how the markets behave in a certain manner. Fundamental and technical factors influence price fluctuations.
The fundamentals are the news of the world economy and politics.Major news events are published in an economic calendar. For example, if the US Federal Reserve meets at the critical rate. The UK exits from the European Union, etc.
All this somehow affects the major currency pairs. Technical factors rely on historical price movements. It follows the pattern. For instance, if there’s a continuous downward move, there will be a rise.
A more advanced analysis tool is indicators. They help structure the data and quickly find the necessary points on the chart. These points include support and resistance levels, trends, volumes, etc. In financial markets, there’s a tug-of-war between buyers and sellers.
For this, terms popped up. These terms are bulls and bears. Bulls mention the buying side, while bears remark the selling side. If the selected asset has more buyers, its prices start to climb.
On the other hand, if there are sellers, then, accordingly, it falls. So, on charts, we see this tug-of-war between bulls and bears. The price movement of an asset is the primary tool for traders. The price can appear on several charts, like line bars, etc.
But Japanese candlestick charts are the most common. You can determine how price behaved during a specific time by studying candles. The time of candles signifies the time frame and starts from one minute. The green or white candle is bullish and suggests climbing up the price.
The red or black candle is bearish and illustrates a dip. Bull and bear candles comprise open and low. The lower part of the bullish candle is the opening level. The upper part is the closing level.
Conversely, on a bearish candle, the upper part is the opening. And the lower part is the closing level. Candles also have shadows – thin lines from the close and open levels.
They suggest when the upper/lower reached the specific price. The candles respond to price moves within a specific timeframe. You can use a candlestick chart on every modern platform.
What time is better to trade?
Financial markets run 24/5. During this time, you can trade all the available assets. But which time is better to trade?
Trading week starts between Sunday and Monday and continues till Friday and Saturday. Markets can exhibit different behaviors during this time. They can remain calm, show volatility, or can move sideways. It’s important to note that volatility spikes up during the intersection of trading sessions.
These trading sessions comprise exchanges of major economies. At this time, trends are formed, reversals and rebounds occur. Many traders prefer to trade during these hours. But others try a conservative approach.
They prefer to work with market calm. It means when currency pairs move mostly horizontally. It all depends on your trading style and strategy. For example, many traders trade one hour from 11 to noon Moscow time.
During this time, Tokyo and London sessions overlap. In Japan, the working day ends during this time. While in the UK, the working day starts. At 16 o’clock in Moscow, the New York Stock Exchange starts.
The London Exchange ends trading at 19. These two are the most important sessions. We see significant volume during the overlapping of London and New York. Many traders wait for this overlap and then place trades.
After New York starts, economic data appears in the market. The time for this is 16.30 Moscow time. These publications can have a significant impact on currency pairs. Particularly on pairs involving USD.
GMT to trade Binary options
When the time occurs, traders wait for the news and then enter trading positions. They don’t want to enter too early or miss the trading opportunity. For instance, if the employment data in the US shows growth, the dollar will rise. It will have an impact on all USD pairs.
And they will rise or fall. A trader would then decide to enter or leave their position. One strategy you can do is predict price changes on weekdays. You can see the price movements at the height of the week.
The height of the week starts on Tuesday and ends on Thursday. On Monday, price gaps and unpredictable moves in the chart occur. It is not a significant issue.
But for traders looking to enter the market, it is problematic. On Friday the weekends, traders look to exit their weekly positions. It can cause unpredictable movements.
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Trade expiration and trading strategies
A key part of binary options trading is how to exit profitably. I mean, you can’t leave it hanging! So, you have to develop a strategy to exit the trade.
According to stats, most trades occur in one minute to half an hour.
Depending on which expiration you specify, you have to select the timeframe. If the timeframe is 15 minutes, the candle will show the price change during this time. Minute fluctuations are a little predictable. Earnings on such contracts are more associated with luck than with skill.
Many traders prefer to trade on minute options. They use various mathematical strategies. These include a rate increase in case of a failure until the deal closes plus. This strategy is famous as Martingale; it came from a casino.
It is a risky trading strategy since the number of attempts for “wagering” is limited. There is a risk of a complete loss of the deposit. Another strategy is to let the contract expire from 10 to 30 minutes. As a rule, a timeframe of five minutes is ideal for such expiration.
Trades either conclude deals in the direction of a trend or catch rebounds. It applies when the price suddenly falls during an uptrend. Or it takes off when the trend is downward. At the same time analyzing the chart, it is best to use different timeframes.
It will help get a general idea of the price movement of the selected asset. And then you can make the right decision. As for trading strategies, there are a lot of them. For beginners, I advise you to use basic systems.
These systems require a minimum of supporting tools for analysis. These include various candlestick patterns, such as the Pinocchio model. Its essence lies in the search for a specific candle. It resembles the head of Pinocchio.
The Pinocchio is a small body of a candle and a long shadow in one direction. Let’s explain this strategy. Assume that the trend is moving upwards on the 5-minute chart. The bullish candle with a long shadow closes.
A price reversal occurs, then you should open a short position. The position should have an expiration of 30 minutes. With a falling trend, you need to do everything exactly the opposite. Wait until the bear candle with the lower long shadow closes and closes a deal.
Now make sure to apply different strategies to the demo account. Almost every trading platform offers it. With the demo account, you can build up your trading skills.
Also, you can test the features of the trading platform. When the time is right, you can switch to live to trade.
What are the best sources to learn binary options?
You can learn by reading books or by visiting popular blogs like ours. You can also select a trading course through which you can learn step-by-step.
Can I enter binary options trading without learning?
It’s impossible to understand the market dynamics without learning. Education is what differentiates pros from amateurs. You gotta learn to earn.
Are binary options right for me?
It depends on your trading style and methodology. Many people like trading binary options because of its Yes or No scenario. So, it’s a zero-sum game.
Is the demo account worth it?
Yeah to learn binary options quickly, you have to practice it on a demo account. A demo account, not only you can get an idea of the market, but you can also understand key features of the trading platform.
Before you jump in, it’s important to learn binary options. You can expedite the process by trading on a demo account. If you don’t want to trade on the demo account, you can take a course. A pro-level course can help you learn all the tips and market secrets.
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