What are binary options anyway?
First, let’s talk a bit about what binary options are. A binary option is a contract having two possible outcomes. Think of it as a Yes or No scenario: you can either win or lose.
There are two types of binary options: cash binary option, and asset of binary option. With the cash binary option, you receive a specific amount when the option expires. With the binary option asset, you get the worth of the investment you are trading. You can trade forex, stocks, commodities, and other assets with binary options.
Let’s explain binary options with an example situation: “Will the price of GBP/USD go above 1.3500 at noon today?” If you think the price will rise, you place an order to buy. If you think the GBP/USD will dip, you’ll sell the pair. The possible trade is an either/or situation.
An important thing to remember is the price of the binary option. The cost of binary options always travels between $0 and $100, and follows “bid” and “ask” prices. Let’s say GBP/USD is showing 1.35000/1.35001. The 1.3500 value is the bid price, while the 1.35001 is the asking price.
If you buy the binary option, you’ll have to bid at 1.35000, and if you sell the binary option, you’ll have to ask at 1.35001. Let’s say you decide to go long on GBP to USD. If the pair’s value does increase by noon, your option expires, and now your options are worth $100 – an excellent profit. On the other hand, if you lose, your options are worth $0, and you get nothing.
The bid and ask prices constantly move till the option expires. The benefit is that you can close your position at any time. You can choose to close the position before the option expires in order to prevent further losses or to maximize profits.
Edward Thorp shares a lot of valuable insights about smart trading in his book A Man For All Markets, if you’re interested in further reading.
How do you make money with binary options?
Now that we know how binary options are, let’s explain how to realistically make money using them.
As I mentioned before, a binary option contract values between $0 and $100. When you win, you win $100, and when you lose, you lose the invested amount. It’s all or nothing.
There’s always someone taking a position opposite to you. For example, someone will sell the binary option if you buy it. This means if you win, the other person will lose, and vice versa.
How to make money in binary without investing anything?
As I said earlier, you can make money without investing. Let’s get into how you can do that.
1. No-risk trades
Many binary options brokers provide no-risk trade. Risk-free or no-risk trading means you don’t lose anything, and the broker returns your lost amount. You have nothing at stake, so you can trade without the stress of possibly losing your investment.
Many brokers provide no-risk trading to new users who sign up with them. You may also check out the 11 best trading apps with no risk. Some brokers also offer a “break-even trading day,” where all your losing trades get back to you at the end of the day. It’s a good chance for beginners to try binary options without losing anything.
2. Affiliate programs
If you want to try binary options without trading, an affiliate program is ideal. An affiliate program involves promoting a binary options broker in exchange for compensation or bonuses.
You just need to sign up for the affiliate program and recommend the broker using your affiliate link. You can have a website on which you’ll promote affiliate links, or if you don’t have a website, you can promote it on social media.
Many brokers have an affiliate program option at the bottom of the homepage. Your commission depends on the broker’s conditions. You will receive commission if a person signs up using your affiliate link, and in some cases, even if a person opens a demo account. You can then use these payouts to trade binary options without investing anything.
3. Trading tournaments
Yes, just like sports tournaments, there are trading tournaments. Many top brokers offer trading tournaments. Usually, any user can sign up to enter, even if you are just using a demo account. An example of binary options broker offering this is Saxo Bank.
Winners of the tournament get a cash reward, which the broker deposits into the person’s account. However, some brokers don’t offer a cash prize; they just provide their premium tools or courses. Check the conditions of the tournament before entering.
Entering a tournament is a great way to test your trading skills while also earning on the side without investing.
4. Sign up bonus
Many brokers also offer a sign-up bonus, which is a “no-deposit bonus.” Consider a sign-up bonus as free money for trading. Sign-up bonuses differ from deposit bonuses. With a deposit bonus, you have to deposit first to get a bonus.
It’s important to note that you don’t get your money back with a sign-up bonus. Therefore, if you lose the trade, you lose the bonus. But the advantage is that you’re not investing anything; the broker is paying you to trade.
If you lose, you lose the broker’s money; if you win, the money is yours. The bonus rate depends on the brokers. However, generally, it is between $10 and $50.
5. Other promotions
Brokers also offer many other promotions. With these promotions, you don’t have to invest a dime. For example, a broker can offer a fund if you complete a questionnaire.
Many brokers also provide a cashback program, which is a loyalty program where you earn points by trading. The more you trade, the more points you earn. These points are then redeemable for cash withdrawal once you meet certain conditions.
Can you make money on binary options without investment?
Yes, you can make money without investing your capital. All you need is to find out the right no-deposit bonus plans for your trading – and, of course, you need to know some trading basics.
What are some of the ways to trade binary options without investment?
You can use a sign-up bonus, no-risk trade, affiliate program, and other methods. Just surf around and find out which brokers offer these programs, then choose the one that suits you.
Can you make a full-time income without investing in binary options?
Although you can start off by trading for free and earn small profits, if you want to make a full-time income, you need some capital.
What can I trade by using no-investment methods?
You can trade every asset by using the no-investment methods. However, you might be restricted by certain terms and the lower leverage offered by the broker.
Is binary trading risky?
Trading in binary options is risky, but it is ideal to do it without any upfront cost. That’s why these free methods are ideal for beginners just starting out.
Are there ways to hedge a binary options trade?
If you are unsure of the direction the price will go, but you believe a big price move is coming (news may be coming out), then you can utilize a strangle strategy to potentially profit if a big price move, either up or down, develops.
It’s a great idea to trade binary options without investing, especially if you’re a beginner. Novice traders may need free signals or social/copy trading. This allows you to understand the market and become familiar with the platform and its features without losing your own money.
On the other hand, trading without investing doesn’t provide much opportunity for long-term growth. These free methods limit your trading to a small amount of capital. If you want to grow, then you have to invest some of your own capital to see larger returns. For more ways to make quick profits (with using own capital) see the Options Scalping Strategy.