Today, binary options as a popular method of earning, there is a lot of conflicting information. They say that if you work in this market, you can have a stable income, which depends only on you. And this is much more promising than being a low-paid specialist.
Of course, everyone wants to have an additional source of income. But is Binary Options a reliable way to make money? Not! Not everything is as simple as binary options brokers say in their advertising. Let’s figure it out …
The advertisement reads: “If you choose to trade binary options, you can become a free and independent person who works only for himself and receives a decent reward for his work.”
And if this is not a fairy tale, many will think. If you just earn money, then why has everyone still not gone to trade options?
Yes, I have to admit that this is not so simple. Moreover, you should not assume that it is enough to start working, relying only on luck, and in two days you will become a millionaire. No intelligent person will ever believe such a thing. Quite often you can hear the same kind of calls regarding Forex or stock markets. Stop working, go trade and take the money in bags …
What are binary options really?
Binary options – this is a very risky financial instrument, on which only a few can earn. Most lose their money because they do not fully understand the essence of the contract they conclude. There are two main misconceptions: regarding the nature of the option contract and regarding the real profitability of the “binaries”. The truth is that binary options are not an exchange contract, and most traders lose investment. And yet, one cannot say with confidence that this is a scam or a hoax.
Binary Options: Divorce or Not?
Working with binary options, as well as trading in the currency or stock markets, is work, not a game or entertainment. So, in order to get something, you have to do something. However, the “free cheese” on the Internet is exclusively financial pyramids that promise magical profits in two days. As a result, you give your money back, and this is where miracles end.
Many perceive binary options in much the same way. However, there are still significant differences. To emphasize them, it is worth debunking the most common myths about binary options trading.
Binary Options Myths
The first, “positive” myth of options as a source of enrichment without effort, we have already debunked. Let’s continue!
Myth one: “If something goes wrong, you can lose everything and get into debt.”
It would seem a rather ridiculous proposition, but many believe in it and are afraid to even try. However, trading binary options implies that you will never lose more than you put on your deposit.
Naturally, in order not to worry, you need to spend such an amount that you can live without if something goes wrong (especially at first). To start trading, you do not need to take a loan and put all this money into a deposit. Enough $ 10-100. This is enough for you to start, because the minimum rates can start from 1 dollar or even 1 ruble. Moreover, you can start working with options without any money at all, using a demo account. For these reasons, Olympus Trade is suitable for beginning brokers (reviews are available on our website) – you can start trading on a virtual account, the minimum deposit is 350 rubles, and the minimum rate is 30 rubles.
It is worth noting that the myth of losing money still has its foundation: some blacklisted binary options brokers used aggressive marketing methods, deliberately misleading untrained “investors”. How to distinguish a good broker from a bad one? Usually scammers often call and promise a lot. Do not believe it! The best rule is to never trust the sales managers who work in such brokerage firms. Live your mind, carefully, in different sources, check all the information, read reviews (on different sites).
Myth two: “Binary options are like a casino, and no one has earned anything there yet. Sooner or later, everyone loses. ”
Incidentally, a very true idea. If options are a casino for you, then you will always lose. Another thing is that you can change your attitude to work. Unlike roulette or toss, where it is theoretically impossible to make convincing predictions, in the binary options trading you have reason to analyze, make the right decision and ultimately make a profit. Not to win, but to earn, because you put your mental effort into it, which means that the money fell to you not from the ceiling and not by accident. This can be called honest earnings.
Myth three: “Anyone can be a trader and work with options.”
I have to admit that this is not so. And who can? The person who is ready for this. He did not come with the hope of “shaking” a few dollars out of the system and leaving, but he was ready to learn and understand. In other words, this is such a person who has a desire to understand more than immediately receive money.
As noted earlier, an important point is the correct attitude to binary options. In no case should you rely on luck, otherwise you will lose. Well, the ability to control yourself, to work not spontaneously, but according to the rules, not succumbing to excitement. Practice shows that only such a person will be able to earn something.
Is it realistic to make money on binary options?
So, binary options is not a game of chance. This means that one cannot rely on blind luck here and several principles must be taken into account.
Since your winnings depend not on luck, but on the correct forecast, it is important to be able to predict using tools such as chart analysis or purchase statistics of other traders.
In order to earn something, you need to correctly manage the deposit, avoiding great risks. In other words, you cannot lose the whole amount or even half at a time. You need to count so that you can afford to lose several times without much loss.
The maximum likelihood of winning on binary options, regardless of the asset (currency, securities, price indices), is for someone who spent time studying, who analyzed the market for a long time before taking any actions, who defy excitement, and work on specific system. If this is you, then success will not take long.
If you know how to work professionally with binary options, then you can win, even if most lose. And the desire to become such a person is precisely what distinguishes one who is able to succeed.
If you are not afraid of our debunking of myths about imminent and inevitable wealth and you are ready to learn a lot in order to make competent decisions and successfully trade binary options, pay attention to such a broker
Theory: how does it work?
An option is a derivative (a derivative financial instrument based on that underlying asset. It can be oil, Bitcoin, the dollar against the euro or ruble, or one of hundreds of other assets).
An option contract is a form of transaction that implies that one of the parties has the right (but not the obligation) to perform a certain action.
In the case of the option – sell (if the option is “Put”) or buy (if the option is “Call”) the lot after a certain time at a fixed price. And here everything is extremely simple. If you buy an option, you set the time for its exercise, as well as the direction of the price movement. Since there are only two directions of movement (up and down), the option is called binary.
Practice shows that one of the main parameters that makes options so attractive is fixed profit. In addition, the psychological factor has a very large influence. Namely: if you bought an option, you can just sit and wait whether it will be fulfilled or not. From the moment of purchase to the moment of making profit or loss, there is no need to be on the market, you do not need to conduct additional analysis, look for possible exit points from the market, place orders and do other things that those who play, for example, on Forex or have to take care of stock exchange.
At the same time, binary options still have their own characteristics. At a minimum, there are several types of such options, each of which implies its own work strategy and profitability level. Finding the best option is to secure a significant portion of success.
It should be noted right away that options are very different, in addition, individual brokers can also offer their own options, by the way, which is why we advise you to read reviews and reviews about binary options brokers. But in this case, we will focus on those options that are the most popular and convenient to use. Almost every major broker has them.
Call and Put Options
This is the easiest and most understandable type of option. You need to guess if the price will be higher or lower than the current one at the time of closing. If your forecast coincides with the real direction of movement, then the profit is in your pocket. If not, you don’t get anything or you are paid a small compensation.
Firstly, this option is good in that there is no mandatory path that the price must go. It is enough for her to take only one step, that is, change by one point, so that you can already get your profit. Usually it varies in the region of 70-75%. That is, this is a good opportunity to make $ 100 out of 175.
How to win?
Here you need to do a minimum of actions – determine whether the price will move up or down. Of course, this is also a difficult task, but options of this type are still much easier to handle than most others.
The fact that different brokers offer different scenarios of actions in case the price at the time of closing is equal to that which was at the time of opening. Of course, this does not happen so often, but the shorter the time you buy options, the greater the likelihood that this will happen. Some brokers consider such an option as a loss, referring to the terms of the transaction, which says that to win the price should be “higher than the current one”. Others rightly refund your option purchase amount in full. Almost no one is ready to count such a situation as a win.
A certain “corridor” has been established for this type of options, and the task of the trader is to determine whether the price will go beyond these boundaries or remain in it. There are brokers who offer winnings only if they exit the corridor, but there are also those who allow you to earn money in both cases if you correctly predict the price behavior.
Unlike Put-call, here the random price fluctuation does not play such a big role. Plus, you can win a large amount. How big? It all depends on how wide the “corridor” is and the duration of the option. If you play on the fact that the price will go beyond the boundaries of a wide corridor in the near future (minutes, hours), then you can earn a lot of money, but the risk also increases.
How to win?
In fact, you need to find an option that has a real opportunity during its action (usually set by the broker) to reach the destination (usually also determined by the broker). In most cases, this situation is impossible. However, this can also be used to your advantage if you play on the fact that the price remains inside the “corridor”. However, the profit in this case is usually less.
Many brokers have the opportunity to independently configure the option, that is, set the execution time and the width of the “corridor”. By the way, it can be one-sided when it comes only to overcoming one bar, for example, the upper one.
In no case should we forget that winning such an option is possible only if the price closes on the right side of the barrier. If, for example, your level is 1.70, then at the time the option expires, the price should be 1.70 or more. If you bought it at the level of 1.40, the price went down to the level of 2.00, and closed at around 1.68, then you lost. This means that in the case of a forecast price increase of 40 points, you need to buy an option that needs to go 25-30 points before winning. Otherwise, at the last moment, the price may skip the wrong way, and in the end you will not get your profit.
One Touch Options
The name translates as “one touch” and exactly corresponds to the meaning of this type of option. Unlike Range, the One Touch option wins regardless of where the price closes at the time the option expires. If at least for one second the price touched a given level, then the option is automatically considered the winner.
The main plus is that as soon as you touch, you will immediately receive money. You do not need to wait until the option expires, even if only five minutes have passed and there is still a week ahead. After all, if the touch occurred, then all further price behavior is not of interest.
In addition, on One Touch, you can also get a good profit. Many brokers offer earnings up to 700%. That is, you can make from 100 dollars 700 or 800 in just one transaction. This, of course, is very tempting. At the same time, distance plays a huge role here. After all, you can and tenfold your money by buying such an option, but here the question arises about the risk and whether the price can really overcome the distance that separates you from the gain.
As a rule, the most experienced traders using One Touch do not seek to earn 700%, but to, for example, double their deposit. Although such a profit is four times less, it’s also four times more likely to get it. And this is quite a lot.
If you are just starting to work with One Touch, try to bet on a small profit, because the desire to get a lot at once deprives you of the opportunity to win those deals in which it is much more realistic to win.
Before choosing an option and even opening the screen in their offers on the broker’s website, it does not hurt to look at the price chart of your underlying asset and draw conclusions in which direction and at what distance the chart will go in the near future. Based on this analysis, you can buy exactly the option that is ideally suited for the parameters of your forecast. This approach involves a minimum of excitement and the temptation to get a lot of money. It is for this reason that in most cases it justifies itself and is used by professional traders.
Binary Options Contract Terms
If you look at the sites of most brokers, you can see that the timing of the execution of binary options are different: from one minute to a month. This gives room for choice and makes you think seriously.
At the same time, if we talk about the binary options market, it should be noted that many brokers rely on options with a short term of execution. You can even find 60-second options that are highlighted in a separate type. And according to statistics, options for an hour or several minutes are bought more often than a week or a month.
All this once again confirms the general concept of the market: to receive income immediately, without long waiting times. On the other hand, you can immediately not only receive income, but also lose.
What you need to know to buy winning options?
Small time scales (time frames)
If you trade on a small time scale, then this, one way or another, leaves its mark on the nature of the work, regardless of the underlying asset. Any trader, no matter in which market he specializes in, will unequivocally say that the smaller the time scale, the more difficult it is to win.
Why? The largest and most predictable trends are really big and are connected with the course of prices by several hundred and thousand points. If we talk about dozens of points, then you will not notice any trends, because the so-called “ripples” will be of decisive importance – a constant and little predictable price movement up and down, which does not obey practically any laws.
The same can be said about binary options. If you buy a high / low binary option for 60 seconds, then this is, in fact, a lottery. Will the price in a minute be at the level of 1.52 or 1.49, if you buy at 1.50? This can not be predicted by any trader, even the most experienced and made a fortune on options. Moreover, these traders are not interested in such a scale, because working with them is more like fortune-telling on coffee grounds.
Very few manage to achieve constant positive dynamics with long-term trading on such a scale. As a rule, a short time attracts newcomers more.
But even if you are just starting to work, it is very good to start relying not on luck, but on your own calculations from the very beginning. And since their accuracy directly depends on the selected time periods, it is best to immediately take the scale of at least several hours. So you will have much more opportunities to learn how to make predictions.
If you play on a small time scale, then it is hardly worth using options like One Touch or Range, since the probability that the price has time to get to the desired mark is small. At the same time, even with the correct calculation, the profit will also be small, because for solid earnings, you need a great distance and time for the price to pass it.
However, if the broker allows, some traders use such options on a “bearish” basis. They rely on the fact that the price does not reach the indicated mark, does not go beyond the boundaries of the barrier. In this case, the probability of winning is much higher, since all that is required of the price to generate income is to do nothing. Here, too, it is necessary to correctly calculate the probability and take into account many trends, despite the fact that to do this over a short period of time, as already noted, is not easy.
Dependence of Scales on a Deposit
Options are good because there is no correlation between the period for which it opens and the amount on the account.
But for stock or currency markets, this is a very big problem. To buy a lot for the long term, you need to invest enough money in it, otherwise the chance to win is extremely small. If the price goes the wrong way, then with a small deposit you will lose everything right away.
Many traders who are not satisfied with this pattern go to trade binary options. Here you will have the opportunity to buy a deposit for a few dollars and set a deadline of up to several weeks. And this is one of the main real advantages of the binary options market, because even a novice trader can, almost without money, immediately begin to get used to trading on a large time scale.
Pros of a long expiration
“Long Term” or “Long Term Option” is, of course, not necessarily many weeks. In most cases, traders trade on a daily or hourly scale, that is, they buy options for a period of 3-12 hours to 3-5 days.
If you do just that, you get the following benefits:
- A significant increase in the accuracy of technical analysis. The larger the size of any figures on the chart, the same “pennants” or “double peaks”, the greater the likelihood that the forecast will work. That is, if such a figure was drawn by a chart in twenty minutes, then it is especially impossible to rely on it. And if she appeared in four days, then it is already possible to pin any hopes on her. In other words, hourly or twelve-hour candles should be trusted more than five minutes. Such trading accustoms the trader to trust technical analysis, since he sees that many of the principles of such a study really work. On a small scale, they work very poorly.
- The ability to apply fundamental analysis. Many brokers publish news on the world financial market on their website. Some traders, having heard, for example, that some problems have arisen in the financial system of European countries, are in a hurry to play to depreciate the euro. In principle, the forecast of such a plan may be correct, but it’s a shame that in many cases the trader will not even know about it. This is due to the fact that if he buys options lasting several minutes, he will simply “drown” in small fluctuations, without waiting for a serious trend. The latter, by the way, can not appear three minutes after the news. The market needs time to react, albeit not very much. When you make an option purchase for a period of 6-12 hours, you have the right to expect that the news during this time will be reflected in the chart and your forecast will make a profit. If you buy options for a few minutes, then you need to understand that even the most global and fundamental news will not help you.
- If you buy long-term options, then you need to do this much less often. You can take one option per day or even several days. The rest of the time, relax, reflect and analyze. This will greatly help your forecasts become more correct.
- Finally, if you predict a significant price movement, you can make more profit from it. For example, in the case of buying Range or One Touch options with a large distance to the execution line. One such lot for a substantial amount can cost hundreds of small options. In other words, you will get the same result, but spend much less time and effort. Indeed, the preparation of any transaction requires a lot of energy, and a large amount of work deprives the trader of the ability to correctly analyze. That is why professional traders prefer large-scale and rare transactions.
Given all this, we can conclude that if you are just starting to trade options, it is best to work with hourly and daily charts. So you will have more opportunities for analysis and a relaxed atmosphere for work, which is equally important for making a profit.
How to start working with a binary options broker?
First you need to register on the website of a broker and put money on a deposit. In most cases, very little money is required, so $ 100 is enough to get involved in the process.
Choosing a broker is a very important point, since brokers differ in the set of underlying assets, and in the types of binary options, and support for the trader. So read reviews about brokers and reviews about traders on our website.
Well, a few articles for additional reference:
- How much money do you need to start trading?
- Options from $ 1 – advantages and disadvantages
- Important rules for choosing a broker
In this case, very tempting offers often come across, like – it’s enough to work for a minimum wage, start trading options, and your life will radically change for the better! Naturally, this often causes distrust. And therefore, many people believe that binary options are something like another scam attempt, that by contacting him you won’t gain anything and at the same time lose your money.
Let us therefore try to figure out what is true and what is not. And how much do you really risk, and how much do you have chances to succeed, if binary options trading becomes your choice.
binary options trading lawsuits
If you go to the site of any reliable binary options broker, be sure to read the risk notice posted there. This means that trading options does not guarantee you a profit, but may cause the loss of your finances.
The dangers of trading binary options
But, by the way, this is already quite understandable to everyone who decides to do this. After all, you make a profit only if your forecast is fulfilled. If the opposite situation occurs, the broker can return you a predetermined percentage of the value of the option, but in any case, it will be a negative transaction for you. For example, having spent $ 100 on the purchase of an option, with an erroneous forecast you will receive $ 15. And these are obvious losses.
But at the same time, it cannot be said that binary options trading is a way to purposefully take money from people. Because in this case, whether you make a profit or remain at a loss depends entirely on you and on the accuracy of the forecast that you make.
How to make binary options trading profitable?
If you strive to achieve such a goal, then you need to pay special attention to the following points.
Firstly, of course, you should choose a worthy broker. Some companies that masquerade as brokers may indeed not pay money and engage in other dishonest things. But if you choose a broker from the top of the best, then this is a guarantee that you can work and get money in case of winning without any problems.
Secondly, you need to learn how to make the right forecasts. And this takes time, and some investments may be required. However, no business involves some kind of return without training and investment. In any case, option trading, and more broadly – exchange, is by no means a “freebie”, and the gain here will be a reward for intellectual work. The idea that to profit from options is enough to sit and do nothing is really a myth. Which, incidentally, often causes dissatisfaction with the result of its trade, when it turns out that getting money just does not work.
And thirdly, you need to understand that option trading does not imply excitement. On the contrary, in order to get something, you must think absolutely soberly, build all your forecasts on the calculation and on the logic. And this also needs to be learned. Using different strategies and methods of technical analysis, almost everyone can begin to receive income from options – usually small at first. If you want to have good money from this, then the way to this is to devote more time to development and train. In this case, you can really earn on options, which in no case can be called a hoax, but from which only someone who takes this seriously can make a profit.
How can a trader build his work?
How to plan your work in derivatives trading
In fact, this is a question that is asked much less often than, say, the question of how to start playing with one dollar or how to buy options. At the same time, the question of building your working day is very important for you to make successful transactions. Naturally, binary options are self-employed, so no one will control you and make you work 8 hours a day.
But no matter how long your working time as a trader – for example, 2 hours or 5 hours – is extremely important to distribute it so that in the end you get the maximum efficiency of your work. And, accordingly, decent earnings.
As a rule, any employee has not one, but several professional duties, the fulfillment of which is necessary for the overall success of the labor process. Many beginners believe that a trader should do only one thing: click on the buy button. However, there are many additional activities that will certainly make trading more successful.
Having taken a place in front of the monitor screen, a trader in no case should immediately reach for the treasured button and buy something. After all, if he had just started to work, then he simply cannot know exactly what should be done now. Before making any transaction (in fact, the transaction is among all other things in last place in terms of the amount of time spent), the trader must do several things.
Assess the market situation. If he adheres to the principles of fundamental analysis, then it is worth looking at the latest economic news, reading expert opinions and forecasts, to be constantly in the know about financial news – this is a must for someone who trades based on fundamental analysis data. To conduct such an analysis of the news, it will take no less than half an hour or an hour. However, the trader does not need to rush anywhere, he needs to find such market signals that you can rely on. Only if he finds them will he have a chance to buy an option that wins.
Make an analysis of the price chart. This includes the search and adjustment of support and resistance levels, the search for reversal patterns and trend continuation patterns, research of indicator signals and setting indicators for the current market. This also takes time, but even more so it is impossible to rush, because it is technical analysis that is one of the most proven ways to make accurate predictions about the future behavior of the chart.
For everyone who is seriously involved in options trading, the implementation of these two points is absolutely necessary in order to count on success in trading.
Transactions, that is, the purchase of options, it is better to carry out with an eye to several principles.
You clearly understand why you want to buy one or another option. You have confidence that he will win with a probability of at least 60%. For example, if the rate of return is 80%, winning 6 out of 10 transactions for $ 100, you will receive $ 480, losing $ 400. Profit will be $ 80.
You have no desire to win back for the previous failure or excitement due to the fact that you just won. If such phenomena exist, then it is worth stopping trade or doing market research, but in no case do not make new transactions, because they will almost always be losing.
You do not need to immediately earn money in order to spend it on these or other needs. If you urgently need money, then at this time trading options is not for you, unless you can completely forget about everything except the market at the time of work. By the way, the ability to concentrate on the chart, on real trends, forgetting about earning at that time and not thinking about money is the most important feature of a real trader.
You are in a good mood and you are not tired
By the way, rest for the trader is extremely important. At least once an hour, it is advisable to break away from the monitor and take at least a 10-minute break during which you can walk, do exercises, chat with friends. All this helps a lot in that the brain regains its full ability to analyze. If you feel that you no longer want to trade today, or in the morning you do not want to do this, close your working day or take a day off. Do not make transactions when there is no desire to do this, because the result of such transactions is most often not at all what we would like. The optimal time for one approach for trading is 2 – 2.5 hours. After each such approach, take a break until you feel that you have fully regained strength and you have a desire to trade again.
Binary Options Trading
Even if there are no trading signals on the market or today it does not work at all, this does not mean that the trader has nothing to do. Because one of the main activities of any trader is the training of his profession. At least one hour a day is worth it to learn. Doing this very well before starting a trade. Firstly, with a fresh mind, everything is much better perceived and remembered, and secondly, it is reading the training materials that allows you to tune into trading, draw on those recommendations, many of which can be immediately applied in practice, to trade not on a hunch, but based on your calculations.
There are currently extremely many learning opportunities. This article, and free or paid online seminars, and books, and videos that are offered by experts. If you study them at least a little, then your professional level will grow steadily.
Many brokers today also offer certain training opportunities you will find a lot of feedback from traders and reviews of brokerage companies, we hope they will help you find the right partner.
In addition to theoretical knowledge, practical training also plays a large role. This is, first of all, trading on a demo account, testing new strategies on it before launching them on your trading accounts. This also takes some time, however, such costs in all cases pay off.
How much time do you need to spend on work?
The answer to this question very much depends on what trading is for you. If this is a way to earn a few dollars a week, then you can limit yourself to an hour or two a day. However, no less, because if you “run” to the market for 20 minutes, you will most likely never achieve a stable gain. Just due to the fact that you need to spend at least some time on a thoughtful market analysis and planning your actions in order to get a good result.
If you want to make binary options trading your main source of income, then you will have to work about the same as people in other professions with a similar salary. Especially at first. In the first months, you should not expect that you will earn a lot. Learning not to lose your money is much more important. Subsequen