Investing in binary options
What is binary options?
Binary options, as they currently exist, are a relatively recent phenomenon. Investing in binary options is positioned as an alternative way of earning income, and it competes with classic trades. Online binary options are much easier for a novice trader than mastering the international financial market. At the same time, it can be a good stepping stone to start a professional career.
The most basic definition of a binary contract is that you are betting that the price of the relevant asset will fall or rise on the date you choose.
So what are binary options? Such a term is a special agreement with explicitly mentioned conditions relating to how the price of a particular asset will behave over a particular period of time. If the terms of the agreement are fulfilled, i.e. the price of a security within a certain period of time, which is specified in the agreement, behaves as specified, then the player receives a certain reward in cash equivalent to the amount specified in the agreement. If the conditions are not met, the player loses as much as the value of the option itself.
What is the binary options market?
This type of commerce is ideal for newcomers with little capital. Due to the simplicity of the business project and undemanding size of the initial investment, anyone can try himself as a beginning businessman. It is enough to study the market a little, learn how to buy contracts, and you can go into business.
To buy a binary option on any asset, the trader does not need a large capital.
The market allows making unlimited profit. Some traders a day manage to increase their initial deposit several times. The matter is that brokers allow working with contracts, which have a short expiry period. If you wish, you can make a big number of trading deals during the working day. The main thing is to buy contracts after the preliminary analysis of market situation, according to previously developed and checked strategy.
What is a binary options broker?
Brokers, who offer investing in binary options, provide a platform to their clients. Clients can log in from anywhere and make trades. The platform usually displays charts and various indicators, so traders can track the performance of the asset over time. This allows traders to track the trend and make informed decisions.
Many brokers offer technical support by telephone or email. Many brokers offer online tutorials, which allow traders to learn the basics of trading without having to visit their local brokerage offices.
It's a great idea if a broker offers you their own mobile app to manage your personal account. This will replicate the full functionality of the platform, and you'll be able to work from anywhere in the world.
Many brokers offer their clients risk management tools. You can trade on a demo account, so you can set up your risk management options and see your profit expectations in real time. So make sure that the broker you choose has all these advantages.
What is a binary options trader?
A binary options trader is not essentially any different from the average forex trader. They are a short-term player, whose aim is to make a quick profit. All traders want to make money. It is very possible to earn serious amounts of money in just a few minutes in options trading.
The peculiarity of binary options is the simplified scheme of buying and selling the contract, which does not cover the real value of the commodity. That is, with options one can buy any asset at a fixed rate, expecting to receive a reward that is almost equal to the amount invested.
A trader has to carefully study the asset they are going to trade, study the terms of the contract and choose the time of expiration. An option time can be anything from 30 seconds to 5 or 10 minutes to a period of more than a day or even more than a month. Expiry times are different for all brokerage platforms. Thus, there are short-term and long-term binary options. The trader chooses the best option for him.
What is binary options trading?
To trade, it is necessary to study the characteristics of options, the types and features of options and, based on this knowledge, choose the one that best suits the trader.
This type of trading has many advantages:
- Profit and loss are fixed, it makes planning easier;
- Potentially higher earnings - up to 95% of the contract value;
- Abundance of assets available for trading. Trader can choose any trading instrument offered by broker: shares, raw materials, currency pairs, etc;
- Expiry periods from half a minute up to several days or even months;
- Low entry threshold. Options start at low cost.
To answer the question of what is trading binary options is all about, let's look at the kind of options in the market. They will clarify which conditions you have to meet to make a profit.
- Up/Down (Call/Put). These are classic contracts, and were originally called binary options. Their essence is that the trader must determine whether the price of the underlying asset at expiration time will be higher or lower than the strike price (i.e. the value of the asset at the time of the contract).
- One Touch. These contracts appeared almost immediately after the classic ones. The idea is that the condition of the option is that the price reaches a certain level.
- Boundary Options. The idea of these contracts is that the trader is offered a certain price range, marked on the chart. It is necessary to determine whether the underlying asset will move out of this range or stay in it.
- Pairs. The essence of it is that you have to determine which of the two underlying assets (pairs) would trade better over a specific time frame.
Experienced traders would advise you to start with the simple types described above and then try more complicated options.
Which type of analysis?
You should strive to be aware of your selection, so that trading does not turn into a game of chance. That is, try to calculate price behaviour. There are 2 main ways to analyse options:
- Fundamental analysis is the study and analysis of a market or asset to determine whether the price will move up or down over a period of time. To benefit from market news, a reliable trading platform that offers up-to-date news and an economic calendar can be helpful. The system provides data to help you make the right decisions.
- Technical analysis is a method of predicting future asset price behaviour based on historical market data. Technical analysts also do not focus on news or other fundamental data. They believe that all factors known to the market at any given time are already reflected in the price. In a sense, all a technical analyst needs is a price chart.
Different indicators study price trends and try to predict when prices will go up or down. These signals make it easier for traders to choose a trading direction.
A common method of trading is through the use of various indicators. Traders can use different methods to study the market and develop their own indicators and signals. They allow traders to recognize patterns and create strategies based on these signals.
Money management for binary options trading
The concept of money management means managing your funds in a sensible and productive manner. Such management will ensure that you make as much profit as possible. Basically, it is a whole science that teaches the investor how to manage their deposit and make a profit with long term planning.
The most important rule of money management is considered to be that - you should not open orders worth more than 5% of your deposit.
You can also set stop-loss and take-profit for your account. A stop-loss is an instruction to the broker to close a trade when a certain level of price loss is reached. The fact is that many traders spend only a few hours a day at the monitor and open trades for the medium or even long term. Respectively, to secure your deposit from negative market fluctuations, you can set Stop Loss.
Take Profit is a type of pending order to broker about closing a transaction when price reaches a certain level - profit. Take Profit and Stop Loss help to insure a trader's position in the market in any situation. Regardless of volatility or connection to the broker's server, your positions will close at levels you determine.
Commerce binary options can be a profitable business if you combine the best dealer and the most efficient trading system. Use the platform and its demo account for successful trading practice!
Where to trade binary options in Nigeria?
Once you have figured out for yourself who is a binary options trader is and how to run this business online, it is time for action, and you need to figure out where exactly in Nigeria you can start your trading.
More and more people are becoming aware of the fact that it is easy to trade options in Nigeria. The broker's platform, which allows investors to place bets on any asset or financial instrument, will help you do just that. To do so, you will need to register on the platform.
It's easy: go to the homepage, choose the registration menu and fill in the short form, entering the minimum data required. A link to confirm the registration will be sent by the system to your email address you have provided in the registration form - click on this link to complete the registration process on the platform.
After registering, you will be asked to open a Demo account, which will help you learn how to trade if you are less experienced. Or if you have been trading for a long time, you can use this account to practice a new strategy.
Before you can trade binary options with your hard-earned money, it is important to have at least an idea of how trading works. This is where you learn about trading strategies by trial and error.
The thing is that the system will credit your demo account with virtual money, with which you will buy assets. But you have to remember that you won't be able to withdraw your profit from this account as well as lose your money.
When you realize that you are ready for real trading, you can open a real brokerage account. Be cautious and start with small amounts, gradually expanding your investment portfolio.
The funds transferred by the client will be accumulated in his trading account, accordingly, all the profits he receives from trading operations will also be credited in real money to the same account.
Do not forget to study and learn new things all the time, use broker's video education, participate in live chats with traders and share your experience, good luck in trading!