Deposit rates are decreasing every year, and more and more people are abandoning long-term deposits and deposits in banks in favour of investing. In recent years, binary options trading has become one of the most popular investment methods.
First of all, since both exchange trading professionals and absolute beginners can invest in them, this earning method can be considered an additional source of income. However, do not forget that binary options obey the same laws of the market, and the risks of capital loss are quite high.
The amount of profit and its very existence depends on the investor himself and his ability to navigate the market. Therefore, to earn income,
- You will need to study analytics
- Conduct technical analysis
- Master medium – and long-term tools, and
- Study trading strategies
And only, in this case, there is a chance to earn quite a lot.
Let’s find out what binary options are
First of all, it should be clarified that a binary option is a type of exchange contract that is used to profit from the movement of prices for assets (currencies, stocks, commodities) on the global financial markets.
The income from binary options depends not so much on the price of a financial asset, but on the correct forecast made by a market participant. For the contract to make a profit, you need to determine the direction of movement of the price of the selected asset before the transaction is completed.
In other words, you choose a period of time after which the price of the selected asset will be higher or lower than the current one. If you make a correct forecast, you will earn about 85% (the rate depends on the broker) from your investments, otherwise, you will lose all your investments in this option.
Basic concepts in binary options trading
- An asset is a currency pair, index, commodity, stock, or other security that can be entered into a buy or sell contract (PUT or CALL).
- PUT option â€“ a transaction for the purchase of an option to reduce the value of the selected asset, executed if a price decrease is expected.
- CALL option – a transaction for the purchase of an option to increase the value of the selected asset, issued if a price increase is expected.
- OneTouch / No touch-an an option purchase transaction, the price of which must reach a certain level (in one touch) or not reach it (without touching) before the expiration date.
- Expiration date â€“ the time when the option expires, i.e. the result of the concluded contract is recorded.
- Entry/exit options â€“ an option purchase transaction that predicts the corridor in which the price will move before the expiration (entry option) or the price will exit the corridor (exit option).
- A timeframe is a time interval on a price chart.
Binary options trading algorithm
- Select a broker that supports this trading instrument.
- Decide on the type of binary option and the asset whose rate you can predict.
- Weigh the risks and open a deal, waiting for the right moment.
- Wait for the expiration date to lock in the profit.
In fact, everything, of course, is not so simple, because, to conduct profitable transactions with binary options, you need to take into account quite a lot of nuances. When choosing a broker, you need to pay attention to its reliability to reduce the risk that you will not be allowed to withdraw funds at the end of the transaction.
Preference should be given to those sites that have been present on the market for a long time, have a license from financial regulators, and have a good reputation among traders. Also, the presence of awards from well-known brokerage events will be a plus. You can also study the broker ratings compiled by the main thematic publications and websites.
As for the types of binary options and trading pairs, to reduce risks, beginners should choose classic ascending/descending contracts and open deals only on those assets for which high premium interest rates are set.
You can’t choose a point to make a deal at random, because in this case, the deal will turn into a roulette game. Therefore, to begin with, you need to pass at least basic training, which is often available on the broker’s website, as well as study and choose a trading strategy that is most suitable for the current market situation.
Another important point when trading binary options is to observe financial discipline and not to invest the entire deposit in one transaction, even if it seems 100% winning. Ideally, to open a trade, you should use no more than 5-10% of the funds available in the account, so if you get a loss, you will still have a lot of chances to cover it.
In addition, you should not trade binary options during periods of high market volatility, as the probability of a successful forecast is significantly reduced. And of course, you can’t make deals while being in an unbalanced emotional state, for example, when there is anger because of a big loss and you really want to “recoup” quickly.
Many experts say that today binary options are the most profitable way to earn money. They explain this very simply because, to get a sufficiently large and predetermined profit, before starting trading, it is necessary to correctly determine the expected direction of movement of the asset value.
The uniqueness of this type of earnings is that you can get income quite quickly. There is no need to wait for a long time, as when waiting for the accrual of interest on a bank deposit. You can independently choose the time after which the forecast will be checked for the asset price movement.
However, you need to understand that binary options are not something magical that allows you to earn millions without risk in a short time. That is, you can earn quite a lot of money, and quite quickly, of course, but it is quite difficult and involves certain risks.
To earn money, and not lose the invested amounts, you need to learn how to predict market movements, correctly calculate the direction of changes in the value of an asset. That is why any trader needs to use effective financial instruments. With their help, it becomes possible to analyze, study the state of the world economy and develop their own strategies of behaviour in conditions of high market unpredictability.
The use of binary options signals is the result of innovative activities in the field of binary options, which facilitates the work of many traders around the world. Technical and fundamental changes in the market are unpredictable, but choosing the right signal provider will determine your successful trading career.
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