What is Binary Options? Binary Options Trading Types
What is Binary Options? Is Binary Option a scam? Immediately save 04 experiences and mistakes to avoid when trading binary options!
Binary Option is one of the most popular investment methods among young people. Many people think Binary Option is a scam, money only comes in but not out. But is that true? Let’s learn about Binary Option through the article below!
What is Binary Options?
Binary Options commonly known as Trade BO, a form of options trading based on price predictions and with only two options (up or down). When the trading session ends, one option will win, and the other will lose. This form is especially popular in gold, stock, stock, Crypto exchanges, etc.
Binary Options go by many names such as: Binary or compound options, digital options, “all-or-nothing” options or fixed-income options.
It’s basically a 50:50 game. However, the risk of fraud is so high that regulators in many jurisdictions consider it a form of gambling and are prohibited. In Vietnam, this form is still legal and there are many famous binary options trading platforms such as: Olymp Trade, IQ Option, Binary.
Pros and cons of Binary Option
If you want to be profitable trading binary options, you need to understand both their pros and cons first. You need to make sure binary options will suit your trading style, risk tolerance and capital requirements.
Simple: Because your investment decisions are based on only one factor or direction, placing bets is simple. The price can only increase or decrease. You also do not need to worry when the transaction ends, the expiration time will solve that problem. Whereas in other markets you may need a system to limit your losses, such as a stop loss.
Fixed risk: Stocks, forex, gold and crude oil have a lot of factors to deal with when investing, from slippage and margin to news events… However, with binary options, Your risk is kept to a minimum with much less parameters.
Profit Potential: Compared to other trading, the profit in binary is extremely attractive. Some brokers promise payouts up to 90% on a trade. If you are looking to execute simple trades with great profit potential, binary options may also be worth a look.
Multiple Options: Instead of being tied to a specific market (e.g. cryptocurrencies or stocks), binary options traders have the opportunity to trade instruments on almost all exchanges. market. It allows you to start trading currencies, indices and bonds if you want.
Accessibility: Binary options always have the best trading hours somewhere around the globe. So you can log in at night, or on the weekend and join the group of aspiring traders trying to turn in profits daily. Real-time charts are available for every market. So if you have time, you can invest 24 hours a day.
Limited trading tools: While most brokers offer advanced charting and analysis capabilities for other assets like stocks, forex, gold,… trading instruments for binary options are often ineffective.
HIGH probability of loss: For every 70% profit, the same trade will lead to 85% loss respectively. This means you need a win rate of at least 55% to break even.
How are binary options different from Forex?
For traditional markets such as Forex or stocks, when you buy, there will be counter sellers. Money is transferred from one person to another. The companies only act as intermediaries who earn commissions through the orders of the brothers.
As for options trading without a reciprocal seller, you play directly with the floor. This transaction also does not have the same order matching mechanism as regular crypto transactions. If you lose, the money is transferred from your wallet to the exchange. If you win, the money will be transferred from the exchange wallet to your wallet.
That is also the reason why options trading is easy to become a scam and many brokers have done this. Again, the name Binomo used to have a “break chart” for traders who lost to make money. Especially transactions with sessions shorter than 1 minute.
Types of binary options trading
Here are the three most common forms of binary options:
Call & Put
It can be said that, in binary options trading with the prediction of an increase or decrease in the value of an asset over a period of time, Call / Put is considered the most popular type, chosen by many investors. . In there:
- Call is a call option, i.e. the right to buy an asset in the future at a predetermined price.
- Put is a put option, i.e. the right to sell an asset in the future at a predetermined price.
Call & Put in Binary Option
One Touch & No Touch
This is a simpler type of binary options trading.
You just need to determine if the asset price touches or doesn’t touch a certain price during the time period, you can win or lose.
No Touch and One Touch
In about & Beyond about
Also called for short, an interval option.
So in essence is quite similar to One-touch & No-touch type. However, the difference is that you have to choose a price range to bet against the possibility of Increase & Decrease, instead of a certain price level.
Binary Options trading session
Another important component of binary options is the session, i.e. expiration time.
This is when the trade will end and is the point where you win or lose. This time can range from 30 seconds and 1 minute (turbo) to an entire day (end of day), even up to a whole year.
As a day trader, you will be more interested in trading 5 and 30 minute binary options. Opt for binary with 1 minute expiry time and you have the ability to execute a high number of trades in a day.
Is Binary Options a scam?
Binary Options is not actually a scam, it is legal, not illegal. Trade BO is often compared to Forex (foreign exchange market) or stock market. However, these are two quite different forms.
The bad reputation of binary options stems from dishonest marketing practices and cybercriminals. Many brokers and BO brokers have fraudulent activities to scam assets.
Specifically, the exchanges will organize very strong marketing activities by letting people post pictures of garages, money, winning order history, pictures of eating and drinking, etc. to blind others, then entice them to play. BO on the floor.
Maybe initially, you will win, but in some cases it will be very difficult to withdraw. This discourages players, then they go back to play again, and so lose, and if they lose, they will usually deposit money to remove.
With that said, playing BO is as risky as profitable, both from a player and floor perspective. But there are some brokers who deliberately manipulate the end result to take profits for themselves, leading to many losses.
Is Binary Options a scam?
Should you play Binary Option?
In my opinion, investing with equal return/risk is a trade that should not be played. Even if the win rate is up to 60 – 70% but sometimes there are heavy losses due to some other reasons such as not knowing how to control emotions, poor capital management, etc., why should we play a game? play with only 50% probability?
The next reason I want to talk about is also because playing BO is the way we play against the floor, if unfortunately playing on the floor is not healthy, our win rate is almost nonexistent.
And that’s why famous investors all choose the long-term investment path, because they don’t know that in the upcoming M1, M15 candle, what will happen, but the probability to predict at time long (3 months, 6 months or 1 year) will be much higher.
04 binary options investment experience
Determine the target
First of all, it should be determined that playing Binary Option in short candles is almost gambling, not too much analysis can be applied here. Therefore, you need to determine what your goal is to play BO. If it’s an experience, or occasionally come in and earn some coffee, you can play. But if you want to become rich, it’s almost impossible!
Choose a reputable Binary Option broker
First, you need to choose a reputable floor to play. Choosing the right floor will help us keep the winning rate up to 50% as I have analyzed above, some Binary Option floors can be mentioned as: Olymp Trade, IQ Option, Binary.
Keep your mind up
Playing Binary Option is like normal trading, emotion is a very important factor. There are times when we win in a row, sometimes we will fall into a series of consecutive losses.
At this point, it is important to keep a cool head to get a better strategy. Otherwise, continuing to play is just giving money to the floor.
Capital management is an action that is never redundant if you are participating in any type of investment. Good capital management may not help us win, but it will help you still have a chance to win.
03 mistakes to avoid when playing Binary Option
It is undeniable that human psychology is very fond of games of chance and gambling. That’s why Binary Options can grow so well in many countries. But since it is gambling, then we should only play at the level of entertainment.
Many people can’t control themselves when they lose, just hoping to remove the gauze. But the more you remove it, the more you lose. Therefore, what we need to do is to make a clear rule for ourselves, stop as much as we lose.
As for the case of winning, you should know enough to rest and reward yourself a little bit. Because no one knows whether the next order will be won or lost, unfortunately losing, will repeat the above case.
The variable of Binary Option is not only the price going up or down, but also in the trading session, the trading floor… It’s not as simple as you think. Options trading contains a lot of risks, so always consider and be cautious when participating. Wishing you success!
If you have any questions, please leave a comment at the end of the article. I and Idolmeta.net team will answer as soon as possible.