Binary Trading: what is it and how does it work? Guide, tips and advantages
By reading this article you will know some valid reasons to start doing binary trading and then decide if it is the case or not to take this path. First of all, it is not a coincidence that many network users looking for a way to make money from home refer to binary options trading.
Now, without further ado, we will immediately find out why choose to do online binary trading with the best regulated binary options brokers.
Binary trading: what it is and how to use it – There is a lot of talk about trading, online earnings and in this myriad of possibilities there are those who risk, those who gain and those who lose. We at MeteoFinanza.com have been dealing for years with online trading and in particular binary trading, therefore we want to clarify the topic in order to give the opportunity to those who want to start this type of activity.
Binary trading: 5 good reasons to start
1) Online binary trading is safe: in the past binary options brokers could operate even without a regular license, because binary options trading was not regulated by any body or authority. In those days the scams were therefore greater; but for years now, the European Union has expressed its opinion on the legality of binary options: all binary options brokers must have a regular license in the country where their registered office operates. And since most binary options brokers are based in Cyprus, CySec is the body that controls the services offered by binary options brokers.
2) Online binary trading is simple: after having clarified one of the fundamental aspects, namely the security of your investments, we want to make you understand briefly why binary trading is so simple. You will surely think that to start well you will need several hours of study of the fundamentals of economics, but it is not so. Binary options have been structured to be the easiest way to start trading online.
Operational example of binary trading
All you have to do is select an asset (gold, oil, Facebook shares, etc.) and make a prediction on the direction that the asset price will take, therefore upwards or downwards.
Let’s say you want to trade on Microsoft shares: when you buy the binary option, the share price is $ 10, if you bought a Call option (high) you earn even with the smallest upward swing of the Microsoft price. So even if the price when your option expires is $ 10.01 you earn! Likewise, by buying a Put (low) option, you will earn if the Microsoft stock price falls to at least $ 9.99 upon expiration.
In binary options it doesn’t matter how much the price can swing up or down, the most important thing is that on expiry your forecast turns out to be correct.
3) Binary trading is profitable: we talked about the basic mechanics of an investment with binary options, but we have not yet mentioned the gains that can be obtained. Binary options are so profitable because every closed profit position offers very high payouts. The percentage returns offered by the various binary options brokers are not all the same, but they are always very attractive. They vary according to the types of options (Call / Put, interval, One Touch) and can range between 75% and 550% of the capital invested for each individual operation. This means that the earnings of each of your winning options yield an exceptional and unusual return. If you invest € 100 you can earn from € 75 up to € 550 with a single position
4) Binary trading is low risk: let’s suppose, for example, that you choose to open a € 10,000 account with a broker, you register and enter the binary trading platform offered by the broker making an investment of € 100, this is the amount you can risk losing, not even a penny more. Not to mention that there is no commission or spread cost to do your binary trading operations. The risk factor of an operation is exactly proportional to the money you choose to invest, nothing more. This is a great reason to start binary trading, because if risk management is all in your hands, then you can manage the risk threshold beyond which you don’t want to push yourself.
5) Binary trading is versatile and fast: in binary options trading you will have at your disposal many different assets among equities, equity indices, currency pairs and commodities. In addition to different types of binary options, as well as deadlines (the time for which your position remains open): it usually starts from a minimum of 60 seconds up to daily and weekly deadlines. Furthermore, opening your own operations requires very few clicks, because the trading platforms for binary options are very simple to use.
Is it worth to do binary trading?
Binary options, as you will have understood, have been designed to revolutionize the field of online trading tools, to allow anyone to create an income, operating exactly like professional traders. With some brokers, you can start binary trading even with just € 100.
Improve your income with our trading strategies
In our portal we have selected numerous trading strategies that you can use to start trading immediately, even if you have no experience. We advise you to choose only two strategies, so that you can focis on a few operating schemes, thus decreasing the probability of loss.
Learn the best strategies, click here!
3 tips to do binary trading
Here are the 3 useful tips that can help you become a professional of binary trading right away:
1) YOU NEED A BINARY TRADING STRATEGY
This is an absolutely necessary step so that you can always be in profit and not in loss. Strategy is the real key to success in trading. The strategies available to a binary trader are easy to learn and simple to apply.
All the binary trading strategies that we suggest guarantee a success rate higher than the losses. The best strategies give you the advantage of being successful even in 70-80% of cases, because they are studied by experts in the sector, to allow even beginners to earn.
2 YOU NEED TO MANAGE WELL YOUR MONEY
In binary trading you do not go anywhere without a careful and rational management of your capital. Investing too much capital in individual operations, even if they seem to be a sure success, is a risk that you cannot afford to take. Even if you are 99% sure of the success of your operation, there is always that 1% chance of making a mistake.
The secret for being successful is to never invest more than 5% of your total capital in one operation. This percentage must never change even if your capital is increasing, thus remaining constant over time; and also avoiding withdrawing all the profits earned with binary options: it is always better to reinvest the money just earned in order to increase the profits of future operations.
3 YOU NEED TO MANAGE WELL YOUR EMOTIONS
The emotional factor in trading, whatever it may be, has an exaggerated importance to say the least. Just think that it has been established that the fluctuations of the markets themselves and their behavior are mainly the expression of the emotionality of each individual trader who acts accordingly.
A successful trader is a bit like a robot that makes coldness its main weapon while making investments. Getting emotionally involved can lead to irrational decisions that certainly do not benefit your ultimate goal: to achieve long-term profits.
You must provide yourself with precise rules to follow outside of which you must never act. In particular, it is necessary to remain calm both in case of strong gains and in case of a series of unsuccessful investments.
Binary trading is not a scam
We immediately answer the first question, that many users ask themselves, that is, whether binary trading is a scam or not. Well, binary trading isn’t a scam at all, but it can be a bad experience if you don’t take this kind of business seriously.
Binary trading means speculating on the performance of an asset, which can be a currency, an index, a commodity or even a share. Basically you have to decide whether the value of the asset rises or falls within a certain expiration date that you decide.
Binary trading is not a bet
What many “uninitiated” users believe is that it is a gamble and it could be true, since apparently it is a matter of deciding on a future event… of foreseeing something. But binary trading is based on the probabilities that a given event may occur and these probabilities can be calculated thanks to market analysis.
The market doesn’t move randomly
The market does not move randomly, the movements that take place in it are always determined by investor behavior, such behavior gives rise to trends. You have certainly heard of the bullish or bearish trend, right? Well, a trend is defined as a directional movement that tends to feed itself (it is fed by investors) up to a saturation point. When this point is reached, there is a trend reversal, that is, the passage from one trend to another in the opposite direction.
Here are some graphic examples that can better clarify the concept:
Bullish (or upward) trend
Bearish (or downward) trend
In order to obtain gains in binary trading, market trends must be followed, which means that if a trend turns out to be bullish, you buy a Call binary option, which allows you to earn on the increase in the value of the asset; if, on the other hand, we are in a bearish trend, we need to buy a Put option, which instead allows us to earn on the descent of the asset value.
Do binary trading with the best strategies
We have described the operation of binary trading, but this must not make you think that it is simple and that, in order to get profits, you simply need to open an account on one of the regulated brokers. In order to make money, you need to have a strategy and manage your capital rationally, without ever letting the emotion lead you to make mistakes.
Within our portal we have dedicated a specific section to trading strategies in binary options. This section contains the best trading strategies that you can use even if you are a beginner and therefore have no trading experience. If you want to start trading professionally and safely, we recommend that you take a look at the section: binary options strategies.
Derivative financial instrument: the new frontier of business
Binary options are a derivative financial instrument, the specific value of which replicates another financial instrument, which may be a currency, an index, a commodity or a share. Binary options were born as a speculative instrument for excellence, which means that this instrument is absolutely not used to invest in the long term, but only and exclusively to make money in the short term. The main features of binary options are:
Expiry: the expiry of the binary option refers to the date, chosen by the trader, within which the forecast must occur to generate earnings. There are many deadlines, but the main ones are:
- 60 seconds expiry
- 5 minutes expiry
- 15 minutes expiry
- 30 minutes expiry
- 1 hour expiry
There are also other deadlines which, however, are not very convenient, which is why we do not consider necessary to list them.
Underlying instrument: the underlying instrument of binary options, as already mentioned, can be a stock, a currency pair, an index or a commodity.
Today trading binary options has become a real business open to everyone, whether you belong to the world of finance or if you hear about online trading for the first time. Finance, until recently a dark matter and far from everyone’s reach, with the advent of the internet has become increasingly available to everyone, and consequently everyone has been able to benefit from it.
The economic crisis that has affected many families, the increase of the cost of living, the increased cost of fuel, are factors that can be remedied with additional financial revenues that can come through online trading, and especially through binary trading.
Binary trading: why?
Basically because binary options, if well used, are much more convenient and easier to use. In fact, through binary options trading you can earn high percentages on the capital invested. These percentages start from 75% up to 85%, and in some cases, as for the One Touch Binary Options, they can rise up to 500% of the invested capital.
The high earnings resulting from binary options have pushed many traders to take advantage of this great opportunity, a chance that everyone can take advantage of, including you, even if you are a beginner with online trading.
Binary options: how to invest?
Investing in binary options is very simple, you just need to choose the underlying instrument, make a forecast regarding the price trend, decide the amount of capital to be dedicated to the investment and finally wait for the binary option to expire. Let’s take an example immediately to better clarify the concept.
During the past year, Mark, a university student, saved around € 1,000, wanting to make his small capital profit, he decides to invest it in binary options. Based on his analysis, he predicts that the price of gold will rise during the day as there is negative news regarding the US dollar. He therefore decides to invest € 100 by buying a Call binary option, the type of option that allows you to earn when prices go up; as an underlying asset Mark obviously chooses gold, the expiry of the chosen binary option is 24 hours. After 24 hours, the price of gold actually rises and Mark gains 80% of the invested capital, that is, in this case € 80.
The example shown is quite common, in fact, binary options have an average profit ranging from 70% to 85% of the invested capital.
Example of binary trading
Let’s see what happens if we try to invest. First we choose the underlying tool, in this case we chose EUR/USD currency pair. The choice was not random, in fact, as you can clearly see from the graph, the price is rising, so we take advantage of this rise by purchasing a Put binary option, to do so we click on the “Call” button.
Once you click on one of the two buttons (Call or Put) a menu appears on the right side of the platform, from where you can set the amount of capital to be dedicated to the binary option purchased. In our case, we decided to operate on this binary option with a capital of $ 100.
As soon as you enter the amount of capital you want to invest, the platform automatically calculates the profit that will be obtained in the event that the investment is successful. In this case the gain is 81% of the invested capital, therefore the economic return will be $ 181.
What you need to trade in binary options
Trading in binary options is simple and the tools you need are very few:
- A computer.
- An internet connection.
- A binary options broker.
It may sound strange, but you really need these few simple things to start trading with binary options. But let’s go step by step trying to understand the best way to to use these tools.
Computer and connection: the computer and internet connection are used to manage your investments in real time. In order to trade in binary options you need a fast connection as the market prices change and update in real time.
Binary options brokers: binary options brokers are companies regulated by CySec, that is the body entrusted by the European Union to deal with the regulation of the sector throughout Europe. A broker offers many facilitations to the trader, in fact it provides:
Trading platform: the trading platform is a software that allows you to invest with a simple click. In binary options trading platforms you have real-time financial charts to use to make your trading forecast. A binary options trading platform looks like the one below.
What you see is a common binary options trading platform that you can use directly on the broker’s website, therefore you don’t need to download any software to be able to use it. The fact that the trading platform is entirely online offers undoubted advantages:
- You can trade from anywhere.
- You don’t weigh down your computer.
- You have no malfunction problems due to an overload of your computer.
Basically, you can manage your investment wherever you are, also because all brokers offer applications for mobile devices.
Let’s analyze the trading platform together and try to understand what its functions are.
In the up bar you can find these names
- Binary Options.
- Option Builder.
- Option Pro.
- One Touch.
- 60 seconds.
These are all types of binary options
In the binary options section you can find the classic binary options with variable expirations that you can choose as you prefer, with returns ranging on average from 70% to 85%.
In the builder options section you can find a particular type of binary options whose parameters are 100% customizable. Among the most important parameters you can customize with binary options builder there is risk / return.
In the one touch binary options section you can find a particular type of binary options that you can use to get 500% gains on the invested capital. One touch binary options are more difficult than traditional binary options and have a weekly expiration.
In the 60 seconds binary options section you find a type of binary options that have an expiration of only 60 seconds. This type of binary options is used to speculate on very fast price increases.
In the second bar we can find instead:
- Hot Assets.
In the “Hot Assets” section you can find the most purchased binary options, basically you can find the ones preferred by investors.
In the “Commodities” section you can find binary options with commodities as an underlying asset, therefore oil, gold, silver, coffee, etc.
In the “currencies” section you can find binary options relating to the forex market, with which you can trade on the exchange rates of currencies, such as the euro / dollar.
In the “Indices” section you can find binary options with indices as an underlying asset. Basically you can invest on indices such as Dax, NASDAQ, etc.
In the “Stocks” section, the last one, you can find binary options linked to the stock market. In this section you can take advantage of the price movements of the largest companies such as Apple, Facebook, Twitter and so on.
After the menu you can find the real binary options trading platform:
At the top left we have a first box that we need to choose the underlying asset, that is, the asset we want to invest in. If we have chosen the Stocks section, a drop-down menu appears in the box with all the available stocks listed, the same thing if we choose the forex market, where all the currency pairs are listed.
At the top right instead we have the box related to the expiry. If we click on it, a drop-down menu opens with all available expirations listed.
This is a very useful part of the platform, as it tells us how many people, in terms of percentage, are investing in Put binary options (sell options) and how many are investing in Call binary options (purchase options). Obviously, the values are relative to the chosen binary option and change according to the selected expiry and asset.
The chart you see shows the value of the underlying instrument chosen, therefore the price of the stock, the currency pair, the commodity or the index that you have decided to use. By observing the trend of the price chart you can make your prediction.
BUTTONS “CALL”(up) and “PUT”(down)
These are the buttons that you need to click to indicate the binary option you want to buy. For example, if you believe that the price of the chosen asset may increase within the expiry date of your binary option, click on the Call (up) button; conversely, if you believe that the price can go down, click on the Put (down) button.
In the last part there is the profit percentage of the chosen binary option, this varies according to the expiry of the binary option, the type and the underlying instrument.
Advantages of binary trading
The advantages of binary options are multiple, let’s see which are the main ones.
Earnings calculated before investing: one of the main advantages of binary options concerns the achievable gain. This type of investment, in fact, allows you to calculate your earnings before even investing. The percentage of earnings is clearly visible and the calculation in binary options trading platforms takes place automatically by typing the capital to be invested.
Exact losses: losses, as well as profits, can also be calculated without problems. In fact, when investing in binary options the maximum loss is 100% of the capital invested, basically you cannot lose more than you invest.
High earnings percentages: binary options offer very high percentages of earnings which reach more than 500% of the invested capital, no other investment offers such high percentages.
Ability to always earn: when investing in binary options you have the opportunity to always earn, both when the price goes up (buying a Call binary option) and when the price goes down (buying a Put binary option).
Loss Repayment Option: Some binary options brokers offer a 10% to 15% return on loss. This means that if you invest € 100 and the forecast is wrong, not all the capital is lost, because € 10 to 15 are returned.
Binary options are the future of online trading, thanks to this type of investment you can get very high earnings in very short times. Obviously, as in all respectful investments, even in binary options there are risks, but as they say: those who do not risk do not gain.
Binary options trading is a particular form of investment. The factor that makes it unique is its simplicity.
In addition, binary options have great advantages for both the more experienced and those who are approaching the world of trading for the first time.
In addition to this unique aspect, we also add:
- Very high profits: there are currently no financial instruments on the markets which, with the same capital invested, are able to guarantee similar returns. This means that, by operating with binary options, it is possible to earn more money much faster than any other form of trading.
- Minimum investments: the capital you can invest is really low. It does not take a lot of capital to start trading, as evidenced by the fact that everyone can easily open an account and start immediately with investments. In many cases, an initial deposit of just € 100 is enough.
- Easy to use: the system created for trading is really easy, and above all anyone can become an expert trader in no time.
- Ease of access: suggests that really good binary options platforms are currently available on the web; this means that the opening time of an account is around 2 minutes.
- Fast learning of the functioning of the markets: binary options give the possibility to learn the functioning of the markets in a simple and direct way. This turns out to be the preferred route for those who want to become skilled traders.
- High but controllable risks: with this paragraph we mean that if the risks are there, as it is right that they are in any self-respecting market, they are also very high. However, what has just been written should not discourage you, because it is possible to adopt different strategies to limit losses and recover.
- Simplified hedging: the last of the advantages we want to list concerns the possibility of being able to use binary options to hedge open positions with other tools in an extremely simplified way. This means that it is possible to buy some sort of insurance that will pay you back in case other types of investment have not been successful. In fact, thanks to this strategy it is possible to recover the capital initially invested and in some cases even to earn. Just as on this occasion we have a coincidence of binary trading with trading in derivative instruments such as CFDs (contracts for difference).
USEFUL RESOURCES FOR THE TRADERS
On our portal, which is specialized exclusively in binary options, we have developed a very simple structure to consult, capable of offering both to novice traders and professional traders useful information and tools to improve and fully learn the operation of binary options. All this to obtain concrete earnings that can meet your economic needs and make your time and life more peaceful.
Let’s see what are the useful tools offered by our portal.
Types of binary options
There are several types of binary options that can be used to trade online on the financial markets. They can be more or less useful depending on the trader’s predisposition and the trading activity he intends to conduct.
60 seconds binary options
60 second binary options work the same as the high / low binary options, but, as you surely have guessed, with the only difference of the expiration date, set at 60 seconds. 60 second binary options are suitable for a fast trading activity that aims to make money on the minimum price differences of a financial asset.
One touch binary options
One touch binary options deviate from the classic binary options both for what concerns the forecast to be made and the percentage of return on investment, which is surely higher than the high / low binary options. One touch binary options, available at the weekend, have an expiry of 5-7 days. The forecast must be made taking into consideration a price value, established by the broker, which must be touched by the expiry date. The returns of the one touch binary options range from 200% to 550% of the invested capital.
Builder binary options
Builder binary options offer the trader maximum customization of the investment parameters In addition to the classic ones such as expiry, asset, capital to invest, you will have the opportunity to set the risk / return. The parameter in question, very useful and interesting, allows you to decide the percentage of reimbursement in case of loss, simply decreasing the percentage of profit.
Binary trading strategies
Thanks to the expertise of our technical staff, we have collected and developed numerous trading strategies that you can use right away and that allow you to obtain real profits. The “strategies” section offers you a resource that you can hardly find anywhere else. You will have strategies explained in detail, with concrete examples to be used immediately to get your earnings with online trading in binary options.
Earnings in binary trading
The gains from trading in binary options are very attractive, however, you have to be very careful, especially if you are not used to earning such figures.
You should never lose your mind and think you are infallible, luck does not count in binary options trading, and skill is the only variable to consider. The skills of a good trader consist in applying a rational trading strategy based on observing the price charts, but also in considering that the investment cannot always be successful. It is therefore advisable to follow the good rules of price trends (the price goes up / the price goes down) in order to obtain gains in most cases.
It would also be a good rule not to invest 100% of the capital deposited on the trading platform, but to dedicate only a small part, according to the theories of money management. For example, if you deposited € 200 on the trading platform, you should invest, for each binary option, only € 10, therefore 5% of the capital.
If you follow this money management strategy, you avoid that the few possible losses will compromise your capital. Preserving your capital is the first strategy to be applied to constantly earn with binary options.
It should also be kept in mind that binary options have the characteristic of being an asymmetric instrument, that is, an instrument that allows you to establish from the beginning the maximum amount for gain or loss.
This aspect must not scare you, but it must be an incentive to understand not only how much you can earn, but also how much you can risk losing.
So in practical and economic terms, if we look with a bullish perspective, we buy Call options; while in a bearish perspective, we buy Put options, trying in both cases to follow the trend of the moment.
Depositing the capital
Let’s now talk about the deposit.
Obviously to trade with binary options you have to deposit your capital into an account, within the trading platform, proposed by the chosen binary options broker.
It is possible to deposit via bank transfer, Skrill account, Paypal, Western Union, but also with credit and prepaid cards (it depends on the choen broker).
The deposit procedure is simple, just register with a binary options broker, entering the required data and then depositing. The deposited funds are immediately available, which means you can start trading right away. Withdrawals are also simple and quick and have the same methods. Usually, a withdrawal is done in about 3-5 business days, depending on your bank.
There are many binary options brokers, but we always recommend avoiding those that do not have a regular European license. You must know, in fact, that the European license is MANDATORY, but there are some brokers who do not own it and therefore must definitely be avoided.
Usually, brokers without a regular license have no interest in protecting your investments and your capital. Since they do not have to follow specific rules, they dare to offer higher earnings percentages, but despite this, it is always worthwhile to rely on a regulated broker that protects you at 360°.
The brokers that we offer to our users have a regular European license and offer interesting earnings percentages, but above all they offer guarantees on the capital you deposit.
Regulated binary options brokers
To invest safely, you must rely on the best binary options brokers, that is, those that in addition to offering the best trading tools (such as fast and professional platforms, safe bonuses, advantageous economic returns and acceptable minimum deposits), also offer the guarantee of regular European license. The European license, granted by CySec, guarantees the protection of the capital deposited in the trading platform. Brokers who have the regular European license are subject to periodic checks that establish the quality of the services offered. We at MeteoFinanza.com sponsor only the best brokers with a European license.
Characteristics of a regulated binary options broker
On our site you will find the best regulated binary options brokers. Choose the one you prefer by visiting their trading platforms and evaluate the earnings percentages and the services offered. We guarantee that they are all reliable brokers and regulated by CySec, a requirement that you can immediately see from their home page.
Now, after carefully examining “how to trade”, let’s move on to “how to choose” a good broker to trade.
Each intermediary offers its own trading software which represents the access point on the markets.
Having said that, before choosing, we must bear in mind that the choice should not be left to chance, but first of all we need to understand if the company is legal in Europe. The regulatory body for European Union is CySEC, based in Cyprus. Before choosing, we advise you to always check that the broker name is present in the pages of the dedicated lists.
Let’s now list the main features that you should find in a serious broker:
- Safety and reliability;
Before entrusting yourself to any broker, check that your personal data is safe. Also check that the company is one of the most reliable and is not a scam. Also pay attention to the type of software provided for trading. The latter must necessarily be easy to use and flow smoothly, to allow you to quickly and best perform your binary trading operations.
Attention to the type of return offered, because a too high return can hide anomalies. We advise not to always choose the platform with the highest profit. The average of the returns offered by our brokers is between 60% and 85%.
- Initial deposit;
You should consider whether the initial investment at the time of registration is high or not.
Beware of brokers sites that offer incentives or money in the form of a welcome. Not all brokers offer them, and they may have restrictions or limits, so where provided, evaluate well before choosing them, looking for more information about.
The fact that the company does not have a branch in your country must not worry you, because since it operates in your country, it should offer help and technical support tools. These tools most often consist of guides, tutorials, telephone assistance, email or chat assistance, all strictly in your language.
In many cases, today most of us work with smartphones, so you should make sure that the binary options trading platform you register on has a mobile version or, even better, an application for Android or iOS.