This is one of the financial instruments that has just appeared in recent years. Binary Options are advertised to help traders make money and get rich faster. In this article, we will clarify the following: What is Binary Option? How to trade? And most importantly, does it really earn us easy money?
What is Binary Option?
Binary Option (BO) is also known by many other names. They are Digital Options, Dual Options, or Fixed Time Trade (recently appeared).
According to Wikipedia, the detailed link is: https://en.wikipedia.org/wiki/Binary_option
Binary Option is a type of option based on financial markets. Therein, traders earn money when the underlying asset, at maturity, is in accordance with a predefined condition (increase/decrease in price and expiration time).
According to professional traders
Binary Option is a form of trading based on the prediction of the price of assets in financial markets (currencies, securities, gold, cryptocurrencies, etc.) that will increase or decrease in a certain period of time. If your prediction is correct, you make money. If not, you lose money.
So, to win in Binary Option, you need to predict two things exactly. (i) The price will increase or decrease (ii) for how long.
The easiest way to trade Binary Options
Most binary options brokers offer a very simple way of trading. You can see the video below.
In the example above, I chose the trading assets of AUD/USD. I used the 1-minute Japanese candle chart to predict price trends. The expiration time which was also the closing time was 16:06. The investment amount for each Binary Option transaction was $5. And finally, I opened a DOWN order, which meant that I predicted that at 16:06 the price would fall. Result: The price dropped and I made a profit of $3.85 (77% of the investment).
Four steps in Binary Options trading
Step 1: Select the underlying assets
Underlying assets are assets in the financial market. They include the following: Currency pairs (EUR/USD, JPY/USD, AUD/USD, etc.). Commodities (Gold, Silver, Oil, etc.). Cryptocurrencies (Bitcoin, ETH, Ripple, etc.). Or stocks listed on the stock market. Often, traders will choose the assets with a high profit rate.
Step 2: Choose the expiration time
The expiration time is a specific time period chosen by yourself to close a binary options trade.
Step 3: Select the amount of investment
For most of the platforms, the minimum amount for each binary option trade is $1.
Step 4: Predict the direction of the price
Within the expiration time, you can predict whether the price trend will go up or down. If you predict correctly, you will get a profit. If not, you will lose money.
Can you really make money with Binary Options?
This is the most important question. Can you really earn money with Binary Option?
Answers: You absolutely can make money. But it is VERY HARD. I will explain each part of this answer.
Some proofs of making money in Binary Option platforms
Proof of deposit and withdrawal in IQ Option
Deposit and withdrawal proof in Olymp Trade.
Some additional withdrawal proof from Olymp Trade to online banking of local banks.
Why is it so hard to make money from Binary Options?
First reason: The expiration time
Remember: To make money, you must correctly predict the price trend in a certain period of time. And time is one of the factors that makes binary options trading extremely difficult.
You can use technical analysis on the Japanese candlestick chart to predict price trends. But no tool can predict the time. This is the key factor that most people lose money.
Second reason: Mentality
Greed and fear belong to human nature. When trading binary options, the mentality of greed and fear will always accompany you. These 2 things will motivate you to trade faster with larger amounts.
Continuous trading is one of the reasons that make you lose money. Or worse, it can even make you lose all the money.
Third reason: Patience
The majority of traders participating in binary options trading are lured by advertisements such as making easy-money, getting rich quick, or simple transactions, etc. Very few people patiently explore, learn, experience, and perfect their own abilities.
At the same time, the patience factor is almost a requirement if you trade on financial markets. Opportunities will always come. Market routines always repeat. But if you don’t have enough patience, you won’t last long enough to see it.
Hopefully, this article will make you understand what binary option is. There will be many other articles for you to understand more about this form of trading.
Read this article for the sake of the money in your pocket!