Real binary options
Trading online is accessible, practical and promising. Online investing has opened the door to the stock market world even for those without impressive capital or professional knowledge of the investment process. With convenient and practical trading platforms, you can now trade stocks or currencies, open futures contracts or buy raw materials from the comfort of your own home.
All you need is a small initial capital, a handy gadget for downloading the trading application and an internet connection.
A modern online platform will be your guide to the world of investment and will provide you with access to the information you need. You will be able to invest in the same assets using online platforms, as you would do on a real exchange.
Of course, there are differences in trading real assets and similar financial instruments online. Today we'll be taking a look at live binary options trading in the UAE, the online binary options option and the step-by-step process of getting into binary options trading online.
Real binary options
A financial or stock option is a contract that gives the holder the right to buy or sell a particular asset at a predetermined price within a certain period of time or on a specific date.
Thus, the essence of an option lies in the fact that its holder has the right, but is not obliged, to perform the actions provided for in the contract. And if, when exercising the option, negative consequences may arise, its holder may refuse to exercise his rights.
On the contrary, if the situation is favourable, the contract holder will choose to exercise his rights and complete the transaction. The right to execute or not execute the transaction makes the decision-maker's position flexible enough. Obviously, this flexibility is of some value in itself.
In classic terms, an option is a financial or commodity futures market instrument that represents the paid right to buy (call option) or sell (put option) an underlying asset (normally a standardized quantity of stock or commodity) at a specified price (strike or strike price) at a fixed future date (European option) or at any time before some fixed future date (American option), if the optionholder would benefit from doing so; otherwise, he has the right not to carry out the transaction.
Real options are traded on regulated exchanges, involve the writing of securities and entitle the buyer to hold the underlying asset. Trading on the real market involves investing in fairly large amounts.
Online trading has greatly simplified this process, enabling traders to speculate on the value of option contracts. So, by buying an option online you do not take possession of the underlying asset.
Binary options are often called all-or-nothing contracts. They get their name because if you forecast correctly the price direction of the asset you will get up to 95% of the profit but if you fail you lose the whole amount.
For many people this feature of options seems similar to a game of roulette, where you have a bet and only two possibilities: win or lose.
A lot of beginning traders do just that - they act at random. As a result, those who consider trading to be a kind of casino analogy get into a buzz and quickly lose money. Such traders who follow their emotions blame their broker, the market and other factors, but not themselves, for unsuccessful deals. It generates a lot of false rumors stating that binary trading is a scam and fraud.
In reality, binary options trading is a section of investing, nothing like gambling. There are strict rules of exchange trading and the price movement, although it looks chaotic at first glance, depends on many factors.
The main task of a trader is to analyze the market, determine the trends, quickly react to the market changes and stay focused.
Trading binary options is all about acting wisely. Binary options are not gambling "for luck".
The first binary options. Varieties of modern options contracts
Binary options first appeared on the US options exchange CBOE - Chicago Board Options Exchange in 2008. The exchange offered fixed returns for this instrument. At first, the assets were only 2 indices - the S&P 500 Index and the CBOE Volatility Index. In 2012, the largest European financial market regulator, Cyprus Securities and Exchange Commission (CySEC), listed binary options as a financial instrument. They were recognized as financial instruments under the Investment Services, Investment Activities and Regulated Markets Law of the Republic of Cyprus 2007.
Today this financial instrument is one of the most commonly used by traders.
Trading options gives you the opportunity to make a very good profit in a short period of time.
There are three main types of binary options:
- Call and Put - options fix the price to buy (call) or sell (put) an asset at a set period of time. The most requested type of binary option for high-risk short-term trading.
- One Touch and No Touch - options fix the price of the asset (one) or the price of the asset (no) at the point specified in the document.
- In and Out - options fix the price range of an asset relevant for a set period of time. The In type generates income if the value of the asset remains within the range; Out type generates income if the value moves out of the set range.
Options are divided into three types according to the possibility to close the contract:
- European type. In such options the closing period is strictly specified.
- American type. The expiry time is specified, but the deal can be closed at any time.
- Asian type. Can be terminated early, but the strike price is calculated as an average of the prices of the asset for the whole previous life period.
Options are also differentiated by the type of underlying asset (stock option, currency option, commodity option) and by expiration date (woon-day, short-term, long-term).
How do I make money on binary options?
A trader's main task is to predict the direction of an asset's price movement. This is facilitated by studying the market, analysing market trends in general, as well as separately those financial markets whose assets you use as underlying in option contracts.
Traders use methods of technical and fundamental analysis to get a real picture of the market situation.
Modern trading platforms are equipped with a powerful arsenal of tools to help the investor in the analysis.
On trading platforms you will find built-in indicators, as well as a market analysis section and an economic calendar. If you're not yet familiar with how to use these tools, watch the video tutorials in the "how to" section. Once you've learned the theory, you can practice with a free demo account and see if you understand how to use each tool correctly.
In time you will start to grasp certain patterns in trading, learn how to apply complex technical indicators and how to make correct predictions.
Where to begin? Find the right broker, register on the trading platform and open an account.
Choose a broker
Choosing a reliable broker is one of the keys to your success in trading the stock market. To choose a good broker, pay attention to the following things:
- whether the broker has a licence from a reputable regulatory body giving him the right to engage in brokerage activities;
- availability of a professional website with all the necessary information;
- availability of feedback for consultation;
- available trading conditions with a wide range of trading instruments;
- availability of technical indicators to analyse share price fluctuations;
- access to free training materials;
- the speed of responding to requests;
- low service fees;
- availability of various available methods for withdrawal of funds.
The online trading platform is a great opportunity to see and learn all the trading tools and techniques.
The first thing you will see are charts of stock price fluctuations. You can select different periods of analysis, from a few years to a few hours. In addition, there is an "Indicators" tab which contains tools for technical analysis of the behaviour of certain assets in the investment market. The platforms are also equipped with training sections with video tutorials, where you will find a detailed explanation of all the basic investment terms, functions and features of the platform. The market analysis section will give you a brief summary of the current state of the exchange. Trading platforms also contain many other handy sections and features - explore these when choosing a broker.
A modern online investment platform is your online home exchange.
Creating a working account on the trading platform
To get started, register on the online trading platform. To register on the online investment platform, follow a simple procedure. Fill in all the details that the system invites (user name, your email, etc.) and click "register". Additionally you have to confirm your email by an automatic link sent to you by the system. By completing these simple operations you will have access to the online investment system and the functions it offers.
Practical lessons with the help of a test account
A demo account is probably the first and foremost feature of a quality online platform. With a demo account you can try your hand at trading by carrying out test operations. Demo accounts use fictitious funds, and you cannot withdraw them. But you can use this money for training operations. Try trading on the platform, by choosing the demo account. All the functions of this account are identical to the real one. Open an option contract by choosing the asset and the expiry time. Check out what your result will be - is there a profit, or vice versa, a loss? Analyse why this is the case. Try out the application of various instruments.
A demo account is a unique opportunity to practice on a trading platform, without the risk of losing real money. In addition, the demo account is absolutely free, and you can update the amount of fictitious funds on it, if you need to, as many times as you like. There is no time limit on using a demo account - use it as long as you need.
In order to start real trading, you need to fund a real account. Modern platforms offer simple and convenient methods of funding your account. There is no need to look for external payment resources. All of the available funding options are listed in the "top up" section. You may replenish your account with a bank payment card, as well as using popular online payment systems such as WebMoney, AdvCash, Skrill, Perfect money, Neteller.
Withdrawals can be made using the same method you used for depositing your account.
Prerequisites for successful trading
It is worth remembering that, despite all the convenience and seeming simplicity and accessibility, it is a risky business and involves both the possibility of making a profit and, unfortunately, the possible loss of funds. We strongly advise you to follow training courses, offered by the platform, in the form of lessons and video clips to avoid financial collapse of your stock market operations. You may also use other specialized literature.
A potential investor must have a fundamental basic knowledge of how a stock exchange works. In addition to theoretical basic knowledge, you must understand that many factors influence the value of assets, such as political and economic processes in the country and at the interstate level, as well as force majeure situations, such as man-made disasters or natural catastrophes and the like.
Once you understand the nature of binary options and peculiarities of working with the online platform, you can discover new opportunities for almost unlimited earnings. However, you should always remember that this financial instrument is not a tool that you can rely on your intuition and guess what the price direction will be. Your success depends on how accurately you forecast price movement. You can only make these predictions with proper analysis.
You can learn how to trade with a free demo account, do some trading and make good profits with your efforts!