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Binary options for beginners

Binary options for beginners

A binary option offers the trader a fixed profit. A predetermined condition is met - a profit is made, not met - a loss.

There are 3 main types of binary options, but beginners can be advised to choose, perhaps, the simplest of them:

  • Call options ("Up"). When the price is predicted to rise relative to the moment of the transaction.
  • Put options ("Down"). When the price decline is predicted relative to
    the moment of the transaction.

It is a mistake to think that there is practically no difference between the directions of movement. It must be remembered that quotes are growing more slowly and falling faster.

To work successfully with binary options, you need to use ready-made strategies, or develop your own rules for choosing entry points. If you just open a deal and wait for the result, then it turns into a lottery with a win / loss probability of 50 to 50%. That is, the business is deliberately unprofitable.

There are several parameters to evaluate. Such as expiration time (that is, expiration), profitability, terms of use.

Expiration of options

Deals can be opened for different periods, ranging from a few seconds and more than a year in some cases. The most popular period for traders is from a few hours to two days. At this interval, market noises affecting prices are cut off.

Experienced traders tend to work in markets with low volatility, therefore, more predictable. Most transactions are concluded within the current day.

But short time periods are the worst predictable. When it comes to seconds, the price movement is generally almost unpredictable. The unreliability of small gaps is due to several factors.

Firstly, price noise is strongly influenced, because quotes change in a split second.

Second, price variances are not significant. In a few seconds or minutes, the price simply cannot go up or down much. Therefore, a reversal can happen at any time, and this will lead to a loss on the trade.

On the contrary, on an interval of several hours, the chart may move far from the point. And if then the price still turns in the opposite direction, there is a high probability that the final indicator will be necessary for the trader.

Options yield

Most often, the return on simple Call / Put options is in the range of 75% to 85%. Thus, with 10 dollars you can either earn 7.5 - 8.5, or lose them completely. Based on these figures, simple arithmetic suggests that in order to increase the deposit, 2 out of 3 trades must be profitable. If a broker on his website promises a mind-boggling yield, close to 100%, then it is better not to trust this company.

Terms of Use

Markets with a pronounced trend are better suited for working with Call / Put options. So that the price moves in the chosen direction for a long time, periodically making inevitable, but insignificant bounces.

To open a trade, it is desirable to be able to determine the beginning of a trend. Then the correction will be smaller.
It is best for beginner traders not to rush to open deals, but to expect a pronounced strong trend to appear in order to minimize risks.

28.08.2020
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