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Learn Binary Options Trading √ • Best Guide For Beginners 2022

How to learn Binary Options trading – The best tutorial for beginners.
Trading Binary Options is not very complicated and hinges on a single question:
Will a given asset rise above or drop below a specified price at a specified time?
If it does, you make a substantial profit. If it doesn’t, however, you lose your entire investment. It’s a zero-sum game, since you will either earn someone’s investment or lose yours to someone – and it works this way for every investor involved.
Binary Options are some of the most straightforward financial instruments one can trade – but don’t be mistaken; making a profit with it is not as easy as it may seem.
But how do Binary Options work? Are they legal? Are there ways you can get scammed? More importantly, how does one trade Binary Options? What strategies can you apply? And which brokers can you trust? We’ll answer all of these questions and more in this comprehensive guide.
What are Binary Options?
Binary Options are derivatives that you can trade on any market. What makes them appealing is their simplicity. The investor knows precisely how much they could make (or lose) before making the trade. You typically make a profit of 70%-95% estimating the right price. If you invest $100 in a commodity and predict the direction of the price right, you will make between $170 and $195. Of course, if you’re estimation is incorrect, you will lose the $100.
Call Option.
You are making a forecast that the price will be higher after the expiry time.
Put Option.
You are making a forecast that the price will be higher after the expiry time.
The simplicity of trading Binary Options makes risk management a lot easier, making it appealing to many traders. There is no complicated math involved at all, and it is for this reason binary options are often called "all or nothing" trades.
Trading Binary Options can be a lot easier than other kinds of trading. There are fewer factors to consider, and you can sometimes make profits simply by following the news closely. One can trade Binary Options on commodities like crude oil and stocks such as Tesla and Amazon. But that’s not all; there is a vast range of derivatives you can choose from. You could trade foreign exchange rate options and even cryptocurrencies. Exchange-traded Binary Options are becoming increasingly popular as well. The trade can be as short as 60 seconds, enabling traders to make hundreds of trades per day across markets globally.
You can trade Binary Options in any timeframe and market.
Learn the history of Binary Options.
Learning about the origins of Binary Options trading can often be helpful if you’ve never traded them before. Binary Options are by no means a new concept – they have been around for decades. What’s interesting about the options is that initially, only large institutions like banks and the tremendously wealthy had to access to these options . But that changed quite recently.
In 2008, the US Securities and Exchange Commission formally enabled traders to trade Binary Options through exchanges. It didn’t take long for the easy-to-understand derivative to gain popularity, and as the internet flourished, more and more traders of all skill levels set about trading Binary Options.
Types of Binary Options explained.
While the concept of trading binary options can be boiled down to predicting whether the price will be higher or lower at a specified time, there is more to it than just that. Here are the four prevalent types of binary options you need to know about:
Up/Down (or High/Low):
It’s the most straightforward kind of binary options trade. You must bet whether the price will be higher or lower than the asset or commodity’s current price when the trade expires.
Think of ladders trades as up/down trades, but instead of using the current price, ladder trades use pre-determined levels that are staggered up or down. These trades demand that the price move up or down substantially, resulting in higher risk. However, the reward is just as gratifying since the returns on a successful trade often exceed 100%. The one thing you must remember about ladder trades is that both sides of the trade (up and down) are not always available.
Touch/No Touch:
In these trades, levels are set either higher or lower than the current price. If the price ‘touches’ the levels before expiry, you will be paid out the profits.
In/Out (Range/Boundary) Trade:
In/Out trades are unique. A ‘high’ and ‘low’ boundary is set, and you must estimate whether the trade will expire within or outside of these boundaries.
Expiry times and how they work.
The point at which the trade will end is known as the expiry time. It is at this point in time you will know whether you’ve won or lost the trade.
Expiry times can be as short as 30 seconds or as long as a year.
However, most traders prefer a minute-long expiry time since it enables them to make a large number of trades in a day.
The legality: Are Binary Options legal?
Binary Options are perfectly legal to trade in most regions; however, they have somewhat of a negative reputation amongst traders. The prevailing scams make traders skeptical of investing in binary options. However, most companies operate fairly, and as long as you pick a company with a good reputation, you have nothing to worry about.
European Binary Options Brokers are only allowed to accept professional traders in Europe as clients. However, in regions like the USA, India, and Australia, trading binary options is legal for private traders.
Binary Options scams (And how to spot one)
The pervasiveness of deceitful companies has tarnished the reputation of binary options. The risk of being scammed is high, especially for a newcomer.
To spot scams in a market flooded with them:
Don’t fall for the promise of ‘instant money’ Don’t believe brokers that could call you Celebrity endorsement doesn’t mean much – the company may still scam you There is no such thing as trading binary options for free. Steer clear of companies making such claims Legitimate companies rarely give deposit bonuses, if ever. You’re better off avoiding doing business with a broker that offers you a deposit bonus.
Don’t trust anybody who promises guaranteed profits.
Advantages and disadvantages of trading Binary Options.
Why trade Binary Options when CFDs exist?
You may ask yourself why one would trade binary options when CFDs exist. While the two derivatives are similar in some ways, there are some critical differences between them. When trading Binary Options, you will either lose the money you put up or gain a pre-determined amount. The risk is fixed, and even if the price sinks to zero, you won’t lose more than what you put up for the trade.
But then again, if the price skyrockets, you don’t stand to gain any more than stipulated. In contrast, CFDs have virtually unlimited risk. If the asset’s price moves significantly, your trade can grow considerably – for better or worse. CFDs don’t suit everybody’s trading style, since not everybody has a high-risk tolerance.
In the same way, Binary Options don’t suit everybody’s trading style, either. Weighing out the pros and cons of Binary Options trading is the best way to figure out if it’s right for you considering your capital and risk tolerance.
Advantages (pros)
Fixed risk: Regardless of what you trade – gold, stocks, or cryptocurrencies – your risk is minimized. This is because, with binary options, you don’t have to worry about as many parameters as you have to with other derivatives. Decent profit potential: Most brokerages pay over 70% on a single trade, with some offering payouts of 90%. The attractive profit potential coupled with the simplicity of the trade makes Binary Options worth looking at. Trade control: You know how much you stand to lose before you enter the trade, so you have more control over the trade right from the start. In contrast, if you trade in stocks, there is no telling whether your trade will make the entry price. Versatility: With binary options, you’re not constrained to a single market. You have the opportunity to trade currencies, indices, bonds, and virtually every other instrument in every market globally. Accessibility: You are not limited to trading at specific times. Since you can trade Binary Options in any market globally, you can log in at any time from any device and get to making profits. If you want to, you can also trade on the weekends. Simplicity: This is perhaps the biggest advantage of trading Binary Options. You only need to bet on whether the price will go up or down – it’s the most straightforward of trades there are. There is no need for you to worry about when the trade ends or set up stop-losses to limit your losses.
Disadvantages (cons)
Reduced payouts for sure-banker trades: If the odds of your trade succeeding are very high, the payout will be a lot lower than you’d expect. Companies only pay big percentages if the expiry date is set at least for a few days from the trade. Also, trades are unpredictable on such a timeline. Higher chance of loss: With other derivatives, you can control the risk/reward ratio to get the edge that makes you profits. However, the odds of Binary Options tip the risk/reward ratio in favor of losing trades. Lack of quality trading tools: Many Binary Options brokers do not offer technical analysis features and charts to users. While experienced traders can source these tools elsewhere, most new traders have nothing to work with. Mitigated trade corrections: If you trade in a commodities or forex market, and a repeat analysis reveals that a trade you made was a mistake, you can close the trade and open another one, minimizing your losses. Such trade corrections are mitigated when you trade Binary Options on an exchange. Limitations on risk management: Brokers set higher minimum trading amounts, and there is no such thing as trading in mini- and micro-lots with binary options. In a forex market, you may be able to make several trades with $200 by trading in micro-lots. However, if a binary broker sets a minimum trade value of $50, you may lose the entire amount in just four trades.
Risks of trading Binary Options.
You may find trading Binary Options appealing for several reasons, but delving into trading them without learning about the risks involved isn’t a good idea. Here’s a list of the downsides of trading binary options:
The odds are against you: For every 70% in profit, the corresponding trade would result in an 85% loss. Doing the math further, you will need a win percentage of 55% just to break even. Easy to lose capital: Most Binary Options brokers set trading floors, and to participate, a trader must invest at least the minimum amount. You cannot trade in mini- or micro-lots, so you risk losing most or all of your capital in a few trades. Lack of well-equipped trading tools: Unlike other brokers, Binary Options brokers do not offer advanced charting or technical analysis tools. Thankfully, some brokers are catching on and now provide analysis tools. There are also several online services that enable charting for Binary Options traders. Reduced payouts: If the likelihood of your trade succeeding is high, you will not get the 80%-90% payout you would expect. Brokers only pay out high percentages when the expiry time is at least a few days from the trade date.
How to trade Binary Options?
Now that you understand what binary options are and know the advantages and risks, you can begin trading binary options. Here are the steps involved:
Step 1: Find the right broker.
Finding the right broker to work with is one of the most critical steps in the process of trading binary options. Here are some factors you must consider before signing up for any broker: