What is Binary Option? Types of Binary Option transactions

By triumphal | Trade

What is binary options

Binary Options are often called Trade BO. It is a form of price prediction, and has only two options (increase or decrease). When the session ends, one option will win, and one option will lose. This form is especially popular in gold, securities, stocks, and Crypto exchanges.

Binary Option has many other names such as: binary options or dual options, digital options, "all or nothing" options, or fixed interest options.

This is basically a 50:50 game. However, the risk of fraud is so high that regulators in many jurisdictions see it as a form of gambling, so it is prohibited by them.

In Vietnam, this form is still legal, and there are many famous binary exchanges like Binomo, Olymp Trade , or in the Crypto market, there is Binance Option Trading.

Types of Binary Option Trades (VD)

Here are the three most common types of binary options:

1. Call / Put

It can be said that in binary option trades with the prediction of whether the value of assets increase or decrease in the coming time, Call/Put is considered the most popular type, and chosen by many investors.


2. One touch / No touch

This is a simpler type of binary option trades.

You just need to determine if the asset price touched, or not touched a certain price during the period of time.

3. In range/Out of range

It is also shortly called as Range Options.

Compared to the essence, it is quite similar to One-touch / No-touch. However, the difference is that you must choose a price range to bet depending on the possibility of Increase/Decrease, instead of a certain price level.

Term of a Binary Option (Session)

Another important component of binary options is the expiry time.

This is when the trade ends, and when to decide whether you win or lose. This time can range from 30 seconds, 1 minute (turbo), to a day (end of day), and even up to a year.

As a day trader, you will be more interested in trading binary options in 5 and 30 minutes. You can choose binary options, which are in expiry time of 1 minute, to be able to make high number of transactions in a day.

Here is the 10 minute session:

Pros and cons of Binary Option?

If you want to trade in binary options, you first need to understand both their pros and cons.

You need to make sure that binary options match your trading style, risk tolerance, and capital requirements.

Advantages

Simple:

  • Because your investment decisions are based on only one factor or direction, the bet is very simple. Price can only increase or decrease.
  • You also do not need to worry when the transaction ends, the expiry time will solve that problem. Meanwhile, in other markets, you may need a system to limit your losses, such as stop losses.

Fixed risks:

  • Stocks, forex, gold, and crude oil have many factors to deal with when investing, from slippage, margin to news events, etc. However, with binary options, your risks is kept to a minimum with much less parameters.

Potential profits:

  • Compared to other transactions, profit in binary options is extremely attractive.
  • Some brokers promise to pay up to 90% on one transaction. If you are looking for simple trades with great potential for profit, binary options may also be worth it.

Many choices:

  • Instead of being tied to a specific market (for example, cryptocurrencies or stocks), binary options traders have the opportunity to trade instruments on almost all markets. It allows you to trade currencies, indices, and bonds.

Ability to access:

  • There are always the best hours for binary option trades somewhere in the world. Therefore, you can log in at night, or on weekends, and join a group of traders trying to transfer profits daily.
  • Real-time charts are available for every market. So if you have the time, you can invest 24 hours a day.
Disadvantages

Limited trading tools:

  • While most brokers offer advanced charting, and analytical capabilities for other assets such as stocks, forex, gold, and so on, trading tools for binary options are often ineffective.

HIGH Probability of Loss:

  • For each profit of 70%, the corresponding transactions can result in an 85% loss. This means you need a win rate of at least 55% to break even.

Frequently asked questions with Binary Option

Is Binary Option a scam?

Binary Options (Trade BO) is actually not a scam, and it is legal.

Trade BO is often compared to Forex (foreign exchange market), or stock market. However, these are two quite different forms.

The bad reputation of binary options originates from dishonest marketing, and cybercriminals. Many brokers, and fake BO exchanges have fraudulent activities to deprive properties.

How is Binary Option (BO) different from Forex?

For traditional markets such as Forex or securities, when you buy, there will be reciprocal sellers. Money is transferred from one person to another. Companies only act as intermediaries to gain commissions through your orders.

For option trades, there is no reciprocal seller, so you play directly with the exchanges. This transaction has no matching mechanism like traditional crypto trading. If you lose, your money will be transferred from your wallet to the exchanges. If you win, the money will be transferred from exchanges to your wallet.

That is also the reason why options trading easily becomes a scam, and many exchanges did this. For example, Binomo once "broke charts" to make traders lose their money, especially in transactions with sessions shorter than 1 minute.

Should I join Binary Option?

At the time when I am writing this article (04/2020 - Covid-19), the market is highly volatile, and constantly has large waves based on news. Determining price trends is extremely simple.

And you can try participating in BO trading in the ways given below:

After the news "the US voted to approve the $ 2000 billion bailout", fomo people started buying lots to make profits, you could place Call orders with Gold, Index, etc. Or you could place Put orders with EUR, Index, etc., after the news of "British Prime Minister, and health minister of UK are infected with covid-19" .

The current market is very sensitive to Bullish and Bearish news as abov,e and it is quite simple to determine the trend in a short period of time. Despite not 100% accurate, the rates of winning are definitely higher than the 50:50 game of intuition.

What to pay attention to when trading Binary Option (BO)

For sessions that are too short, determining the trend up or down can only be based on intuition. This makes this game completely 50:50, like gambling.

Session 30s, the time of 60s also makes gamblers gamble more, resulting in a more collected commission fee of the exchanges.

  • With sessions 30-60s
  • With larger sessions
  • You should identify that this is to have fun, and make money for coffee, not to get rich.

The second thing is to choose a reputable exchange. There are more than 400 BO exchanges in the world at the moment. If you search in Google with the keyword like "BO exchanges frauds", there will be no less than 1 million results.

There are reputable BO exchanges you can try: IQ Option, Binary, Olymp Trade, ExpertOption, and Binance.

The third thing to note is that you should not trade Demo. Sounds ridiculous, right?

In my experience: Demo account helps you become familiar with the interface, and features of exchanges.

However, trading with Demo account for a long time will make you lose the discipline in trading, and follow the trend of "bad luck 50:50". The best way is to deposit a little enough for you to be responsible for the property.

Binary Option Decentralized Trades

The solution to transparency of options is to use Blockchain.

And Coin98 is proud to be one of the first ones to develop the product. It is the BitBoom game in the dApps section of the mobile application Coin98 App.

Data is taken entirely from a third party, and the Callers must have reciprocal Putters. Coin98 does completely not affect the results. All operations are performed on Smartcontract.

Conclusion

BO's variable is not only the price up or down, but also the session, the exchange, etc. Therefore, it's not as simple as you think.

Options trading is risky, so you should always be cautious when participating.

If you have any questions, please leave a comment at the end of the article. The Coin98 team and I will respond as soon as possible.

Goodbye and see you again in the next article!

triumphal

What matters is not the standing position but the direction.