Real Binary Options

Treat this lesson with the utmost attention. It’s very important from a psychological point of view. If you now understand what a real binary option is, understand the essence of this market, you will save a lot of money and a lot of neurons. And no other broker in the world (not just binary) will be able to fool you. Ever.

This information on the Internet is deliberately complicated and disguised, because it is very beneficial to the entire binary industry. As a result, 99% of newcomers to binary options have no idea where they are – that’s exactly the point.

The lesson is a bit complicated (not on purpose, I tried to make it simple). It will probably bore you to tears at first and then inspire you. But my task is not trivial: to immediately create in you an extremely realistic and sober understanding of binary options. So that you accurately understand the essence of the phenomenon. Really. And not as described in advertising and on brokerage websites.

Focus! Everything is simple. There are only 2 types of binary options in the world:

• bets;
• exchange rate.

The vast majority of traders come across bets (bookmakers) and don’t understand that this is not trading itself. You should understand this now. When you, after registering with a normal binary company, click on the “Buy” button, you are not buying anything from anyone. This is not an exchange agreement. This is not a trade. You are simply placing a financial bet on the price, just as you would bet on a horse or the outcome of a soccer match.

This is the key to understanding the whole industry. Please re-read the above paragraph again. Understand completely what is said there.

Now let’s compare two absolutely, cosmically different worlds – forex binary options and betting.

Binary options on the stock exchange

Where can I trade real binary options? On regulated exchanges. At the same time, for 99% of traders in Brazil, this method is not available due to many financial and legal difficulties. In addition, two real binary exchanges are located in the USA and do not accept traders from Brazil.

If the manager of your binary company is going to talk crap in your ear about “trading” and “investing”, you should just laugh in his face.

Binary Options Binary OptionsE

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Let’s take the Chicago Board Options Exchange, also known as Binary OptionsE – Chicago Board Options Exchange. It is 170 years old, one of the oldest American exchanges. Here you can buy binary options only at:

• SPX index (S&P 500);
• VIX Index (Binary Options Volatility Index).

Surpresa! Acontece que em uma das principais bolsas do planeta você pode comprar apenas… duas opções binárias. Não há centenas de opções para você “comprar” opções para quaisquer pares cambiais ou ações disponíveis em seu escritório binário na Copções bináriasE.

Você não verá nada como na captura de tela abaixo em uma corretora de câmbio, especialmente porcentagens de pagamento:

What’s more, only call options are available on Binary OptionsE – it’s not so easy to “sell” a binary option there. A special synthetic option construction is used to “sell” it.

NADEX Binary Options

Although binary options is the oldest exchange in the world with a multitude of different options, there is only one dedicated American exchange that deals exclusively in binary options.

It’s called NADEX. There you won’t find any bet payout percentages and the exchange’s interface looks very peculiar:

It’s only available to EU/US citizens. And this is the only example of such an exchange; there is no other.

Cantor Binary Options

Apart from NADEX, there was only one other specialized binary options exchange that emerged in 2015. Veterans like me remember it. It was called Cantor Exchange and it didn’t last long. The popularity of binary options has waned, but the attempt was a good one.

This is the window for buying or selling a binary option on Cantor. Please note: there are always several contracts available. If nobody sells an option, it can’t be bought.

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Remember, real exchange-traded binary options are only traded on stock exchanges:

• CME
• Binary optionsE
• IG/NADEX

And that’s it. Now for some nuances.

Characteristics of exchange-traded binary options

Exchange-traded binary options are fundamentally different from over-the-counter options:

• there are no fixed profit percentages on the stock exchanges;
• to buy a real option, someone must sell it, so if there are no sellers, there is simply no possibility of buying.

For example, you want to buy BVZ binary options on the Binary OptionsE exchange. Do you know how? How to open an account there? After all, this is a real American stock exchange. Its headquarters are in Chicago. Take a look:

To open an account with an American broker that gives you real access to binary options, you need not only English and an impressive dollar account, but also serious trading skills.

Stock options, including binary options, are much more complicated than primitive bookmaker options. In addition, stockbrokers have to go through a difficult procedure to formalize an account in English, you have to pay taxes and so on.

Advantage Futures is an example of a Western broker that provides access to binary options.

In general, the American stock exchanges remain a dream for Brazilian citizens. Yes, some professionals know how to work with NADEX, CME or Binary OptionsE, but for that, they need to be professionals, and there are few of them. What’s more, many American brokers now don’t open accounts for Brazilian citizens.

As a result, several domestic offices take advantage of this and pretend to trade on American exchanges. The managers of one group of pseudo-brokerages have deceived thousands of their clients, suggesting that they would be trading something. In reality, they just create a game to make quotes and cynically line their pockets.

Real binaries have never been popular – or famous. The average American trader has never heard of forex binary options in their life. Only experts know about them.

But this tool… compared to vanilla options, is very simple and attractive. That’s why, in 2008, just after the crisis, some brilliant mind came up with the following idea. Trades are not available to most people – they don’t know what they are, the entry threshold is too high. The level of financial education of the population is below zero.

So why not give them all an imitation of the stock exchange, a system of betting odds? That’s how binary options bookmakers were born.

Binary options in bookmakers

It’s these binary options that you’ll be dealing with. Almost all the binary companies you see in the ads we work with at Binary Invest, all presented on the Internet, are financial bookmakers and are not affiliated with official exchanges in any way.

That’s not necessarily a bad thing – there are clear advantages, we’ll talk about them later. However, almost all representatives of the binary market are coyly silent about the essence of their business. You won’t find this information on any binary company’s website.

All these guys are just exploiting someone’s brilliant idea to disguise betting – financial betting – as trading. The companies simply install a platform that displays real stock quotes and lets you bet on them.

They have no connection to official stock exchanges or exchange trading. They are, in essence, gaming applications that display real quotes and allow you to place bets on them. As a result, the developers of many binary options companies have already been involved in creating conventional mobile games for iPhone and Android.

But they base the odds on official providers, the same ones that inform the real bookies. This is the advantage of betting on binaries. You don’t buy/sell anything, your bets are placed against the bookmaker, but it’s all based on real data. This is the only bridge that connects binary options betting with the real world.

So creating binary options at the broker is not that difficult. All you need to do is:

• buy or develop an application to bet on prices;
• connect a quote provider;
• take bets.

Bingo. In reality, of course, setting up your own brokerage is a little more difficult (especially if you need to go through regulation), but not impossible. That’s why there have been hundreds of binary options companies on the market, they were literally created overnight.

Comparison of exchange and bookmaker options

Let’s briefly compare their characteristics.

Binary options on the example of Binary OptionsE (Chicago Options Exchange):

• only work with official brokers, listed on their website at https://cfe.cboe.com/tradecfe/brokers.aspx;
• English only;
• large dollar deposits;
• no options for “anything”, just 2 types;
• without fixed percentage payments;
• binary options is officially regulated by the government;
• account replenishment only by transfer to a US bank account;
• official trades between real counterparties.

Binary options from bookmakers:

• hundreds of companies;
• replenishing the account in dozens of ways;
• Portuguese everywhere;
• a large number of assets always available (of course);
• no sellers/buyers;
• Among the documents, you only need to scan your passport;
• the percentage of revenue from the transaction is always known in advance.

With bookmakers, you only play against the binary bookmaker itself. This, of course, immediately causes a fatal conflict of interest, because the binary bookmaker profits solely and exclusively from your losses. However, in 2019, some binary options offices finally learned to hedge (insure) their business risks, which significantly reduced the conflict of interest. But it still exists, it’s the nature of the binary options market.

If you’re afraid of difficulties or dangerous consequences, you shouldn’t start any trade. There are a few simple tricks that I’ll cover in the next few lessons that will help minimize the side effects of this business.

In fact, the task of an experienced binary options trader is to find a sound binary bookmaker (fortunately, there are more of them) and work skillfully with him so as not to get into a conflict of interest with both feet. That’s when you get more money from the bookmaker than he would like to give you. You and I will learn to work with them so that everyone is happy – both these guys and us.

The Great Binary Circus

The sheer ignorance of newcomers has meant that the entire binary options betting industry is built on a fairy tale. Many old-school binary companies have tried to advertise that they are real financial markets, that they are “investments”, that they are an official source of income and other impressive nonsense, using the fact that the average person is absolutely ignorant of finance and can’t even identify a stock exchange.

By the way, what is the name of Brazil’s main stock exchange? Without Googling it? Where do we sell real vanilla options? How and where can you buy them? 99% of people who see an ad about binary options have no idea and can’t explain the essence of the option as a financial derivative (and when they try to write the word “derivative”, they make 5 mistakes).

The level of financial literacy of our population is below zero. It almost makes you want to swear, since the majority of the population is banally asleep. That’s why financial pyramid schemes, pseudo-investment companies and scammers of all kinds still flourish in our country, because the people don’t want to open their eyes. Nor do they have the motivation to do so. So when they come across tempting offers, a red light doesn’t even go on in their heads.

Meanwhile, with cold blood and greed, the founders of many binary betting companies (mainly with Israeli roots) have used monetization methods to deceive the population. The peak of this madness was in 2014, when hundreds of thousands of people lost their money through managers, “guaranteed signals for binary options”, and other nonsense, which still exists widely on the web. I’ve worked with dozens of companies, some of which you could write a book about. It was incredible a few years ago, but many of the stories would be hard to believe now.

However, binary companies didn’t have to try very hard – people themselves put money in the black box, without thinking about why some companies pay out 80-90% per minute, where this money comes from and what the essence of this business is. It’s not hard to guess – the bookmaker only has the money that other people put into it. The majority lose money, the minority keep it, the difference goes to the company.

2015 was the apotheosis of the binary boom. At that time, more than two thousand (!) bookmakers appeared on the market, investing tens of millions of dollars in advertising, promising the population a bright future.

However, in the winter of 2015, the market began to cool down, because illusion can’t live forever. Most of them lost their money in express mode, because – what a surprise – predicting normally what will happen to Apple shares or the euro/dollar in 15 minutes is extremely difficult for a beginner who hasn’t heard the word “quotes” until yesterday.

The poor have deluded themselves. Self-deception is always powerful. In the ad, it was promised that anyone could successfully predict the quotes of currency pairs or shares for months. Funny, isn’t it? It’s ridiculous. And the newcomers, under the assumption that they could be born kings of the market, capable of predicting this, weren’t alarmed at all. Look at that arrogance! Lovely.

Social networks spread the most absurd propaganda, aimed at provincial citizens who don’t know anything about the financial market:

Financial education in Brazil doesn’t even seem to exist. While a few professionals with happy faces were taking money from binary companies, more than 90% of novices, most of them crazy, poured millions of dollars into these companies – and into some traders.

Some binary companies are still putting on the most ridiculous circus on the financial market. Others, especially those that have distinguished themselves, are still working on these fraudulent schemes.

Fortunately, time has put everything in its place. Hundreds of companies have disappeared. Interest in binary options has stabilized. As a result, there are now only a few companies left that have divided this market among themselves, and completely odious stories are a thing of the past. The market has gotten pretty boring – there are no more impressive adventures going on. That’s all behind us 😀 Older people remember.

In short, it’s much easier for a modern binary options trader now – the market isn’t the same as it was in 2013-2015.

Proper binary betting

The best representatives of the binary market have always understood that there is no need to deny the obvious. Yes, they are not exchange or trading companies, because they simply offer rates on quotes. However, sports betting is hundreds of years old and stimulates tens of billions of dollars. This is how financial betting is gradually turning into a white, transparent and regulated industry.

If betting on a decrepit horse is absolutely legal, why not bet on the euro/dollar exchange rate? In essence, the task of any proper binary, like Forex, is to be a simple intermediary between those who issue successful predictions and those who point their fingers at the sky. And to earn from the turnover of this whole process. Such is the “white” business model.

In “white” binary companies, you won’t hear the voice of a manager stealing your deposit – they don’t need it. For them, that work is done by the market, and the companies don’t get their hands dirty in black schemes and “signals”. They value their reputation, which is very expensive in this dirty market.

These are the white elements of the binary market that you should work with. We’ll talk about how to find them in a separate lesson, but for now let’s move on.

Who makes money with binary options

Remember what we already know about over-the-counter binary options:

• are not transactions;
• are not trades;
• is not a dispute between buyers and sellers;
• have an uncertain legal status;
• In the US, all binary options betting is prohibited, only exchange options are allowed.

Once you’ve understood all this, you should have a sober understanding of what kind of opportunity any binary betting (and Forex) company offers you:

It gives you the opportunity to cash in on losers.

The main audience of a binary company knows nothing about finance and economics. This is a naive and greedy public, mainly from the provinces. Bogged down with loans, meager salaries and desperate for easy money. They think they’re getting 80-90% a minute. These guys know nothing about technical and fundamental analysis, something that professionals study for months and years. The naive are full of illusions and sweet hopes. They are sheep, a source of money for professionals and binary firms.

So look at the binary company as an intermediary between you and the sucker’s pockets. The more experienced you are as a trader, with cold blood and cynicism, the more money you’ll make from binaries. Because a bet is still a bet. If you know how to predict the price movement, you win with it, simple as that. A lot of money has been made from binaries over the years, but only by those who have understood this market correctly.

In fact, binary companies are not brokers, we call them that only for convenience, and we are not traders. After all, we don’t buy or sell anything, we’re just betting on prices. However, if you go about it professionally, you will become a trader. After all, binary can and should be considered the leitmotif of the whole site as the first step into the financial world.

So what is the meaning of binary options?

The reputation of binary options has always been bad and has been severely damaged by scam artists. In the past, similar scams have greatly damaged retail Forex, which is still viewed with great uncertainty by many newcomers. We only have to thank the publicity given to these dirty and unmarketable working methods of some odious offices.

There were years when setting up a brokerage was so easy that a bunch of sinister characters created their pseudo-brokerages. At the same time, forex binary options are still inaccessible to most and not particularly necessary for professionals. Fortunately, the market is not standing still and new generation binary options based on smart contracts already exist, but this model still needs to mature.

So there are ” three options here:

1. use binary betting as a first step in the big financial world (I did);
2. switch to exotic binary exchanges (it makes no sense);
3. accumulate money, immediately switch to the Forex/stock market and forget about binary options.

If a binary bookmaker allows you to trade live, that’s great, but only if you can extract real money.

The key to the market

I’ve seen a lot of guys get into binaries and fail. This is often justified down to the smallest detail.

First binary, then Forex, then you’ll open your first account with a real stock broker in Brazil, then maybe with an American one. Most likely, you’ll combine several tools at the same time, because there are pros/cons to everything.

That’s how I went down this road. The journey took several years.

• 2012. First account in a binary office.
• 2013. First exchange account.
• 2015. I bought the first futures on the Moscow Stock Exchange (MOEX), the same year on the Chicago Mercantile Exchange (CME).
• 2016. I started by investing in shares, mutual funds and ETFs (exchange-traded funds).

Now, in the 2020s, there are many other tools, including cryptocurrency markets, DeFi and all sorts of exotic things that are incomprehensible to the layman, such as US municipal bonds. Trading is incredibly versatile. No doubt I’ll spend a lifetime at it and won’t even notice, because here a year or two years fly by.

I’m often asked why the site doesn’t first describe much simpler and less risky things, like unleveraged stocks or government bonds. The reason is simple – it’s built on the way I’ve experienced speculative markets myself and fully reflects my personal experience.

Herein lies something interesting. A fun psychological phenomenon that can change everything.

Hammer

Let’s face it. Every day we see ads for Forex and all kinds of exchanges on the streets, we hear news about some stock markets, on TV they constantly press the smart guy and our souls… but nothing happens. No interest. Zero, right? It’s not that interesting. Because it’s some kind of boring economic baseness.

“Issuer of a new issue of preferred shares…” Stop right there. I stayed on the word “issuer” and immediately forgot what I read after that. I don’t like it. I don’t understand what it is, because I don’t want to. I’m not interested. I’ll forget about it.

But we are interested in… money. Money. And promises of easy money. And that’s fine. Whenever they tell us about successful investments, they shout “buy-invest” and promise everything at once without any worries or hassles. But what if this idea is taken to the point of absurdity?

If we offer something special, extraordinary, to involve a person in this speculative world? For example, 100% in a few… seconds, at the touch of a button? And binaries – yes, those same binary options bets – are a tool. A hammer. It immediately hits the head with a weight of 80-90% per minute and a person is completely stunned (naturally losing his money consecutively), grabs his head and starts… getting to know the market. What the price is, where it comes from, where those damn candles are going and why. Who and what is bought there, where all those charts come from, why the dollar is up and the euro is down. And that feeds into this strong, warm feeling.

There’s an incredible psychological collapse in consciousness. You previously had no idea what economics, stock markets, a few graphs were about and suddenly, as if by magic, it all became the most interesting thing in the world to you. This is the binary trick. This is a master key to the trader’s dormant conscience. Brokers use it to take money from suckers, while motivated smart people use it to their advantage.

It is in binaries that you will understand the value of technical and fundamental analysis, learn to practice it, get money out of binary options and climb higher up the ladder of experience. For that I will always be grateful to them.

The irony is that the price is the same. Whether it’s binary betting, Forex trading or futures on the Chicago Stock Exchange. In all these cases, the same chart is on your monitor. Only the monetization method differs: bookmaker for binary options, spread betting for Forex, exchange for futures/options, etc.

Do I work with binary bets now? Yes, although less than when I started. Binary options have a colossal advantage, but you can only understand it after working with Forex and stock markets. Only then will you finally realize why 80-90% for 1 pip with no spread is manna from heaven and an unprecedented opportunity in special market conditions. But it will take time to understand it. Time and experience. You don’t understand it straight away. You have to go through market hell, and survive, by keeping a sober mind and a strong portfolio.

Without the apparent simplicity of these two buttons, no one would have forced me to understand charts and the secrets of trading. Before binaries, the very idea that I, a humanist, would enthusiastically understand economic news, follow the main rates of the world’s central banks and know in detail what is hidden behind the phrase “the number of people employed in the non-agricultural sector” (and be able to decipher the abbreviation NFP) would seem to me the most ridiculous absurdity. I wouldn’t have believed it if someone had told me about it a few years ago. Sometimes it’s hard to believe even now, after years. But that’s how binaries work – their downside stays with you forever.

There’s nothing to be surprised about here. This is a natural and even banal process. After the first stage of gambling and losing money in binary options (as in Forex), you’ll cool down, think and start asking simple questions:

• what a graph is;
• where the price comes from;
• what affects you;
• what is the dollar
• who issues it;
• who the FRS are;
• another and another.

Hundreds of questions will turn your head into a pumpkin. An ocean of information will wash over you. This is how you start your years-long trading journey.

This is how I want you to perceive binary betting – how my friends and I have always perceived it. The first step towards real trading, towards professional trading. And to your first profit, of course. However, there are few options for success. This whole market exists only because there are so few of them.

Pros and cons of binary bookmakers

Now for the advantages of proper binary bookmakers:

• $1-10 is enough for the first trade (and that’s a good thing);
• extremely simplified registration;
• understandable payment percentages;
• no spread (apart from a few exceptions), 1 pip more during the expiry time is enough;
• there are no sellers or buyers, so bets on hundreds of assets are always (or almost always) available – unlimited liquidity;
• documents – nothing (just a scan of your passport);
• replenishing the account – any method (with a real stockbroker this is only done via a transfer to one of the US banks);
• taxes – free (nobody pays taxes with binary options, actually).

The binary, for a smart person, is a great tool for entering the financial market through the back door. For the naive and limited – an easy way to lose money.

The disadvantages are obvious:

• some companies still take advantage of the total ignorance of the population and try to steal money from them with insane, stimulating advertisements and ridiculous promises;
• there are still fraudulent offices;
• YouTube and Telegram are full of fake binary traders and beacons sponsored by various fraudulent companies;
• the legal status of binary options in the world is still “floating”, somewhere they are recognized, somewhere they are not.

So is it necessary to start betting on binary options?

Now, with a complete overview of the market, it’s up to you to decide. If you understand the essence of the business, you can get a lot of money out of bookmakers, just like sports betting – a fact. The same money that hundreds of thousands of idiots, stunned by the interest, are pouring in. But for that, you’ll have to learn cynically and coldly.

If you’ve come here because you have:

• low salary;
• loans;
• wants a car or an apartment;
• and other things that make you want money fast.

Binaries will chew you up and spit you out in two seconds. They were created for these characters. The binary industry is full of money – but few people know how to move around.

Of course, having spent many years in this market, it sometimes seems that everyone is making a profit here. But I’m aware that this is a cognitive illusion, because our opinion of the world is largely determined by the environment. In other words, if there are a lot of talented traders around, it starts to seem like only they exist…). But in reality, this is not the case.

Binary options are legal

On this article, I recommend the legal status of binary options. In short, the legalization of binary options as a derivative financial instrument is being discussed in the EU.

In fact, in 2018, in the UK, the Gaming Commission binary options came under the supervision of the FCA, as they were finally recognized as a common financial instrument and allowed for professional traders with large deposits (an analogue of our qualified investors, which was introduced for the Russian stock market).

However, until now, binary options in many EU countries are considered gambling, official derivatives or don’t even understand what. History is repeating itself now with cryptocurrencies – regulators don’t understand anything and don’t keep up with the changes.

Legal status is necessary. I need to be clear about what, legally speaking, happens when I press the Up/Down buttons on a binary platform. In fact, this is how binary options in Japan and the US were completely legalized. The EU is lagging behind in this respect.

Betting on the market against a binary house? Fabulous. Make it legal so that payments at these rates are strictly controlled by government supervisory bodies. Let the companies be punished for fraudulent advertising and the unscrupulous work of their managers.

State regulators such as CySEC and FCA have cleaned up the market a lot over the years and there are hardly any scammers (but they still occur).

Ultimately, the binary industry will clean up and refresh itself. All we need is a guarantee of payments and protection for us as participants in this market. The name could be anyone, but they will put things in order. The clean-up process has fortunately already begun, although it is going slowly.

Binary totals

So let’s summarize. Foreign exchange binary options are in themselves a niche and not very popular instrument. However, at the beginning of 2010, the Israelis came up with a betting market and launched binary options.

A smart person with a sober view of this industry will seize this opportunity to take the money from the morons through binary bookmakers. For professionals, this market is simple and enjoyable. It’s ironic that sometimes a person tries binary options, laughs, and moves on to Forex. After a few years, they come back and it even looks like a funny system. With fixed risks, no spreads, no one breaking your stops. It’s all wonderful.

Stupid, uneducated citizens will fall for the advertising and fairy tales of managers in dodgy offices, handing over all their money to them. The same money that the professionals will take away. This, of course, is not a hymn to social justice, but still… who deserves it more (money) – the guy on the street, fooled by advertising or an experienced professional, or the experienced trader? The question is rhetorical. The latter will take it all, leaving not a penny for the former.

Binary options, as a betting tool, allow you to bet all or nothing on prices. Using special tools and skills, you can learn to design the mathematical expectation of trades in your favor. The money you receive in this case will come from other clients who got their predictions wrong. The principle is very similar to sports betting, only in this case it’s financial.

Binaries have struggled to grow, and their reputation has been badly damaged by fraudulent companies. In several states they have been recognized as a financial instrument, in some they want to ban them, in others they don’t know what to do with them, thus remaining in an intermediate grey zone. So a trader’s task is simply to choose normal companies, it’s not that difficult.

Binario Invista clarifies and you’ll do the rest yourself – by learning how to choose the right companies in the following lessons.

As in any business, the smart cynics survive, who immediately understand the essence of the industry and how you can make money from it. They know how to control the risks and are not immune to marketing techniques.

This is an opportunity to make money on the Internet by literally pressing two buttons – Up and Down. It’s real. It is possible. I know this both from my own experience and from the experience of many great binary traders. I know even more who… didn’t make it.

So you have to know when to press those damn two buttons and when not to. This has to be learned, studied long and hard. And the learning curve usually takes at least half a year. You’ll need a year straight away. But that’s what distinguishes the professionals from the novices. There’s no time for them on this topic.

The skills you acquire will stay with you forever. Then you’ll use them in trading on other markets. You will, you will 🙂 I also used to think that the stock market was extremely difficult. After binary, it will be much easier to understand other markets, you’ll see for yourself. For technical and fundamental analysis, it doesn’t matter which market, because the charts are the same everywhere.