What are Binary Options?
A binary option is an investment contract in which the investor does not purchase an asset but only predicts the direction in which its price will move. The main advantage of options is that gains and losses are fixed and known at the time of the operation.
This type of trading is also called “all or nothing” because there are only two possible outcomes – the investor earns the established profit if the prediction is correct or incurs a loss if the price goes against the prediction. At the same time, the value of the profit or loss does not depend on the amplitude of fluctuations in the value of the selected asset. If the forecast is for a price increase and is successful, no matter how many points the price increases, the investor will still receive the profit stipulated in the contract.
What kind of return can you get?
The value of fixed profit can range from 60% to 89% for each operation, and this percentage depends on the conditions offered by the broker, as well as the type of binary option. Some brokers allow investors to adjust the level of risk, thus changing the percentage of losses and profits.
What are CALL and PUT?
CALL (up / price up) is the option that involves the rise in the price of an asset.
PUT (down / price down) – is the forecast indicating the fall in the price of an asset.
What is the minimum investment amount?
You can invest in binary options with a variety of values. Naturally, the higher the investment, the greater the profit. The minimum investment amount is R$ 60.
What is the option expiration date?
The investor determines the period based on their own analysis and predictions. Brokers allow you to invest for periods ranging from one minute to one month. The profit amount does not affect the option period in any way. You can achieve a 70% profit in one minute, hour, or day.
What is expiration?
Expiration is the date or time of the binary option’s expiration. The expiration level is the estimated price of an asset at the moment the trade is concluded. During expiration, profit or loss is constantly calculated.
Why can’t I buy the option?
- Insufficient funds in the account.
- Short-term technical maintenance is being conducted on the broker’s website.
- The market for the specific asset is not active. For example, if an option with Apple stocks is chosen for purchase, a contract can only be concluded during the opening hours of the American stock exchange.
What is a strike price?
Strike price is the asset’s price at the time of purchase. From this price, the option is calculated during expiration – whether the price has risen or fallen in relation to the strike price.
What is an underlying asset?
When buying an option, you are not acquiring the asset itself but speculating on its price. Underlying assets in binary options can include stocks, commodities, indices, and currencies.
How to buy an option?
To purchase a binary option, you need to register with a broker and deposit funds into your account. Then, on the broker’s trading platform, select the asset you are interested in and set the transaction terms, with the most important being the prediction of the price – whether it will go up or down.
Why are binary options considered a scam?
Most people don’t analyze the market and invest solely based on intuition and emotion, leading to financial losses. These individuals often believe they are not at fault, expressing subjective opinions that may form a misguided view of binary options. Additionally, many use services from unregulated brokers that fail to meet expectations, causing delays or improper payments to clients. In contrast, well-known and reliable brokers generally receive positive feedback.
What are the risks of binary options?
Binary options involve high risks, as incorrectly analyzing the market can result in a 100% loss. The risks of losing your investments are offset by extremely high profits, ranging from 70 to 89% per trade. To limit your risks, you should not invest more than 5% of your balance. With effort, you will only have one risk – not getting poorer.
Is it possible to earn regularly?
Binary options offer over 200 assets traded 24 hours a day. You can trade 24 hours a day and earn for five days a week while the markets are open. The regularity of earnings depends on your strategy, analysis, and perseverance.
How to analyze assets?
To analyze the market and individual assets, you can use fundamental and technical analysis, each with its own tools and methods. For assessing stocks, you can use the P/E ratio, or for short-term investments of 10 to 15 minutes, it’s better to use indicators and numbers from technical analysis. In any case, success is more guaranteed by combining different types of analysis.
Who are the regulators?
Regulators are government and non-government bodies that control financial markets. They provide security for investors against brokers, overseeing their activities based on laws and high international standards. Regulators oversee only the most reliable brokers that have met all modern standards and hold appropriate licenses. Examples of well-known regulators include CySec, MiFID, BaFin, FCA, FMA, etc.
How to choose a broker?
The broker should have regulatory bodies, at least 5 years in the market, offer a large number of assets, flexible option terms, different types of binary options, 24/7 support, and good customer service.
