Currently, binary option trading has become very popular in the gaming market as a subject and, consequently, as getting the profit. To the novice player fullness pattern has been formed, it is necessary directly examine the options – what are they, what is their story? Future traders (so similar to the stock exchange and Forex called buyers and sellers BO) should know that awareness – even at an early stage – when to speak about an experience is inappropriate, is the key to the success of transactions, because it gives the opportunity to develop the right trading strategy. Options system is known around the world, but each of their appearance – binary or classic – has its own features.
Definition of the option. Something from history
The classic option as a financial instrument is a conditional agreement for the right to buy or sell the underlying asset. These may be securities, strategic commodities, precious metals, currency and so on. There is a difference:
• put-option – for sale;
• call-option-on purchase;
• double-option – two-sided – the prototype of the binary.
No matter, it is assumed the purchase or sale of the asset, the process occurs at a predetermined price. If the transaction has not taken place, the buyer of an option runs the risk of money spent on it. Sometimes it comes a responsibility, because it is only the right to make a deal – not an obligation.
The first options in Europe appeared in the Netherlands in the XVII century, during the tulip fever. Timely buying and selling the right to buy flowers, people fought their way onto the market – it was profitable to those who did not have the funds to purchase tulips.
In the first half of the XIX century stock options have been introduced the London Stock Exchange. But in America, the instrument has appeared relatively recently – in 1973 on the Chicago Board Options Exchange.
How to differ the options
Classic options have the following division:
• exchange – value of the contract value, the terms of implementation are directly related to the events on the stock exchange;
• Over-the-counter (OTC) – conditions are determined by parties in the transaction. It is one of the ways of interaction between large companies and banks. So it was in America before the advent of the Chicago Stock Exchange.
American and European variations have differences. American contract is actually can be checked and pay off in the duration term, and in the European version the result of the transaction is fixed at its end.
This financial instrument began to study at a high scientific level. The question is how it is better to convert? – was asked by the mathematics of different countries. It was got a lot of models, the most famous of them:
• Monte Carlo;
• Black Scholes and others.
The agreed price, type, kind, and active – all these are fundamental indexes in determining of standard tools. Conditions beyond the typical signs are called exotic binary and were long time among those.
Binary options – key features
Having considered the standard, it is appropriate to identify what is binary options? – as they are so popular. Appeared in 2008 with the filing of the Chicago Board Options Exchange. The operation involved:
• a trader – the buyer and the seller of the option holder, to make transactions;
• broker – the person providing the platform (platform) for the transaction (such Premium Signals). Brokers do not participate in commercial transactions directly as themselves, but get paid for their software.
It is possible to make a determination paying attention to the question – What are binary options – it is a trader’s contract to fulfilment of the condition for a certain period of time to obtain a fixed fee. The trader does not risk much predictable abstract rewards as well as real money invested for the purchase of the option. In some cases, brokers return part of the cost. Such moments, as well as the amount of the premium are required to take into account when you sign the contract.
Every trader chooses when market events occur – consecutively or, conversely, chaotic, but in any of the manifestations that affect the price of the underlying asset. The task of the trader to predict the direction of price: up or down over time. Asset as itself does not necessarily to buy, most of the traders especially beginners usually do not do this.
Types of Binary Options
Prediction is a basis of binary options market and by its nature depends on the type of separation, which, however, are similar to the classic:
• Call / Put – raising or lowering;
• One Touch / No Touch – tangential or non-tangential;
• In / Out – range.
Increasing or decreasing the options are classic and more often used in the market and make its basis. The bottom line is that the effect of price and strike price of an asset at the time of purchase of BO. Prediction is done if price will fall as to strike position price or increase. Accordingly to this, we buy the step-bought (Call) option, or a step-down (Put).
The basis of the tangent or non-tangent option is a bet on the price if the price will reach the benchmark (One Touch) or not (No Touch).
The essence of band option is predicting the price corridor, which will move the price. It is important to predict if the price will remain in the corridor or go beyond its limits, considering that we decide to buy: Options In (in the case of the forecast within the range) or Out (in the case of exit).
For BO traders there is no unambiguous interpretation of the benefits: it may be a decrease or increase of the price of an asset, depending on the forecast made by him.
On the gaming platforms you will meet the definition of expiration, it indicates the time of closing of the transaction, and is a determinant by its nature. Experienced traders renew the contract, seeing the prospect of future interest rates or make it part of the strategy.
In the world trading system
Most of the brokers in the BO, for example, Premium Signals, broadcast operations in the world trading system, and this feature is important as an indicator of reputation. Basically, options’ trading is conducted in a fairly narrow environment. The main feature is well known to those who are considering a binary option that is primarily forecast trends.
There are, of course, experts and concerning options, and even on specific indicators, but the analysis of price movements takes the majority of the transactions. Short-term transactions (timeframes) are very popular.
Events in BO market, despite the distance from the exchanges are happened with an eye on the events taking place in it. Especially if the underlying asset chosen stocks or shares of large companies are chosen. Many traders prefer to play on the basis of a daily status option levels, using special tools in response to the state of the Chicago Board Options Exchange.
The most favourite asset is speculation on currency pairs, it is more often the ratio of the pound against the dollar, the euro, national currencies. Professional traders are not averse and more exotic relations. On this basis, the underlying mechanisms in the BO moved with Forex, it means that these two tools earnings should not generalize because of the differences, but at the same time does not stand and uncouple as it is trying to do all sorts of experts in the network.
Binary options have gained adherents also because their market is built on scalping – the method of intraday trading in stock markets, often associated with the quotations of currency pairs. Using such a system there is no need to spend a lot of time for the operation at the same time taking into account the specificity of the binary options, it is likely to make the right direction forecast. To reinforce the success made use of technical means – indicators.
The strategy depends on the method of forecasting the timing of the expiry used indicator – one or more often – in the set. Among them:
• Strategy 60 seconds – involves the purchase of an option in the short term. There are variations: 5; 15 minutes and so on;
• Catch the trend – one of the most popular, used in the specifics of the trend
• Trade on the news – is another way to make the right forecast, using the news;
• Market Imbalance – to use this strategy, it is necessary to study its theoretical aspect, since it is directly formed on the basis of multiple exhaust performance indicators: when to buy and when to refrain.
It is listed not of all, but only the basic strategies. In the market there are considerable number, including based on mathematical calculations, for example, a Martingale’s method or Ichimoku’s Cloud. The list is regularly updated.
The technical component
BO Trades are happened on gaming platforms. A good option is Premium Signals. It contains the gaming terminal, which shows the direction of prices. Choose the desired indicator of the list. As a rule, it made use of a few. In particular, it must simultaneously be: the indicators of support and resistance, leading and lagging (in part reflect price indices). And all this is for a more accurate forecast. It is very important to have no redraws.
The indicators are trending; in the form of an oscilloscope; with the moving average; volume. Among the names:
• Ultimate Oscillator and others.
Indicators option levels are directly related to the Chicago exchange.
The main advantages of BO include:
• Availability – gaming platforms around the clock and put the game can be any amount;
• Simple rules – to predict, especially in the short-term direction of prices is easy;
• Risk control – before the bidding player clearly knows how much to invest and how much to lose, eliminating unawareness action;
• High profite operations.
Speaking about the last paragraph, it should be noted that the profit is often reaches 85%.
Binary options are often called as all or nothing. The fact that many brokers under the simplified system, use the allocation of reward only two numbers: 0 and 100. For example, for the purchase of a call option is spent 20 USD. If the forecast is successful, the trader receives 100 USD bonuses, for failing the award is excluded. In such cases, it is normal to buy several options using different strategies. For more information about how to use binary options correctly, about news from this sphere read on Premium Signals Platform website.