Binary options are an alternative trading method that seems to be thriving within the cryptocurrency ecosystem. Many binary options platforms provide access to stocks, indices, commodities and foreign exchange, as a high-low binary, in which customers open their positions in relation to what will be the price move within a certain period of time. This is because the option runs on a certain period which means it has an expiry time and also a strike price. Binary Options are extremely simple to use and by using the adequate strategy it can turn out to be a very profitable activity.
Thanks to courtesy ofBitPlutos, the very first binary options trading exclusively on Bitcoins, we now begin our short series of tutorials on how to profit from binary options trading.
Today, we focus on different binary options types.
Binaries are the most popular trading instrument at BitPlutos. It is by far the easiest tool for trading, especially for beginners. The investment amounts range from 0.05 to 5 BTC. There just three easy steps to start trading. Just choose the asset you want to trade, enter the amount that you want to invest and choose whether the price of the asset will be above or below at the time of expiry. In case you choose an expiry time that is very close to current time, the transaction might not be completed. In such a case, you will have to choose a later expiration time. This specific category of options differs from the others with respect of expiration time, as available expirations refer to the same day. For example, if the price of gold is currently at 1500 dollars per bar, will it rise or fall by 5:00 PM? Remember, the trader never purchases an asset, they only predict the market direction. A correct prediction results in an “in-the-money” trade with 70-80% profit!
- the primary advantage is that making a prediction in times of high volatility can be very profitable, thus making binaries ideal for medium-term investments (15 minutes up to one day)
- substantial profits over a short period of time
- thorough expertise not required.
- a perfect connection between short terms (less risky) and long terms (quicker profits).
- good for beginners
With similar functionalities to Binary & Long Term, Pairs allows traders to predict the relative ratio between 2 assets from the same equity type (which asset will outperform or surpass the other by expiry). With regular Binary Options, the price of a commodity is predicted. With Pairs, a trader predicts how strong or weak one asset will be compared to another. The investment amounts range from 0.1 to 5 BTC. For example, investors can trade on the performance of Gold compared to Oil, Google compared to Apple, Dow Jones compared to FTSE. The idea for Pair Options came from the universe of currency crosses and currently those instruments are a unique trading method as they are based on relative strengths or weaknesses and not on absolute strengths.
- no sophisticated analyses required
- substantial profits over a short period of time
- good for complete beginners with mentality where choosing one or the other makes more sense than choosing a direction
Long Term Options gives you the ability to trade at a wider time frame. By taking into account the macroeconomic environment and basic fundamental indicators, you can have exposure to positions expiring from the next day up to 1 year. If you are correct with your predictions, meaning that your position will be In-the-Money, you will be able to increase your trading account based on your long term trades. The investment amounts range from 0.1 to 5 BTC.
Long Term Options are similar to Binary. You just choose the asset, the amount and the direction that you believe that the asset will move. The difference is that expiry times of assets are not on the same day. Expiry times are: end of tomorrow, end of day after tomorrow, end of week, end of month, end of quarter, and so on.
Long Term characteristics:
- The primary advantage is that making a prediction is more straightforward. In times of high volatility, it isn’t easy to predict small changes of asset values. However, with the asset’s sensitivity to a market announcement or other trading signals, you can trade more successfully. By waiting longer, you give the asset time to respond according to identified trends, helping you make more lucrative trades.
- Lower risk and greater returns. The average return becomes more stable over time and you are more likely to place profitable trades, assuming that you placed your trades upon solid market analysis.
- Investors have more time to study markets and conduct more thorough analysis, in order to make professional and educated forecasts.
- Long Term is also ideal for more experienced Binary traders who prefer to benefit from their market knowledge by taking a longer term view.
- A long term view gives you time to improve your trading strategy.
These are the binary option types you deal with when entering binary options trading. We will soon publish the next part of this article.
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