How to enter into bargains on binary options (example)
Despite the fact that the trading interface of various brokerage companies of binary options is, to some extent, different, the very essence of the technical features of the concluded contracts (transactions) does not change. The scheme for selecting a trading asset, analyzing the charts and making transactions for all brokers is almost the same, only the layout of the tabs can differ.
Below is an example of the sequence of actions when concluding an option contract transaction.
The trading interface and example of the transaction is shown on the example of the company IQ option
1. The first thing you need to make a deal is to choose a trading asset, everything depends on the initiative of the trader himself, who can choose an asset based on the% of the return on the asset in case of a correct forecast, or some other convenient for the trading criteria (for example, you Trading on news and now there is a positive news for the euro area, you are exactly sure that now the EUR will start to rise and choose a currency pair with EUR and other currencies, even if the yield is lower than on other assets.One example - you have an open position on Futures market and you want to hedge a position, you hedge it with options by choosing an analogue of an asset in a futures market, and for you, it's not the% of the return on the asset that matters, but the fact of the transaction insurance itself).
2. Most brokers have the ability to switch the working timeframe of the chart of the selected asset, the principle of which is analogous to MT4 (forex brokers) in the trading platform's platform - minute charts - m1, m5, m15, m30, hourly charts h1, h4, daily charts d1, d30 , And possibly a higher period. The data of switching between the periods of the schedule allows the trader to study in more detail and analyze the previous period of the price behavior of the asset, on the basis of which (in technical analysis), to put forward the asset prospects for the future period.
3. The expiration time of the option (the expiration period) is set by the trader independently from the considerations of the trader himself. Ie, this is the life of the option, the period of the option's action upon expiration of which is determined whether the transaction brought profit to you or not. Example - if you think that the price of an asset will be lower in five minutes than the price now - you expose the option for 5 minutes, if you think that the price of an asset in a day will be higher than the price now - you set the time the option is valid for 24 hours. The expiration period for brokers may differ. Some may have an expiration period of 5 minutes, 15 minutes, 30 minutes, 1 hour and all. Other brokers may be for longer periods of time 24 hours, 5 days, 14 days, 30 days or more.
Likewise, so-called "turbo options" are gaining popularity - these are the same binary options, only the expiration period varies in a minute range, i.e. The life of options (transaction time) is 30 - 60 seconds.
4. The next step is the amount that you are willing to invest for the period you specified in the expiration period. Example - you set the expiration time to 15 minutes. And chose the amount of the investment of 3 dollars, if in 15 minutes. Your forecast is justified - you will receive from 70-90% of the invested amount (% of profitability is the same, different brokers may differ). If after 15 minutes. Your forecast is not justified - you lose 3 dollars that you invested.
Why do you get 70-90% in successful circumstances, and lose the whole amount if you fail? Part%, which is not accounted for up to 100% of the yield - is a transaction fee, i.e. This is the commission that you pay the broker for the transaction, which varies from 30-10% (depends on the broker, asset, market volatility).
The amount that can be invested in the transaction from different brokers is different, some have a minimum amount of $ 100, others have $ 50, and the third has 20, 10 or 5 dollars.
5. After you have set all the necessary parameters of the transaction, you need to decide - which way you buy the option (open the deal) - higher or lower. If you believe that the price of the asset at the expiry date is higher than the current one, you buy the option ABOVE, if you think that the asset price at the expiry date will be lower than the current one - you buy the option BELOW. In other brokers these names can be CALL and PUT.
After the expiration of the option, the transaction is automatically closed. If your forecast for the selected asset recovers - you will receive a previously known profit (70-90% depends on the asset). If your forecast for the selected asset does not work, you will receive a previously known loss (the amount you invested in the transaction).
Your income depends entirely on your actions and investments.
Many can compare binary options with the casino, there are only two options - black and white, as well as binary options, there are two options - up or down, but do not forget that in the case of a casino, only the will of the case plays a role, and No clues will help predict the fallout. In the case of binary options, the price is affected by real economic events, having learned to read and understand which, it is possible to determine the correct variants of the development of events for the selected asset.
It's another matter how you treat your own business. If you came to the binary options to play without wanting to receive any knowledge of the financial markets, then for you it can be compared to a casino. If you came to binary options with the desire to trade, then for you it's real market quotes and a real financial market that can be used for investment.
Each of you will have his own arguments. However it may be, how to treat binary options is up to you.