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 of BitPlutos, 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.
Trading Short Term Options is similar to trading classic Binary Options. The difference is that those options expire at 30, 60, 120, 180 or 300 seconds from the initiation of a trade and the investment amounts range from 0.05 BTC to 2.5 BTC.
Short Term Binary Options are designed mainly for more aggressive traders. Those instruments provide instant profits and allow traders to take advantage of markets high volatility. For example, short terms are ideal for
Short Term characteristics:
- excellent for aggressive trading
- instant profits
- the perfect tool for rapid market fluctuations
- great supplementary tool for basic binary options
- a chance to start out small and invest with lower amounts for the learning purposes
One Touch Options are not similar to the rest of the provided Binary Options at BitPlutos, as they provide higher payouts in case an asset reaches a pre-defined price and are tradable when all financial markets are closed during: weekends, holidays, and after-hours. If at any time from the initiation of the trade until the expiration of the option, the underlying asset reaches or surpasses the target price, then the option will be “In-the-Money” and the payout amount is credited at the investor’s account. The investment amounts range from 0.1 to 1 BTC. One Touch Options are purchasable on Saturday from 12:00 AM to Sunday 19:00 PM. The Options are traded from Monday 12:00 AM to Friday 17:10PM. The options may only be purchased in the units of prices which are specified on the site. The options will be sampled over a period of five days, Monday through Friday, once a day in accordance with the Reuters 17:00 sample rate.
These are the options mainly for experienced traders as they deal with greater risk and return than the regular binary options.
One Touch characteristics:
- greatest profits in whole binary options repertoire
- perfect for major market situations and crises
- greater risk than with regular binary options
The Ladder is a trading tool that allows the trader to make multiple predictions on a particular asset and expiry time, while analyzing the corresponding payouts and profits. As oppose to classic Binary Trading (choose, analyze, invest), with the Ladder, a trader can select multiple options for the same expiry time that are deep “in the money” to gain a few % points in a “safer manner”, or choose an option that is “out of the money” to gain a potential return that can reach up to 1500%.
The investment amounts range from 0.05 to 0.5 BTC.
- the best starting tool for novices, perfect for patient investors
- provides investment safety and risk management like no other tool
- with proper attitude, the efficiency in Ladder trading reaches up to 85%
- profits and risk are always your choice, you can simply choose how much you want to profit/risk
- great to use for predictable areas of support and resistance
Trading foreign exchange on the currency market, also called trading forex, can be a thrilling alternative to the regular binary options at BitPlutos and a great source of investment income. You can make a lot of Bitcoins without putting too much into your original investment, and predicting the direction of the market can be quite exciting. The investments amounts range from 0.1 to 4 BTC.
In forex trading, you make Bitcoins predicting fluctuations of the currency rates. You need to choose your currency first, then your desired leverage you want to trade with (leverage is a ratio of the transaction size to the actual investment used for margin. It allows a client to trade without putting up the full amount). Enter the amount you want to invest and decide if you want to BUY or SELL the currency pair. If you think that the currency pair will lose value, SELL it. If you think otherwise, BUY it. Also, you can set your TAKE PROFIT amount which actually stands for your maximum profit for that investment or STOP LOSS amount that indicates the maximum loss you are willing to suffer.
Features of forex trading:
- forex trading is open as long as markets are available. It starts in Australia on Sunday evening and closes in New York on Friday
- forex markets are subject to liquidity, which means we can move large amounts of money into and out of foreign currency with minimal price movement
- in forex, the cost of a transaction is built into price. This is called SPREAD, which is the difference between buying and selling price
- forex allows trading with leverage which means the ability to trade more money on the market than what is actually in the trader’s account. If you were to trade at 1:50 leverage, you could trade 50 BTC on the market for every 1 BTC that was in your account. This means you could control a trade of 50,000 BTC using only 1000 BTC of capital.
CFD (Contract for Difference) trading differs from the regular Forex only in assets put into action. In CFD you trade with everything but currency pairs (metals, energy, crops, other commodities, indices, stocks etc). CFD trading is mostly influenced by specific factors, such as supply and demand of a given commodity or trend changes associated with business sectors. Forex trading on the other hand is mainly driven by global events, like large employment shifts or international political changes.
Forex trading characteristics:
– designed mainly for experienced traders
– enables to make substantial money with leverage, still may be very risky
– perfect to use when global and financial crises occur
– good risk management tools (Stop Loss/Take Profit)
These are the binary option types you deal with when entering binary options trading. Make sure to read our next guide on how to manage risk in trading!
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For more info, go to www.bitplutos.com or email at: [email protected]