Hello and welcome to this special and important conversation about binary options.
What is Binary Options -in simple terms-?
- Simply, this is trading in currencies (Forex), stocks (Google, Apple, etc..), indices (NASDAQ, Dow Jones, etc..), and commodities (Gold, Silver, Oil, etc..) with a difference from Forex. In binary options, you have to determine if the price is going up or down after a certain period of time.
- You will need to choose between up and down (or call and put) for a position which you already chose and timed.
- For example, you can say that Euro price will be higher after an hour, so you open the one hour position and choose call option. If you were right, you will make a profit and make about 80% of the investment you put in this position. If you were wrong you will loose 100% of the investment you put in this position.
How the percentages are determined?
- The profit and loss percent differs from broker to another and from an asset to another and period of position.
- Highly traded assets have higher profits. EUR/USD are the highest profitable asset to invest in.
- Some brokers provide higher profit rates.
- Period of position affects the profit percent. The lowest are the short and long periods. The highest are the in betweens. One hour and half hour position are the most profitable.
- Ther is one more thing that affects your profit which is your deposit. Your account gets higher profit when you make bigger deposits. Each broker has sets of account types. Each type will give certain privileges.
The beginnings of binary options
- Binary options started with the US securities and exchanges commission approval at 2008 then it expanded very widely and there are many regulated brokers now. However, Binary Options was available before this year.
- I knew about the existence of Binary Options in 2012 and I had my days with it. I will tell my story with it at the end of the post.
The progress of Binary Options
- Binary Options has progressed a lot and provided many different options and methods of trading.
- The regular is the call/put options:
- This period starts from 30 seconds to days and even months. However, 30 seconds and long positions are the lowest profitable as we said earlier.
- Touch/no touch option:
- You have to decide if the price will reach a certain point within a certain time. For example, you decide that the price of the EUR will hit 1.40000 within the next hour or half hour (it has multiple time frames too) And you will make a profit if your prediction was right. This option has higher profit starting from 150% up to 300% according to period and the price.
- You decide if the price will be between to prices at the end of the position. The broker determines high and low price and you say if the price will be between them or outside them after the period of the position ends. This option has higher profits to start from 150%.
- This option is complex and has more than one price. It has five prices each one with a higher and lower prediction, profit percent. The profit increases with the nearing of the end of the position. It has up to 1500% profit percent.
- New options appear and brokers can come up with many other ways to trade in Binary Options.
Binary Options controversy
- There is a controversy about Binary Options being gambling and game of luck and that it is like spending money in a casino. You will find some talks like that about it if you googled it.
- However, that isn’t entirely true. There is a similarity between gambling and Binary Options but only in one direction. And that is your prediction can be wrong. But, gambling isn’t really a prediction, you can’t predict where or how the dice will fall. Gambling is pure luck. Binary Options has the same laws and statistics affecting Forex trading.
- The price which we are trying to predict is the same price at Forex platforms. The difference is the time. Binary Options position will expire at the end you chose while investing whatever the result is. Forex position expires manually or automatically by Stop Loss or Take Profit.
- So, my opinion is that Binary Options isn’t gambling at all and very different from gambling that only depends on luck. However, it would be awesome if you were lucky 🙂
Some facts to know before thinking in investing
- You can loose your investment. So, you must only invest the money you are OK with losing. However, you can take the risk, but it’s better to be safe as a newbie.
- You will never win 100% of your positions. You will win some and loose some and your objective is to be making profits, not your winning percentage.
- Deposit bonuses are something to understand before investing. Many brokers will give you up to 200% deposit bonus, but you won’t withdraw any earnings till you reach at least 30 double of the bonus. So, if you deposited 1,000$ and got a 100% bonus, you are obliged to open position with the sum of 30,000$
- Some brokers give other better bonus which is a money back. In which, you will get a withdrawable bonus after you reach certain trading volume.
- Do a little research about the broker before joining.
- There are some new services that will give you trading signals if you joined them.
- Binary Options can be easy and difficult simultaneously. Just come up with a plan for trading and stick to it. The most difficult thing in Binary Options is sticking to the plan or the strategy. Sometimes you will find yourself making amazing profits easily and will start to gain overestimated self-confidence, be very aware of it.
Some crazy ideas I came up with in Binary Options
- Lucky trading: Blindly choosing a call or put. If you won, that’s awesome. If you lost, do it again with higher investment. For example, I made a call on EUR/USD with 25$ and lost, I will make another lucky call or put with 40$. If you won, that’s awesome too :). If I didn’t, I make another lucky trade with an investment that compensates both of my previous losses, and so on. Totally depend on how lucky you are.
- One way decision: I will always choose call or put repeatedly. For example, I will choose a call on EUR/USD with 25$ for 5 minutes. If I won, it’s nice. If I didn’t, I will make another call with 40$ for the successive 5 minutes, till I win once. The longest marathon of successive one direction candlesticks I saw was 12. To be safe, you will need about 140,000 $ to trade with this style. Which I don’t have 🙂
- Smart compensation: Analyze the market and try to make a perfect prediction and if your prediction were wrong, do another well-studied prediction and open a position with the sum that compensates your first loss. For example, I made my analysis and predicted that EUR price will be higher after an hour. So, I made the call. If I were right that comforting and I can make another analysis for another successful trade. If I were wrong, I will analyze the market till I find an opportunity for more trusted trade and will open a position with the sum the cover my first loss and give additional profit.
These ideas above need an equation to decide the investment of the next trade:
- If you lost one trade only: The amount you lost x 100 / the profit. So if you lost a position of 25$ with an 80% profit, you will 25 x 100 / 80 = 31.3. Opening a new position with 31.3$ will just cover your loss from the first trade so you will add the profit you want to make. So, 31.3 + ( the amount you want to earn x 100 / 80 ). If you wanna earn 10$, it will be 31.3 + (10 x 100 / 80) = 43.8$.
- If you lost more than one trade: The same as above, but you will need to add all the losses together. So, If you lost in the previous example, you will add 25$ to 43.8$ together and use them as the amount you lost.
- Sorry for these disturbing calculations, but try to understand it well.
My story with Binary Options
- I received a call and a bonus from a broker called Opteck. And don’t know why, but I wanted to give it a try and I made a 500$ deposit, simultaneously with a 300$ deposit at another broker called EmpirOption.
- My first trade was 25$ position at Opteck with 80% profit and I won it as well as my second. So, I made a 40$ in my first trials and so I thought it was very easy.
- Then, I started to make some losses. And I found myself not capable of earnings. I was making winnings and losses and the outcome was zero. I wasn’t earnings any money and wasn’t losing too. And it stayed like this for a while.
- Then, I get occupied with military service for a year. In this year, I didn’t make any trades.
- After this year, I got back to trading in Binary Options and continued trading with a little more progress and was making little profits. Then, I started receiving trading signals from a service connected to Opteck and that signals boosted my profits a little.
- I got greedy and starting making very risky trades and uncalculated risks. And then I noticed the ladder at EmpireOption and started trading at it. I made great profit, but it was very risky. So, I ended with losses that disturbed my thoughts about Binary Options and made me trade very recklessly and ended with losing all my investment.
- It didn’t end here. After a year, I joined 24Options and found it to be a great broker with a great platform. I got a demo account with 1000$. I used it for two weeks and I made amazing profits. I doubled the 1000$ demo.
- So, I decided to invest 1000$ and started to apply the ideas I talked about earlier after I tested them at the demo account. And I was making good profits.
- But, the price kept going in one way for a long time while I am choosing the other direction repeatedly and I lost all my investment due to bad money management.
- After few days, I received a message with free risk trade and I grabbed it. I’ve made a deposit with 1000$ and invested all of them in one position “benefiting from the free risk trade” and it was a success. I earned 800$ in one hour.
- I started withdrawing and had a great time making good earnings. I was making about 400$ weekly with very little time daily.
- One day I made a big loss and was having a problem with my family and I was really upset.
- And I made my final and most costly mistake, I traded while being psychologically uncomforted which is a very big warning. I lost all my account balance.
In the end, I wanna say that trading in Binary Options can be very profitable, risky, fun, and I would invest again when I have some money that I am OK with losing as I said earlier.
I hope this was interesting and informative
Thanks and good luck