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What are binary options
The concept and origin of the option
A binary option is a speculative financial operation that takes place on an exchange or, more often, the over-the-counter market.
Options appeared as a result of the development of forward transactions. Their difference is that one party receives the right (but not the obligation) to purchase a commodity (or perform some other action) in the future at a price determined at the time of purchase of the option.
The topic of how can you make money with binary options is certainly the hit of this year, and even of the new century! Because if earlier only professional participants of stock and commodity exchanges could buy and sell stocks, securities, oil, gas... now anyone can do it.
How to makemoney on binary options without investing.
You will not be able to make money on binary options without an investment, whoever says what they say about it. In order to reach a quality result, you will have to invest - it is the law of business. No investment - no income. This should be clear to every beginning trader. You can try your forces on demo accounts for a long time, but to real trading on the financial market it has only a remote relation. By the way, pay attention to the fact that many really reliable, highly-rated brokers give even demo accounts to their clients-traders only after they have deposited a certain sum of money. That is a serious approach to the business.
At the moment, the rating of the best binary options brokers according to B-Options is as follows:
Online broker IQ Option.
IQ Option brokerage company was founded in 2012 and has since gained the trust of users from all over the world. The maximum payout in case of a successful outcome is up to 95% of the trading operation. More than 500 assets (investment instruments) are available for binary options trading.
IQ Option Europe Ltd. is well known for its reliable brokerage services. Moreover, the broker is regulated by the Financial Market Commission of Cyprus (CySEC, The Cyprus Securities and Exchange Commission).
Demo account and training materials.
In addition,according to B-Options experts, the top best binary options brokers include the following brokerage companies:
How binary options work
How to make money with binary options?
Binary options have recently become increasingly popular among traders - here the essence of trading is more simple due to the key features of this type of trade. Among the features of this type of options are the following:
The ability to manage risks: the trader knows in advance how much he can lose or earn as a result of the transaction - even before he concludes it
Accessibility of trading - because clients do not buy the asset itself, but a contract for it, which allows many more traders to profit from predicting the price movement
A trader does not need to be in the market for a long time to follow the price movement, does not need to waste his nerves and take additional decisions in the course of a transaction - you are in the market as long as the time of transaction requires. A deal, in turn, can take a minimum of time - the shortest lasts 1, 5 or 10 minutes.
Trading binary options is quite simple: the amount of income is not related to the price difference, but to the general prediction of its movement - up or down. Thus, binary options trading becomes available even for inexperienced traders.
What is binary options trading
Now we can move on to the practical part. This is very important because not everyone knows how to trade binary options correctly. This is why many people lose money and then write that binary options are a scam, when in fact they just misjudged the market.
Trading on binary options is relatively easy and difficult at the same time.
Trading starts with the broker. This is an important point, because many people inexperiencedly go to the first broker they come across after reading paid reviews about him.
When choosing a broker, do not look only at the reviews, because many people are not inclined to exchange trading and when they do not succeed, they blame the broker, the market and everyone else.
How to Make a Correct Forecast?
In order to trade binary options successfully, it is necessary to specify a correct forecast. There are many analysis tools for this, but first, you need to decide on the market or the asset.
In addition to the analysis, most traders use simple strategies for trading, which reduce the time of work to a minimum. Signals to buy UP and DOWN options can be given by various indicators and technical analysis figures, for example, what are just moving averages or Japanese candlesticks.
The expediency of using strategies is not only to work less, but because the most common options periods do not exceed half an hour, and often the usual news cannot have a strong impact on the market situation in such a short time frame. At the same time, strategies based on technical analysis can accurately predict price direction even for such time frames as 5 minutes.
Some of the best strategies are:
Trading by News
Walt Disney Strategy
60 Seconds Strategy
How to make money with binary options trading in South Africa
Binary options - give a great opportunity to make a huge percentage of profit in a matter of minutes, as with most brokers you can buy BO with expiration time of 60 seconds or more. It's hardly in the order of the day in any other financial market to earn 75-90% of an investment in, say, 1-5 minutes.
The advantages of trading binary options:
High yields. On the stock market, you can earn up to 100% for the year of the invested funds. On average, this parameter reaches 30%. And now imagine that you were given a financial instrument where you get 70-90% of your investment in just a couple of minutes!
It is binary options that give you the opportunity to earn really crazy percentages in a minimum of time. In fact, you can make in one trading day several times more profit, than stock market traders do in a whole year!
Making Profits Fast. To begin with, deposits and withdrawals virtually take less than a day at a broker, if we are not talking about bank transfers. In the case of electronic payment systems this process is accelerated to a few seconds.
Variety of assets. While traders on the exchange have at most ten different assets, you have the opportunity to trade hundreds of different instruments in binary options.
No commissions. Traders who work at stock exchanges know: the lion's share of profits will be eaten up by commission, which you pay on absolutely every deal. Therefore, it is not only necessary to have a considerable initial deposit, but also the commission must be calculated in advance in order to avoid unpleasant surprises.
Types of people trade binary options.
Repeatedly many traders novices who trade binary options could read, see, hear the information that work on financial markets is first of all psychology. In the process of trading it is necessary to hold oneself completely in control. Risk management, control, self-discipline, excitement - all this should be learned. Experts are sure in positive result of every trader, if they can control their emotions completely.
At this point, there are two types of people:
The notion of "the best, profitable and profitable" asset is very subjective and depends on the trader, his knowledge, previous experience, depth of market monitoring, temperament. To make the right forecast and be in the money at the moment of expiration not in the loss one must know the factors effecting the price formation and choose asset.
For currencies, it is primarily the statements and decisions of Central Bank governors, monetary policy, the economic state of the country, the geopolitical and geo-climatic situation.
Corporate stocks are influenced by news related to a company's activities: its purchase, sale, merger, demand for products, investments, general situation in the industry, etc.
Exchange indices are formed on the basis of a group of several companies grouped on certain grounds (success, economic sector, industry, IT, etc.).
The price of goods and raw materials is determined by their demand - demand, supply, yield (for crops), explored deposits for raw materials, geopolitics.
Also, market analysis plays no small role in the selection of favorable conditions in the binary options market.
Technical analysis of binary options is also called graphical analysis, as a price forecast is made on the basis of past prices. It uses charts and asset price history. Also, technical analysis is basic and very important because it shows clearly in which direction the price is going, rising or falling. This chart determines the current trend: upward or downward. There are many different tools, such as indicators or special chart figures, to determine the trend and its long term. The most successful deals are always based on trend trading. It is on finding the trend that most binary options strategies are based, so it is difficult to overestimate its analysis.
Technical analysis has the most impact on the currency market. Currencies are a popular asset among binary options, so let's look at the basic concepts and techniques.
Fundamental analysis in the binary options market.
Economic news analysis is a popular method of predicting price movements. This approach is based on the assertion that any changes in currency rates and asset values are due to fundamental factors. In other words, economic and political news determine the vector of price movement.
Although some binary traders do not use fundamental analysis, explaining it by its seeming complexity, this approach deserves attention, because it can make trading more successful and efficient.
Often, trades are not concluded at all during the publication of the news, because it is quite difficult to predict impulses with the help of indicators during these periods. And it is really so. Indicators and technical analysis tools do more harm than good when volatility is rising sharply.
Sentiment analysis is an assessment of market sentiment. Are traders confidently buying risky assets or are they going to lower their risk and start buying safer ones? This type of analysis is very useful if we want to jump into a trend.
Will EUR/USD soar to new heights, or will the trend run out of steam and the momentum will be too weak? Analyze the sentiment to find out.
If risk appetite is still high, the trend is likely to continue. If you are confident that the market would prefer safety, you can buy an option on a risky currency or asset (Australian or New Zealand dollar, commodities, stocks).
On the other hand, if you think the mood is about to change, you can buy a put option on the same assets and currencies.
The combination of these factors will help to get the most favorable conditions for trading in the binary options market.
Newcomers to the binary options market often make the same mistake: hoping to find a universal binary options strategy with accurate signals that will always work, regardless of external conditions.
In the world of finance, it is important to remember that a recipe for good fortune that suits another person will not necessarily suit you due to time and a different mindset (making different decisions with the same knowledge).
There are many factors that influence the success of a strategy, and just a strategy is a combination of factors such as the temperament of a trader, his reaction rate, as well as standard behavior patterns in different situations. For example, not everyone is suitable to a 60 second binary options strategy - many traders prefer more conservative and long-term methods. This does not mean that the model is bad - you just need to find a different working principle.
THE ROLE OF RISK DIVERSIFICATION IN BINARY OPTIONS TRADING
We can't completely get rid of risks in financial markets, but we can reduce them. In this review I will tell you about the ways of diversify your trades, both trading and non-trading. Surprisingly, without changing anything in their trading system, traders can greatly increase the efficiency of their work on the market.
In this case diversification is an investment approach aimed at minimization of trading and non-trading risks which allows protect your capital. It means that we can take some measures which will help to increase trading effectiveness, as well as to decrease the probability of negative events.
For the most part people go for risky trades depending on the risk/reward ratio which allows them both to lose and to gain more profit.
The option strategy called "volatility trading" is becoming more and more common in the financial markets lately. It allows to earn on the mere fact of price fluctuations, i.e. when using this method the trader makes absolutely no difference in what direction the price will go, as long as it does not stand still.
The algorithm of the execution of classic options is fundamentally different, because in this case the loss of the buyer of the contract is also a fixed variable (equal to the value of the premium paid to the seller). The profit potential will depend on how the price behaves, i.e., theoretically, it is unlimited.
Where to trade binary options in South Africa
Binary options trading in South Africa has become an increasingly popular market in recent years as more and more investors seek to open trading accounts online. As awareness of this particular method grows, so does the number of international brokers offering their services.
Binary trading is unregulated and therefore local South African companies are not allowed to offer their services to SA traders. However, with our extensive knowledge of the binary options industry and the rules and regulations that apply to trading.
As we learned in Indonesia about the binary options law, trading in South Africa is perfectly legal. Nothing prevents a person from trading online. However, the industry is unregulated, which means that those who choose to trade here are not afforded any protection. This also prevents good South African companies from brokering.
If you look at the tax requirements associated with binary trading, South Africa is very similar to any other country. If you are an individual, you will undoubtedly pay personal income tax. You can pay from 18% for income below 2 000 $. Up to 40% for income over 8500 $. Local tax applies to income from any income and this includes binary options trading.
If trading is a second income, you will need to itemize your income and make sure you pay the correct tax on that amount. Remember to subtract any losses and determine your net income so you don't pay too much tax.
Now that binary options brokers are not responsible for informing the South African tax department that you have earned income from trading, they will keep a record of your transactions in your account. Make sure you have access to this information, which you will need when calculating your total profits for a given period. We recommend keeping a monthly record of deposits and withdrawals, and recording all profits and losses.
Currency conversion fees for converting to and from the currency in which you will trade
Deposit fees are usually associated with certain types of transactions. Your account provider may charge these fees
Transaction fees from your credit card or e-wallet provider
Withdrawal fees from your broker for each withdrawal
We estimate the amount of binary brokers' commissions, the set of trading instruments offered by them, the responsiveness and quality of the technical support service, as well as several dozens of other factors. To date, a comprehensive analysis of the leading binary brokers allows us to highlight the following leaders in South Africa: