Making money using binary options
For quite a long time making money on the Internet has neither surprised nor terrified new users – quite the contrary, in fact. Specialists conducting research and monitoring the online behaviour of users claim clearly that people using the Internet are increasingly turning to alternative ways of making extra money – instead of looking for additional work, they prefer playing on the stock exchange, sports betting or forecasting using binary options. Unfortunately, while the access to different commercial solutions on the Internet is possible for virtually anyone, on condition that they have reached the appropriate age, not everyone is actually able to make money – at least not right away.
If you are interested in binary options, we will try to plainly explain to you what they are all about and why they are currently one of the most popular methods of making money, in which everyone could try their hand.
What are binary options?
Binary options, also known as “digital options”, “zero-one system” or “all-or-nothing option,” are the system of investments which are made by the buyer in order to spend the invested funds on speculations, forecasts concerning growth or decline in the underlying instrument. Using the language of banking, binary options can be simply described as European-type options with a cash settlement. What does this mean in practice? In a layman’s language, binary options are thus nothing else but a new, cost-effective way of making money through online trade which, however, requires adequate knowledge. The fundamental principle of operation of binary options is to predict whether the price of an asset we are interested in will be changed and how it will happen. It is defined, for example, whether the price of the asset will fall or increase.
What are assets?
Assets in binary options are:
- currency pairs – for example USD/EUR, which is dollar and euro
- commodities – oil, gold and the like
What is interesting, it usually occurs in a specified time horizon – for example, during 15 minutes. If the forecast effect at that time brings the desired results and proves beneficial for the forecasting person, and therefore the premonition proves correct, the reimbursement could be considerable. The investment allows you to get an addition of up to 85%. Unfortunately, if the forecast proves wrong, you will lose the entire investment. However, the persons concerned claim that the risk is worth it.
Trading binary options is in theory available for anyone who has a minimum of $10, but not everyone can immediately make the money they dream of. As a rule, everyone starts from losses, but after several attempts, gaining experience, and, above all, acquiring adequate knowledge, first positive results that start the machine and encourage to continue forecasting begin to appear.
In order to facilitate the matter, investors have a choice of several types of options that automatically assume an effect. As the foundation of binary options is the ability to select only one of the two paths, the buyer bets either on the CALL, or on the PUT option.
CALL option – an investor deciding to buy this option presupposes that the price of his/her underlying instrument rises. Specifying the time in which it happens, with the end of it the price should be higher than the initial one.
PUT option – an investor deciding to invest in this kind of option assumes that the price of the underlying instrument will decrease. Therefore, after the expiry of the specified period of time, the price should be lower than the initial one.
As already mentioned, if the forecasts prove right, the investor will be allowed to withdraw up to 80 percent of the invested funds, obviously with the addition exceeding the investment. Unfortunately, an error will result in a total loss of funds.
Types of binary options
As mentioned above, the binary options allow primarily to forecast in two directions – down or up. Is it a last resort? Are there really only two types of binary options?
Fortunately not – the participants may also be tempted to use other variants. In fact, they appear in many varieties, but the most popular ones are the four of them. All variants of binary options have one trait in common, namely the characteristics of the settlement. Regardless of the choice of binary option, in the case of accurate prediction, you obtain a predetermined gain, and when the forecast is incorrect, you lose it all.
There are also differences between binary options – the most important ones are:
time horizon of the investment
way of determining the option – In-The-Money option or Out-The-Money option
degree of advancement of the option
degree of advancement of the investor
The main types of binary options:
UP/DOWN option – the most popular traditional type of binary options enjoying the greatest popularity. The investor has the possibility of buying options in two variants – CALL and PUT. When deciding on the CALL option (up), it is automatically assumed that the price of the asset (underlying instrument) will increase at a certain time. In the case of the PUT option (down), it is assumed that this price will decrease. The profit may vary depending on the type of the selected asset – however, it usually oscillates within the range of 65 – 85 percent.
ONE TOUCH – the second type of binary options, which has the highest rate of potential profit from a single transaction. Depending on the choice of the trading platform as well as the type of the underlying instrument or asset, the rate may oscillate within the range of 200 to as much as 500 percent. Unfortunately, with so much profit opportunity, the risk of losses is enormous. As in the case of a standard CALL/PUT option, also here you can buy the up or down option. It is assumed that the price of the underlying instrument will rise or fall at a certain time.
OPTION BUILDER – the most advanced type of investment consisting of the creation of binary options. In practice, this means the ability to set the option parameters independently, according to your preferences, for example, to personal strategy or risk aversion. Profit in the case of this option usually fluctuates between 30 and 80 percent.
60 SECONDS – the last of the most popular types of binary options, which is characterized by the highest possible risk. In this case the time is determined in advance and, as the name suggests, it amounts to only 60 seconds. The profits are huge, but the investor must have a lot of experience or simply be very lucky.