What is Binary Option? Getting to know basic trading, strategies and techniques for beginners

Hello our fellow members of Olymp Trade, recently there have been more and more newcomers, who have registered on Olymp Trade to trade Binary Option. Yet, some people still do not have much knowledge about Binary Option: what it is, how to trade, and what is good about it. Therefore, this article will help you improve your understanding related to trading starting from the very beginning. I hope that new members will read this carefully. I guarantee that after you finish this article, you will certainly have correct understanding about Binary Option.

What is stock trading?

If we talk about stock market, many of you must say that you know what it is. But how many of you truly know stock trading and how to trade in this market. Stock trading requires your understanding of many information related to the stocks that you are interested in buying. This is called VI. But some people may not like taking short-term positions – to buy and sell in the same day. This does not require much knowledge. You just have to read the graphs and analyze the graphs, the process of which is called technical analysis. Transaction is made through a broker, which can be a bank or a stock market. The profits are earned from the increase of values, which might not always be a drastic change. You can buy stocks at low price and sell at higher price to make profits, but in case that the price moves even lower, you will then have a loss.

What is Forex?

In foreign countries, there is a trading of currencies in Forex market. It is the competition of currencies or in English “Currency Pairs” such as EUR/USD. Forex has some unique features: firstly, you can trade 5 days in a row from Monday to Friday. The market is opened 24 hours, because Forex has its centers all over the world. These centers are opened in different time. The first center opens, then the next one after another. So, you can trade 5 days a week. Also, you can trade Forex in 2 directions: buying it in the upward direction which is called “Long”, and selling it in the downward direction, which is called “Short”. If you think the graph is going up, you will buy it, and if you think the graph is going to down, you will then sell it.

Why are there 2 directions to trade? For example, if the EUR/USD graph is about to climb up, it means that EUR has gained its value. So, if we buy, it means that we are buying to keep the EUR. When the graph heightens up, it means the value of 1 EUR against 1 USD is higher. In case that we sell at the higher price, we will receive profits from this gain. On the contrary, if the graph is going down, it means that USD has increased its value. If you have shortened your position, it means that you have speculated for profits by holding the USD.

Making profits on Forex can bring you better profits than the typical stock trading. Nowadays, Forex trading has gained high popularity among Thai people. But in order to trade Forex, it may take some time for you to prepare yourself to study different indicators, lot size, leverage, stop loss and etc. This can be quite difficult for beginners.

What is Binary Option?

Let’s get to the topic. After having learned some basics about stock trading and Forex trading, now we move to Binary Option. Binary Option is another financial product similar to Forex, but it is much easier to understand the concept. Let’s say you do not need to learn much, nor study for a long time in order to start trading, because Binary Option has not so many conditions to get acquainted with.

Trading Binary Option also has 2 directions as in Forex. If you think that the graph will go upwards, you will then choose buy. If you think it is going downwards, then you will sell it like in Forex. What’s more additional is that on trading Binary Option, after you made a deal, the transaction has its fixed expiration time. You have to specify the expiration time at the beginning before buying the actives, whether you want the deal to expire in minutes or hours. When the deal expires and your prediction is correct, even a slight difference higher or lower than your purchased price would give you profits instantly. With Binary Option, you can make profits over 80-90%. You can make maximum profits within a minimum time limit of 1 minute. Remember that only correct prediction of the price’s direction will grant you profits. What is good about Binary Option is that it gives you high return. Now, you probably understand what Binary Option is, so let’s take a look to the table comparing between Binary Option and Forex.

Binary Option Forex
Profits when correct prediction is made Very high (80-90%) % as actual
Risk Very high High
When wrong prediction is made Wrong prediction gives loss of the invested money ‘Stop loss’ setting to prevent loss. Selling is allowed to prevent loss at any time
Form of trading Buy and sell with automatic expiration Buy and sell at any time

 

How to trade Easy to understand More difficult to understand

 

The popularity of Binary Option in Thailand

If we talk about Binary Option, Thailand is one of the countries, where there is increasing popularity in trading. For the past two years since 2016 to 2017, the popularity is growing rapidly. More Thai people have turned to Binary Option market. When compared in the global market, Thailand is in the top list of the country with most popularity in Binary Option.

How to trade Binary Option – you have to choose a proper strategy

To be good at trading Binary Option, traders or players have to find a strategy that suits them. They also have to train very hard, not any less than Forex. Although Binary Option is easier, and quicker to understand, it still takes experience in order to trade accurately. When we have more accuracy, then we can identify the direction of the graphs better. Profit is never too far to reach in this case.

  • Indicator

I suggest you to learn the candlestick graph, because candlestick is a graph that explains its emotions very well. It has many forms and meanings. For instance, if a graph is like this, it means that the graph is about to reverse. There are literally so many forms of graphs that we can study. It is also the most popular among users all over the world.

  • Price Action

In trading Binary Option, the next strategy is to study Price Action or how to determine support and resistance levels, and how to study the graph to identify the reversing point according to the Western methods such as Triple Top and W shape.

  • Indicator

The last strategy is to learn how to effectively use different indicators such as Moving Average, SMA, EMA, Bollinger Band, Stochastic Oscillator and RSI. These indicators are well-accepted from users around the world. They are highly ranked among all the indicators.

 

When you understand and know how to use different strategies, your next task is to try trading Binary Option by yourself. You can combine different strategies, create conditions for trading Binary Options and create your own techniques.

 

Trading Binary Option by using signal to make profits

Binary Option Signal is another strategy in earning money. Binary Option Signal is a service, which helps indicate signals and let you know when to enter a deal. Currently, there are many providers of such service. But we recommend that the best way is to train and  trade by yourself. If we only wait to receive signals informed by others, we will never improve. Therefore, Binary Option Signal is not an answer for professional traders. Another reason is that by entering the position according to the signal, the entry has to be fast. When we receive a signal whether via SMS, Email or push-notifications on the provider’s application, we have to enter the position immediately. Late entry may lead to different results. This is the difficulty of using Binary Option Signal.

At present, Olymp Trade’s platform has provided a webinar for new traders to study. There are also materials and educational videos for traders to study, train and experiment by themselves.

 

To be good at Binary Option, you have to stay conscious.

A good training of Binary Option requires a considerable and consistent amount of experiment of your techniques or strategies. For instance, if you prefer a strategy of Moving Average to analyze the turning point, you should try it on a demo account first. Test this strategy for about 100-200 times, and every time after a deal, always keep records of your trading. The title may be “Moving Average”. Then, make a report of the results. Eventually, you will learn which strategy suits you best.

A good record can be collected on A4 papers, but the title should be marked clearly about the conditions of your trading system. Trading system means different conditions, that we use to open a deal on Binary Option, or in other words, it is a condition that you will only make a deal when you encounter these patterns. On the header of the page, you may write:

 

Conditions of Moving Average:

  1. Using graph with 1 min time frame
  2. Expire 5 min every time you trade
  3. Trade only when there is no strong volatility on the graph
  4. Trade the active EUR/USD
  5. etc.

In the note write down

Transaction Number Direction Correct Wrong
1 Up      X
2 Down              X
3 Up     X

 

Caution: when choosing low time frame such as 1 minute, there can be high volatility and more risks.

When you repeat this process for 100 cells, noting it down when the deal is opened and after it ends, you can then tick in the correct or wrong cells according to the result. After you repeat this step for 100 times, you will have a statistics of how many times the prediction turns out to be correct and wrong in order to further measure in the future. When you understand the principles of Binary Option, and you have experimented it correctly, with confidence and readiness you can then start trading with real money.

Why is there a need to create a trading system and making records? It is because trader should follow his system and conditions of trading clearly in order to eliminate emotions, as emotions can lead to errors. Therefore, after having created the system, you will have to follow it strictly. One of the problems that the majority of real-money traders have encountered is the feelings of excitement and nervousness. This leads to wrong prediction, although traders might have made good fortune on demo account before. However, when it comes to real account, some errors may appear also. It could then be concluded that a trading system is necessary for everyone.

Conclusion

Once you have reached this part of the article, many beginners of trading should have gained more knowledge ranging from the basics, stock trading, Forex and Binary Option. Now you know what Binary Option is and the advantages of it. So, to all new traders, please try to trade a lot on Binary Option. In this regard, OlympTrade provides a demo account for everyone to try out before trading in the real field.

If you have any question or should you need any assistance, please contact our Support. If you would like to learn more, we also have a Binary Option webinar by professional traders, where you can also participate weekly.

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