What are Binary Options? Types of Binary Options transactions

Binary Options is one of the most popular investment methods among young people today in Vietnam. Many people think Binary Options is a scam, money only goes in but doesn't go out. But is that true? Let's learn about Binary Options through the article below!

What are Binary Options?

Binary Options is often called Trade BO, a form of options trading based on price prediction and has only two options (up or down). When the trading session ends, one selection will win, and one will lose. This form is especially popular in gold, stock, stock, cryptocurrency exchanges, etc.

Binary Options have many names such as: Binary or compound options, digital options, “all or nothing” options or fixed interest options.

Basically, this is a 50:50 game. However, the risk of fraud is so high that regulators across many jurisdictions XEM it a form of gambling and prohibit it. In Vietnam, this form is still legal and there are many famous binary trading platforms such as: Olymp Trade, IQ Option, Binary.

Advantages and disadvantages of Binary Options

If you want to profit trading binary options, you first need to understand both their pros and cons. You need to make sure binary options will suit your trading style, risk tolerance and Capital requirements.

Advantage

Simplicity: Because your investment decisions are based on just one factor or direction, betting is simple. Prices can only increase or decrease. You also don't need to worry when the transaction ends, the expiration time will solve that problem. Meanwhile in other markets, you may need a system to limit your losses, such as stop losses.

Fixed risks: Stocks, forex, gold and crude oil have a lot of factors to deal with when investing, from price slippage and margin to news events… However, with binary options, the risks brother's is kept to a minimum with much less parameters.

Profit Potential: Compared to other trading, profits in binary are extremely attractive. Some brokers promise payouts of up to 90% on a single trade. If you are looking to make simple trades with great profit potential, binary options may also be worth a XEM.

Wide range of options: Instead of being tied to a specific market (e.g. cryptocurrencies or stocks), binary options traders have the opportunity to trade instruments on almost all platforms. market. It allows you to start trading currencies, indices and bonds if you want.

Accessibility: Binary options always have the best trading hours somewhere around the globe. So you can log in at night, or on the weekend, and join the group of avid traders trying to turn profits on a daily basis. Real-time charts are available for every market. So if you have time, you can invest 24 hours a day.

Defect

Limited trading tools: While most brokers offer advanced analysis and charting capabilities for other assets such as stocks, forex, gold, etc. Binary options are often ineffective.

HIGH possibility of loss: For every 70% profit, the same trade will result in an 85% loss. This means you need a win rate of at least 55% to break Capital.

How are binary options different from Forex?

For traditional markets such as Forex or stocks, when you buy, there will be corresponding sellers . Money is transferred from one person to another. Companies only Vai as intermediaries to receive commissions through your orders.

As for options trading without a counterparty seller , you play directly with the floor. This transaction also does not have an order matching mechanism like regular crypto transactions. If you lose, money is transferred from your wallet to the exchange. If you win, the money is transferred from the exchange wallet to your wallet.

That is also the reason why options trading can easily become a scam and many exchanges have done this. It must be mentioned that the name Binomo once had a scandal of "breaking the chart" for losing traders to make money. Especially transactions with sessions shorter than 1 minute.

Forms of binary options trading

Here are the three most popular forms of binary options:

Call & Put

It can be said that in binary options trading, with the prediction of the value of an asset increasing or decreasing over a period of time, Call/Put is XEM the most popular type, chosen by many investors. . In there:

• A call is a Call Option, that is, the right to buy an asset in the future at a predetermined price.
• Put is a put option, that is, the right to sell an asset in the future at a predetermined price.

One Touch & No Touch

This is a simpler type of binary options trading.

You just need to XEM the asset price touches or does not touch a certain price level during the term to win or lose.

In range & Out range

​Also known for short as interval options.

So in essence, it is quite similar to the One Touch & No Touch type. However, the difference is that you have to choose a price range to bet against the possibility of Up & Down, instead of a certain price mark.

Binary Options trading session

Another important component of binary options is the session , i.e. the expiration time .

This is when the transaction will end and is the point that determines whether you have won or lost. This time can range from 30 seconds and 1 minute (turbo) to a whole day (end of day), even up to a whole year.

As a day trader, you will be more interested in trading 5 and 30 minute binary options. Opt for binaries with 1 minute expiry time and you have the ability to make a high number of trades in a day.

Is Binary Options a scam?

Binary Options is not actually a scam, it is legal, not illegal. Trade BO is often compared to Forex ( foreign exchange market ) or stock market. However, these are two quite different forms.

Binary options' bad reputation stems from dishonest marketing and cybercriminals. Many brokers and BO floors have fraudulent activities to fraudulently appropriate assets.

Specifically, the exchanges will organize very strong marketing activities by allowing people to post pictures of their cars, money, history of winning orders, pictures of eating and drinking, etc. to blind others and then entice them to play. BO on the floor.

Maybe at first you will win, but in some cases it will be very difficult to withdraw money. This frustrates the player, then they turn back to play again, and lose, and if they lose, they usually deposit money to win.

As mentioned, playing BO is as risky as it is profitable, from both the player and the floor perspective. But there are some exchanges that deliberately manipulate the final results to take profits for themselves, leading to many people losing money.

Should you play Binary Options?

In my opinion, investing with equal profit/risk is a deal that should not be played. Even if the winning rate is 60 - 70% but sometimes there are heavy losses due to some other reasons such as not knowing how to control emotions, not managing Capital well,... then why should we play a game? play with only 50% probability?

The next reason I want to talk about is also because playing BO is a form of us fighting against a floor. If we are unlucky enough to play on an unhealthy trading floor, our winning rate is almost non-existent.

And that is the reason why famous investors choose the long-term investment path, because they do not know what will happen in the upcoming M1 and M15 candles, but the probability to predict over time. long term (3 months, 6 months or 1 year) will be much higher.

04 experiences in investing in binary options

Determine the target

First of all, it is necessary to determine that playing Binary Options in short candlesticks is almost gambling, there is not too much analysis that can be applied here. Therefore, you need to determine what your goal in playing BO is. If it's an experience, or occasionally coming in to earn some coffee money, you can play. But if you want to become rich, it is almost impossible!

Choose a reputable Binary Options floor

First, you need to choose a reputable floor to play. Choosing the right floor will help us keep the win-loss ratio up to 50% as we analyzed above. Some Binary Options floors include: Olymp Trade, IQ Option, Binary.

Maintain your mentality

Playing Binary Options is just like regular trading, emotions are a very important factor. There are times when we win in a row, and sometimes we fall into a losing chain .

At this time, it is important to keep a cool head to get a better strategy. Otherwise, continuing to play is just giving money to the floor.

Capital Mangement

Capital management is an action that is never redundant if you are participating in any type of investment. Good Capital management may not help us win, but it will help you have a chance to win.

03 mistakes to avoid when playing Binary Options

It cannot be denied that human psychology loves games of chance and gambling. That's why Binary Options can develop very well in many countries. But since it's gambling, we should only play at the entertainment level .

Many people cannot control themselves when they lose, just hoping to get off the hook. But the more you remove it, the more you lose. Therefore, what we need to do is to make a clear rule for ourselves , stop losing no matter how much.

As for winning, you should know enough to rest and reward yourself with something. Because no one knows if the next order will win or lose, if you lose, the above situation will repeat.

Conclude

The variable of Binary Options is not only the price up or down, but also the trading session, the trading floor... It's not as simple as you think. Options trading contains a lot of risks, so always consider and be cautious when participating. Wishing you success!