How to trade binary options?

Explanation with an example : let's say at this moment, I see that the price of oil is now at 46 dollars per barrel and I think, according to my analysis (which you can learn later on this site), that price will rise to 47 Dollars within an hour. Well, all I have to do is open a CALL option with an amount of money that I am willing to invest (for example $ 100) and expire within 1 hour.

If after that time the price of oil is higher than it was when I opened the option, then  I won! . In that case they will pay me 80% (on average, because it depends on the broker you use) over the risky capital (100 dollars). In other words, I will have 180 dollars . If the price went down instead of going up, that is, my prediction failed and after the hour is lower than it was when I opened the option, then I lost my 100 dollars.

In the event that I had thought that the price would be lower than $ 46 in the next hour, I should have opened a PUT option . The mechanics is the same as explained in the previous paragraph regarding the gain or loss. And this is how binary options work .

To end this boring theoretical part, I clarify that you will need a broker. It is a company that allows you to participate in trading binary options . But you can read much better in the section broker .

Can you live on binary options?

This is a recurring question for both newcomers and those who have been around for some time. I always answer the same thing: binary options are like any business or risky investment, if carried out with responsibility and discipline you can live off it . In my particular case, it is one of my constant income since I have other businesses as well.

But in the world of speculation, you have to change that misconceived philosophy of thinking about "living" something, replacing it with the powerful concept of "profitability" of something. Concentrate on being profitable and you will see that this question does not make sense.

Differences between forex and binary options

Here is a serious error of concept. Forex, is the global currency market while binary options are a speculative instrument related to several markets (among them the currency) but without directly participating in them.

Now, if we refer to operational differences between doing trading in the forex market and trading in binary options, the basic differences are:

• With the binary options you can speculate based on several markets: currencies, commodities, stocks, indexes. In forex trading only speculation about the foreign exchange market.
• Although in both cases the objective is to correct the future direction of movement of an asset, in binary options the gain is fixed and is obtained simply by hitting that direction by the least of the difference. In forex trading, in addition to guessing the direction, the gain will depend on "how much" the asset moves in that direction.
• In binary options transactions have an expiration time that determines the gain or loss. Doing forex trading is not time-limited.
• If you trade in forex, you can close the transaction at any time. But in binary options it is necessary to wait until the maturity of the same.
• In binary options, the loss and gain of each transaction is fixed and established by the broker. In forex trading that is decided by the trader himself.