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Binary Options trading in Singapore

Your capital may be at risk. This material is not investment advice.

The word ‘Binary’ has two meanings. In the term Binary options, it is used to mean that only two options or scenarios exist. This is therefore a trading format in which investors are given options that will either lead to a win of a predetermined monetary amount or no win. The direction in which a product is moving in the market determines the profit during a Binary options trading.

In Binary options markets, the trader or option holder is not given the right to sell or buy the asset in question. In fact, their proposition is entirely yes-or no-based. For example, an option holder can be asked to foresee the direction the price of an asset will take at a predetermined point in time. In this case there are only two options; it will either be lower than a certain amount or higher at the said time.

How do binary options work?

Binary options differ from traditional options of trading due to their design that involves only two outcomes under consideration. They are therefore one of the most preferred ways of trading the fluctuations in prices in multiple markets.

The “high-low” or fixed-return option is the most popular Binary option. This option provides access to foreign exchange, commodities, indices and stocks. The success of an option holder is based on whether they have waged correctly on the direction of the market and not the degree of movement of the asset. An exercise (strike) price and an expiry time or date are preset to determine this. A wage is paid out if at the expiry of the trade the price of the underlying item is at the foreseen side of the exercise price. If you choose an ‘out of the money’ option you win nothing, hence the term “all-or-nothing” option.

A binary option is a common type of Binary option with a call/put or up/down option. As a trader, you buy a call (up) if you predict that the underlying price will go up. But if you believe the contrary, then you buy a put (down). The expiry, exercise price, risks and payout are all revealed before the trade begins. To be compensated for a call, the price you predicted must fall over the exercise price when the time expires. If you bought a put and indeed the market falls, you are only compensated if the price is below the exercise price at expiry.

The main technique of binary options

The binary option is all about the prediction of the direction of market price. By market, it includes the entire global market.

If the trader believes that the price of a certain market may rise, he would purchase a call. On the other hand, if he predicts the fall of that certain market price, he would buy a put.

When the trader is opting to buy a call, it should be noted that the price must be more than the strike price during or at the time of expiry.

On the other hand, if he opts for put, the price should be lower than the strike price during or at the time of expiry.

Strategies to follow while doing the binary trading

When you are using the binary Options, your risk only gets limited within the amount that you have earned or invested for trading. When you fail to predict, you only lose the traded value. Depending on the specific broker’s option, you may even lose only a certain percentage instead of the whole amount.

Before starting with this form of trading, make time to understand the candlestick chart pattern for trading. It will help you to judge the various market prices and the direction they may take. Try Technical analysis indicators as well, it could be helpful to some extent.

Types of binary options

As binary options become more popular and competition heightens, more products are being unveiled by brokers.

A ‘one-touch option’ is a type of binary option where the trader predicts an amount they believe the item will be traded at before the close of the trading period and another amount they believe it will not be traded at. If your prediction is right and the price does not touch the level you projected, you are compensated.

There is also a ‘double touch’ binary option that requires one to choose two prices that they predict will be traded at. Although this is a range of prices, both of the prices must be touched for you to receive your compensation.

Another binary is a ‘range’ where traders are allowed to select a price range that the asset will trade with until the close. You receive compensation if the price stays at the range you predicted, but lose your investment if the price goes above or below the predetermined range.

The closing price is irrelevant with all types of binary options trading. Traders often feel that the prices of certain assets are highly volatile. For these underlying assets, an investor will be able to trade comfortably when they have a range of value that they believe the price will remain at.

Option types

  • With the low/high options, you can forecast whether the markets will be rising or falling.
  • With the one touch option, you can forecast if the markets will achieve a specific target price.
  • With the boundary options, you can forecast if the market is going to breakout from a particular price range.
  • With the different options types, the vital thing is that forecasts come as true or false. By how much value your forecasts come true is not important.
  • With the low/high options, the value by which the market falls or rises is not important. If even the smallest possible movement is in the favour of your forecast, you will gain on your investment. If even the smallest possible movement is against your forecast, the value of your investment will decrease.
  • With the one-touch option, the most important thing is the market reaching the target value or not. The duration for which market sustains at the target value or how far it goes beyond the target value is not important.
  • With the boundary options, the important thing is the market breaking out of the price channel. The distance covered after breaking out of the price channel is not important.

Small market movements and big profits

In comparison to conventional assets, binary options perform differently. For example, when you make an investment in stocks and the stock increases by 1%%, your profit also increases by 1 %. Similarly, if a stock rises by 5%, your profit will also increase by 5%.

The binary options let you avail a secured payout, no matter what distance the price of stock covers. Depending on the type of option, the payout could be 1500%. This makes binary options a very attractive asset rather than conventional ones for trading short movements.

In case your trade does not perform as per the expectations, the value of your investment will decrease or the whole investment will become zero (in case you invested all the money in a losing trade).

What makes binary options trading attractive?

With binary options trading, the only important decision to make is the direction that the market is taking. This is different from other forms of trading where the size of a price movement can also affect your success.

binary options give traders an overview of their risk-to-reward option since everyone gets a similar payout as long as they have made a winning wager. This also differs from traditional options that give limitless profits and losses.

The flexibility of binary options is another plus for them. There is a flavor of underlying assets to trade in from indices like S&P 500, FTSE, company shares, commodities and even foreign exchange. There is also flexibility in the time period of contracts from as low as 30 seconds to as much as several months. This gives one the freedom to choose their contract based on their trading style and expertise.

Experienced traders who have knowledge on fundamental and technical analysis from other markets can use these skills in binary trading.

The steps to trading binary options for beginners

If you are completely new to this binary options trading in Singapore, you must start with a minimum initial deposit. Also, it’s a very good idea to start with a demo account to be familiar with the know-how’s of this certain form of trading.

Watch or read tutorials, find some on this website, or on the official IQ Option blog. Those are the basics and you have to follow them all through your binary options trading.

In this binary options trading you must keep in mind that you will be playing against your broker because if you lose your money, your broker will get that invested amount of yours. If your prediction goes right, you will earn 75% of the invested amount. But if you are unable to predict the correct direction, you lose all your investment.

Beginners are always advised to start with a demo account. It will help them understand the binary options trading market by various means of practical experience.

Depending on the country, the structure of binary Options trade differs. Although binary Options trading runs certain risks, if studied and practised properly, it can be very rewarding. Beginners must know the rules and the basics of this form of trading before starting off with a solid binary options trading platform.

Binary Options Assets

Assets or items that can be traded internationally are often regarded as underlying assets in terms of financial language. They can be anything like gold or oil that companies often keep in stock apart from the traditional form of paper currency.

Assets such as stocks, currencies, indices or commodities are said to be the starting point of any trading business. Assets can also come in different forms when it gets to binary options trading, most of which are held across the internet concerning the global market stock.

These are the different kinds of assets you can trade in options trading:

Stocks
In simple terms, stocks are parts of a company. Buying a stock means buying a part of that company. They are the shares, a company issue. In binary options trading, the trader can invest in a company predicting its future price.

Currencies
Currency is a fine thing to invest on. Trading in currencies happens in pairs. This means every currency is traded in relation to every other available currency. Having all the types of currency, the trading option is plenty.

Indices
Indices are often regarded as a group of assets. They can also represent a group of certain companies.

Commodities
Commodities are real-world goods. They include everything from coffee to rice, wheat, gold, silver and platinum. Due to everyday political and environmental factors, the worth of these commodities varies. By using binary options, the fluctuations in the prices of these commodities can be noted properly.

By using binary options trading, you can learn to predict the fluctuations in the market price. Nowadays with the changing environment, change of political scenario and other factors, the prices of various commodities are changing at a fast pace. So, when it comes to choosing a broker in your binary options trading, check which one is offering the highest range of assets with respect to various financial and geographic markets.

The binary options trading lets the danger run into a heavy loss. So, it is advised to master the tips and tricks of binary options trading before investing in certain assets of your favour.

It is advised to learn about strike price, payout and expiry of every broker and also be aware of the certain dangers in trading binary options.

Practice

When you decide to start trading binary options, you might have some trading patterns in mind. You should make sure to familiarize yourself with the trading platform and ensure that you are aware of its every attribute like installing indicators or drawing trend lines. Then you should start trading according to your pattern. Keep in mind that no trading pattern is perfect and every time you trade, make a note describing the reason behind it. Whenever the trade fails, take a note and compose another pattern which will make your trade more successful the next time. Always remember that the key is perseverance and your capability to critically analyse your own decisions so that you can come up with a perfect pattern for live trading.

Confidence

To trade in the live market, the most vital characteristic one should always bear is the confidence. If you are trading in binary options, you should be confident about your own trading patterns. Later, you can master many other trading plans. If you are not confident about your work, why would others be confident about you? That’s why it is very important to practice on a demo account because it will give you much experience. IQ Option Singapore offers a free demo account with $10,000 to learn the basics of trading options. When you will have a robust trading record and a track record of numerous successful trades, the confidence will automatically come. After achieving all this through a demo account, you yourself will say that you are completely ready for carrying out live market trades.

If you want to minimize the risk, it is important that you first start practising on a demo account. Some people will not agree to it because they want to earn money right away. They hold little knowledge and are nothing less than gamblers. If you do not want to blindly depend on your luck, you should practice trading on a demo account until you feel that you are completely ready for the live trading.

What are binary options expiration times?

Expiration time in binary options is the time limit of a binary option contract. The trader keeps in mind this time limit and forecasts the trades according to that only. In simple words, the expiration time is the deadline for a binary options contract.

If the forecasted trade does not move according to the trader till the expiration time, the trader loses money in that investment. If the forecasted trade moves in the trader’s favour after the expiration time, then the money invested will be lost. Only the happenings at the time of expiration matter.

The expiration time of binary options is displayed in the countdown clock form as traders are able to see the remaining time until the expiry of the binary option’s contract. After the expiration of the time, the trader is not allowed to carry out any action in the expired option contract.

How are expiration times established?

Most brokers of binary options offer previously fixed expiration time. However, there are some brokers who allow the traders to select an expiry time which fits their style of trading. There are commonly three kinds of expiry:

· Short Expiries
The range of this expiration time is only a few minutes. The commonest range for such expiries is one minute to five minutes.

· Medium Expiries
The option contracts which last from five minutes to one or two hours are the contracts with medium expiries. These contracts sometimes give better returns than option contracts with short expiries.

· Long Expiries
When the expiration range of contracts is between two and twenty-four hours, it is said that such contracts have a long expiry. These options can be forecasted at the earliest.

Binary options trading signals

Binary Options Trading Signals are good because the experts who recommend them to hold very wide knowledge of the market and their years of experience in binary options trading helps them to precisely analyze the market conditions. When you avail the binary options trading signals, expecting a decent increase in your investments is not wrong.

Support and security of binary options trading signals

The binary options trading signals or the providers of these signals could have different intentions. Some of them are actionable pieces of advice and some are tips which you can act upon only if you desire. These are wonderful ways to find a profitable trading opportunity which might otherwise be missed. There are some robotic signals which are nothing but automated services which claim that you can earn huge profits if their trades are automatically followed. These look attractive but require much caution and it is not advised that you blindly follow any signal, service or tip.

If you are a new trader, you should not put a huge sum of money in binary trading. The smart move would be to start with a small capital and as you gain experience, you can infuse more money. It is not advisable to start your trading career because of only these signals. You should first educate yourself, develop skills, gain experience and then go for any such kind of advice. This way, you will be aware of everything happening in your trading account.

NOTE: This article is not an investment advice. Any references to historical price movements or levels is informational and based on external analysis and we do not warranty that any such movements or levels are likely to reoccur in the future. In accordance with European Securities and Markets Authority’s (ESMA) requirements, binary and digital options trading is only available to clients categorized as professional clients.
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