How to trade Cryptocurrencies with Binary Options
Table of Contents
Cryptocurrency binary options are a form of trading that predicts whether the price of cryptocurrencies will rise or fall over time. If you’re right, you get paid for that option. If you are wrong, you will lose your investment. Each binary option in cryptocurrencies has a specific expiry date to confirm either an “in the money” option (when your guess is right) or an “out of the money” (when your guess is wrong).
Each cryptocurrency binary option has a specific payout that you can earn. They are called “binary options” because the result is either a profit or a loss.
Cryptocurrency is a digital asset. It is a medium of exchange for initiating and executing financial transactions using cryptographic functions. The events that led to the development of cryptocurrencies are long and interesting. It dates back to 1983 when cryptographer David Chaum came up with the idea of electronic payments and the invention of DigiCash.
However, the first official cryptocurrency did not appear until 2009, when Bitcoin was created by pseudonymous developer Satoshi Nakamoto. Bitcoin followed a flood of other cryptocurrencies with the creation of Namecoin and Litecoin in April and October 2011 respectively. There are over 5,000 cryptocurrencies today. Many others are still under development. Their total market cap is at least $200 billion, with Bitcoin and Ethereum being the largest contributors.
Cryptocurrency binary trading: The fundamentals
Cryptocurrency is a global phenomenon and interest in binary Options cryptocurrency trading is growing. Digital currencies are ideal for binary trading with expiry dates as their exchange rates fluctuate greatly. The popularity and reputation of the currency also make it a great target for potential scammers and more, so only trade with reputable brokers like the ones we list here at binaryoptions.net.
A minimal understanding of cryptocurrencies is required to start trading binary options for cryptocurrencies. Basically, Bitcoin is a digitally created currency that can be used wherever Bitcoin is received. This is for a free and international trading system that does not depend on central banks and does not charge excessive fees.
Cryptocurrencies are based on highly sophisticated cryptographic algorithms that create value in a process called “mining”. For example, Bitcoin miners, who are typically tech-savvy computer operators, create coins by running programs that severely limit the size and speed of coin mining so that they are not removed. Once mined, coins can be sold, exchanged or exchanged. Bitcoin is now used for global currency exchange and international trade, but the world powers have not yet adopted it.
Just a few years ago, there were very few brokers offering Bitcoin as a trading asset. Things have evolved in a new direction. Several brokers currently offer Bitcoin trading and lesser-known cryptocurrencies like Ethereum or Litecoin. Therefore, traders now have a lot of choices when looking for a broker that offers binary Options on cryptocurrencies trading. If your current broker doesn’t offer this, consider moving.
Choose a broker which accepts cryptocurrencies as deposit and withdrawal methods. You can also trade Binary Options on different cryptocurrencies with them:
Broker: | Review: | Advantages: | Account: |
|---|---|---|---|
1. Quotex  | + Accepts international clients + Crypto payments + Bonuses + High payout 95%+ + Best platform | Live-account from $ 10 (Trading includes risk) | |
2. IQ Option  | + Easy platform + Best support + Highest yield + Multiple payment options | Live-account from $ 10 (Trading includes risk) | |
3. Pocket Option  | + Accepts any clients + Bonus program + Social Trading + Accepts international clients | Live-account from $ 50(Trading includes risk) |
(5 / 5)
(4.9 / 5)
(4.7 / 5)What are Binary Options for cryptocurrencies?
The rise and popularity of binary options and cryptocurrencies have provoked mixed reactions. For many traders, for example, binary options are the perfect speculative product, while cryptocurrencies are a more efficient value proposition than fiat currencies. But for regulators, this is food to watch with a falconer’s eye.
Binary options and cryptocurrencies have several features. Some have come under regulatory scrutiny, while others have caught the attention of traders and investors. As a purely speculative contract, binary options have a validity period of 30 seconds to a month, with a fixed payout of up to 92% of the amount invested in the trade.
A standard type of binary option is to predict whether the price of a particular underlying instrument will rise or fall. However, more types of binary options have emerged, including no-touch, double-touch, and double-touch binary options. For example, a one-touch binary options trade is considered successful when the underlying asset’s fixed price is reached.
How does Binary cryptocurrency trading work?
Some innovative brokers have discovered new possibilities in binary Options cryptocurrency
trading and have suggested ways to trade Binary and Bitcoin Options together. Basically, there are two ways to trade cryptocurrency binary options. The first way is to use the crypto coin as a currency. The second approach is to use the crypto coin (Bitcoin) as an underlying asset.
Cryptocurrency as a medium of exchange
When using Cryptocurrency as an exchange, traders trade various underlying assets in the financial markets in Bitcoin. For example, you can trade the EUR/USD currency pair and ask for an increase or decrease after the binary option expires. So, if the transaction is successful, you will be paid in Bitcoin and not in fiat currencies such as US Dollars or Euros.
As always right, you may be wondering why someone would want to receive cryptos if they only pay in USD. The first advantage of crypto trading is that it has the lowest transaction costs of all online payments. This is why Bitcoin was created primarily to reduce the cost of online transactions. There are no service fees when receiving or sending payments, as there are no central authority controlling cryptocurrencies
Cryptocurrency binary options trading
Another important reason traders use Bitcoin to trade binary options is the additional return of Bitcoin. Bitcoin is traded on its own and its value against the US dollar depends on demand. By displaying all trading activity in Bitcoin, traders can protect themselves from fluctuations in this cryptocurrency while at the same time earning more from their trades.
However, it should be noted that this type of trading is limited to binary brokers that accept Bitcoin as a currency. This means that only a limited number of binary options brokers fall into this category.
Cryptocurrency as an underlying asset
Another way to trade cryptocurrency with binary options is to treat the currencies as an underlying asset. As mentioned earlier, Bitcoin itself is traded on specialized Bitcoin exchanges. The exchange rate against the US dollar rises and falls in response to demand.
For example, the loss of confidence in the euro during the financial crisis in Cyprus in 2013 led investors to change their havens from the euro to bitcoin. The sharp rise in demand for Bitcoin has helped push the value of Bitcoin almost to the price of gold. Due to this volatility, some binary brokers have started introducing binary options contracts related to the value of Bitcoin. In other words, Bitcoin is trading like any underlying asset listed on most binary brokerage platforms.
(Risk warning: Trading involves risks)
Cryptocurrency deposits and transactions
Some brokers are currently accepting Bitcoin as a deposit method. They allow traders to deposit, trade, and receive Bitcoin payments. The leading broker offering this service is Quotex.io. The company accepts 15 different cryptocurrencies including Bitcoin, Ethereum, and DASH as funding methods. If you are learning Bitcoin trading, you have probably come across companies like Trade Rush that offer binary options trading for Bitcoin.
(Risk warning: Trading involves risks)
Risk Reward Ratio
Most critics of the legitimacy of binary options trading usually refer to the risk-reward ratio that traders face when trading in this market. On platforms like Option.FM, traders can earn up to 91% of the trades they put on the market. This is one of the highest income levels in the industry. This profit means that if a trader trades $100, he can earn $91 if the guess is correct. But if you make a mistake, you lose $100. Your risk outweighs the potential reward. For this reason, most critics classify binary options as game derivatives.
However, critics do not realize the simplicity of binary options trading and the possibility of repaying the profits in a short period of time. In binary options, traders earn a certain profit if the closing price of an asset is above or below (even partially) its strike price. In other markets, such as forex, profit depends on how far the asset price moves from the strike price. In these markets, traders need to perform more accurate and detailed analyses than binary options. When the market is less volatile, traders in this market will have a worse risk-reward ratio than the binary options market.
Binary options allow traders to return profits faster than in other markets. On platforms like Option.FM, traders can trade contracts with expiration dates of up to 30 seconds. This gives traders the opportunity to make money in a short amount of time. It is impossible to make a huge profit in such a short time in other markets.
Benefits of cryptocurrency Binary Options
It is not necessary to know the exact value of the cryptocurrency at the end of the option, only if it has increased or decreased. You don’t need extensive trading knowledge to participate in Bitcoin’s binary options. The payout can be 88% ROI.
Disadvantages of Cryptocurrency Binary Options
As you may have noticed, binary options in cryptocurrencies are similar to easy play. If you study binary options in detail, you will find that trading platforms always have an advantage over investors (you need to earn more than 50% of your time to keep your budget balanced).
Due to the unpredictability of binary options for cryptocurrencies, in many countries, there are strict rules about who can carry out these activities, so it’s a good idea to check if the exchange you want to trade binary options for cryptocurrencies is regulated. Also, cryptocurrency options, just like games, can be very addictive, and no matter how knowledgeable you are, it is impossible to consistently predict what cryptocurrency prices will be in the short term.
Can you really make money with Binary Options Crypto Trading?
Binary options have become a popular way to trade financial assets online due to their simplicity and high returns. However, various studies show that less than 30% of retail traders achieve profitability by trading in this market. For this reason, most investors often wonder if it is really possible to make money by trading binary options. The short answer is ‘yes’, but the long answer is that you have to work hard, be dedicated, and be committed to reliably profit in the binary options market.
How to make money by constantly trading binary options in cryptocurrencies:
1. Choose the right asset for your trade
The first decision a trader must make before a trade is placed on the market is asset selection. This is not an easy task as the binary options market allows traders to guess the price of more than 150 financial assets, including stocks, currency pairs, commodities, and indices. Since money in binary options is generated by price fluctuations, it is important for traders to choose an asset with sufficient liquidity and volatility. These assets include EURUSD, oil, USDJPY, and gold.
Traders must also trade the right assets at the right time. Different assets have different ideal trading times. For example, US stocks and indices are ideal for trading between 13:00 and 23:00 GMT when the New York market opens, while Japanese and Australian stocks and currency pairs are ideal for trading when the stock exchange Tokyo opens. 00:00 and 09:00 GMT).
2. Include news strategy
Incorporating a news strategy into a trading plan can help traders reduce trading risk and increase profitability. This is because economic data is one of the main catalysts for price movements in the binary options market. Due to a large number of valuable assets in binary options, there is usually at least one major financial announcement every day, which will cause significant price movements in the market. Traders who oversee financial data disclosures can make money by anticipating such moves.
Financial data flows are usually tracked with financial calendars, which are available free of charge on many websites such as www.forexfactory.com. Tracking financial data also helps traders reduce their trading risk. Traders can avoid trading assets that could be affected by disclosure of financial information if they are unsure how the data will affect the price of the underlying asset.
3. Portfolio diversification
It is important to register with a broker that can trade different types of binary options contracts. There are several ways to trade the price movement of a trader’s preferred asset. Diversifying your business will help you increase your market profitability. For example, on platforms like Option.FM, traders can trade contracts as short-term options, long-term options, and call/put options, while other trading options available in the industry include pairs, contactless options, one-touch options, ladder options, and weekend options, and more. A full option contract allows traders to earn up to 500% on a single trade.
4. Protect your capital
Amateur traders generally focus on making money while professional traders focus primarily on risk management. Risk management is a proven way to achieve sustainable success in financial markets. Traders should always ensure that up to 5% of their capital is impaired for each trade. There are many trading opportunities in the market and no one is better than the others. Traders should also use the many innovative trade management features available on platforms like Option.FM to reduce their exposure to risk and increase their potential profitability. These features are almost in their infancy, so traders can end their work before they leave. Traders can use this feature to reduce their total losses by leaving bad trades. This feature can also be used to lock profits by excluding potentially good and bad trades.
5. Use robots and signals.
You can utilize binary robots and signals to make sure you are always ahead of other traders. The advent of the Internet has changed the way people discover. Brokers can offer binary robots. This is software designed to trade automatically. Your broker can offer binary robots. This is software designed to automatically trade when you can’t. The robot will exchange opportunities at any time according to your choice. It’s important to know what you’re doing to get the most out of your binary robot.
A binary signal, on the other hand, is a type of service that automatically tells you when it is best to install or remove a selected asset. This signal is useful for those who are always on the move and unable to keep up with the latest market trends to make informed financial decisions. With a signal, you can always feel comfortable because you won’t get a big win. Messages are sent directly to your phone or email for your convenience. New and experienced traders use signals to make more use of binary options.
(Risk warning: Trading involves risks)
On the other hand, the most important features of cryptocurrencies are:
Decentralized
Cryptocurrency is completely decentralized. However, this transfer must be defined. This is a political and architectural transition. They are politically divided in the sense that they are not under anyone’s control, and their architectural dismantling stems from the fact that they are not responsible for the infrastructure.
This decentralized feature helps spread power. Unlike fiat currencies, which can be created and influenced by central banks and governments, cryptocurrencies are logically centralized, ensuring complete independence from any individual or government. This reduces the chance of failure and protects against attacks.
Immutability
Blockchain is the technology of cryptocurrency and all cryptocurrency transactions are registered here. Nothing has changed completely in this regard. This means that not all committed transactions can be undone. This feature has interesting implications.
For example, you are the only person who can move money as long as your data is not compromised. As elements of centralization and trust are removed from operations, cryptocurrency transactions cannot be influenced by third parties and no one needs to be trusted. As a result, it is very difficult to change the cryptocurrency trading ledger.
Trust
Cryptocurrencies have successfully solved the trust problem associated with the use of traditional currencies. Because they are unreliable, there is no central authority to support them with their full faith. While trust contracts have their advantages, they also make traditional currencies rigid and vulnerable to the whims of those in power.
Instead, the blockchain system works in such a way that no one needs to trust anyone before a transaction is completed. Everyone in the ecosystem has a copy of the ledger to verify all transactions. It also offers the benefit of transparency.
Conclusion
Fixed profits can be made by trading financial assets in the binary options market, but traders must work hard and follow a smart trading plan that reduces trading risk and increases potential market profitability.
(Risk warning: Trading involves risks)
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Last Updated on January 27, 2023 by Arkady Müller
