Basically, Options is a half-blood child between financial investment and gambling. So what exactly is Options? Is it a trading channel in the financial field? Or a disguised red or black game? And most importantly, how many people actually make money from here? This article will expose you to the fact of Options.
- 1 What is Binary Options?
- 2 Let’s look at an example of opening a basic option in IQ Option
- 3 Do you think Options is the same as gambling?
- 4 So can you make money with this Option Trading?
- 5 You should participate in trading Options or not?
What is Binary Options?
Binary Options (BO) is an Increase/Decrease game that uses the prices of products on the financial market as a basis for betting. It includes foreign currencies (EUR/USD, USD/JPY, GBP/USD, etc), Coin market (BTC, ETH, etc), commodity market (gold, silver, etc).
I have to repeat it again. This is a game that bets on the increase or decrease of the price. If you predict the price will increase, you open an Up bet (or an HIGHER option). On the contrary, if you predict the price will decrease, then open a Down bet (or a LOWER option). Within a specified time period (which is called the expiration time of that prediction), if it is right, you win money. If it is wrong, you lose money.
There will be no reciprocal options when you open a trade. You are betting with the bookie – the owner of that Options platform. For example, if you trade BO in IQ Option, the bookie is IQ Option. If you trade BO at Olymp Trade, then the bookie is Olymp Trade.
Let’s look at an example of opening a basic option in IQ Option
- Select the base asset.
- Choose the expiration time (1 minute, 5 minutes, etc)
- Enter the amount you want to bet
- Make a prediction that the price will increase or decrease. If increase, click Higher. If decrease, then click Lower.
Thus, within the expiration time you have chosen, If the price goes according to your prediction, you will win an amount of money depending on the rate that the platform offers. If the price goes wrong, you lose all your bets. For example, if you win, you will be paid 76% (bet $1 then profit is $0.76). If you lose, you will lose $1.
Do you think Options is the same as gambling?
Or rather, this is the green/red game (the color of the candlesticks). Very similar, right? If the red/black game uses cards and dice as a betting base. Options is based on the price of financial products as a basis to open.
However, that is not all. A red and black game has no specific rules. But Options is. Why? Because this game bases on the price of financial products, so you can use a number of tools such as technical analysis or statistical surveys. These are factors that increase the probability of the correct option when you trade.
So can you make money with this Option Trading?
The answer is yes but very difficult. Harder than all the monetization channels you’ve ever known. It’s due to the following reasons.
Time element in an Option trade
You can predict the movement of the price if you’re good at analysis. But to win and gain money, you have to guess correctly the end of that prediction. This is an extremely difficult task. Cause there is no tool for you to control the time.
More importantly, it is the psychological factor hidden within this time period. The more you wait until the last seconds of an option, the heavier you feel. This is so-called “The feeling of waiting for death is more terrifying than death itself.”
Stopping point element
It is very difficult for you to stop when trading Options. You will quickly turn yourself into a trading addict. Because it’s so simple, easy to trade and easy to make money.
You get dragged into that whirlpool and can’t control yourself. Your emotions have only two states: (i) When you win, you will be greedy and subjective. (ii) When you lose, you will be upset and want to recover the loss. That is why you keep opening options until you lose all your capital.
Attraction element from the community
It’s just like when you hear about Options. I’m quite sure someone brags to you that they can make money in this game. And they are trying to drive you in. As if being caught in a “rat poison”, you feel greedy and then you join.
Options is now common in the world. It appears on every channel you access online. Names like Binomo, IQ Option or Olymp Trade become quite familiar to everyone. But the truth is that few people make money from this game. They introduce you, expect you to participate. It’s all because after every trade you open, they will be paid by the platform owner. You indirectly become a tool to help them make money.
You should participate in trading Options or not?
Let’s read all 3 elements above again. Do you see what’s in common? That is the emotional element. And humans are controlled by emotions. Options platform owners only need to focus and use this factor. And you think you lose all the money because of bad luck.
If you asked me either to trade Option or not, my answer is:
If you are a rational person who has both tenacity, patience and the ability to control emotions, you absolutely can make money in this game.
Reason: There will be methods and entry points that give you a high winning probability. But it doesn’t appear often. You need to be patient.
If you are an emotional person, the decisions you make in your daily life come from emotions. Or you are an active one who doesn’t like waiting. Then this is not a game for you. It can take away everything you have from time, beliefs and many other things.
Be very careful when setting foot in this field!