Making Money with Binary Options in Crypto
Short-term price predictions may seem like a no-brainer, but succeeding with binary crypto options requires a strong tolerance for risk and loss. This article breaks down all the essentials for getting started, including platform selection and expert tips on managing risks.
What Are Binary Options and How Do They Work?
Binary options are a financial derivative that lets traders wager on whether the price of an assetâstocks, currencies, indices, or cryptocurrenciesâwill move up or down within a fixed time period.
The term "binary" refers to its two potential results: either the price goes higher or lower. This straightforward structure is often likened to a coin toss or betting on red or black at a casino, with an added layer of a time limit.
Because of their simplicity and perceived resemblance to gambling, binary options have become a beginnerâs favorite, though theyâre notoriously unreliable as a trading method.
Binary options are divided into two categories:
- Call Option: A bet that the price of an asset will go higher than the optionâs purchase price.
- Put Option: A bet that the price of an asset will fall below the optionâs purchase price.
If your prediction holds true, you make a profit. If not, you lose the entire amount wagered. This âall-or-nothingâ principle defines the high-risk nature of binary options.
Unlike binary options, spot trading typically involves manageable and limited losses, whereas margin trading carries the risk of losing more than the initial investment.
Some trading platforms now offer âdigital options,â which are akin to binary options but introduce a strike price parameter. Traders have the flexibility to set a strike price near the current market level or choose one further away. The farther the strike price is from the current level, the greater the potential payout.
With potential returns as high as 500%, digital options have gained traction among traders who thrive on high-stakes strategies.
Binary options: A gamble on price trends
How to Trade Binary Options
Engaging in binary options trading with cryptocurrencies is relatively straightforward.
Hereâs a step-by-step guide:
- Sign up for an account on a binary options trading platform.
- Deposit funds, ensuring the amount meets the minimum threshold set by the platform.
- Pick an asset to trade, like Bitcoin.
- Conduct your own market analysis to understand the cryptocurrencyâs current state.
- Forecast price changesâdetermine whether the price will rise or fall in the immediate future.
- Set the expiration time for the option, whether itâs 1 minute, 5 minutes, or 4 hours.
- Buy the option that aligns with your predictionâa call option for a rise or a put option for a fall.
When placing a wager, consider these strategic approaches:
- Trend trading: Go with the flow and bet on the price sustaining its current momentum.
- Reversal betting: Anticipate the price pivoting in the opposite direction after substantial movements.
- Hedging technique: Place both call and put options simultaneously within a single timeframe to reduce risk exposure.
- Pattern-based trading: Look for confirmation signals in candlestick patterns before entering a trade.
- News-triggered trades: Act quickly during the release of key macroeconomic data to capture market volatility.
A correct prediction earns you a fixed return, usually calculated as a percentage of your initial investment and disclosed upfront. If your prediction fails, you lose the full amount of your investment.
Binary options are short-lived by design, typically lasting from several minutes to a few hours. Most platforms offer users the flexibility to specify the expiration period.
Choosing the Right Binary Options Broker
Before committing to a broker, evaluate these points:
Keep in mind that binary crypto options operate in a largely unregulated space. This means your funds and personal data are not fully safeguarded, and you trade at your own risk.
- Minimum deposit thresholds;
- Regulatory credentials and licensing;
- Passive income options, such as referral bonuses;
- Demo accounts for hands-on experience and functionality testing;
- Deposit and withdrawal terms and conditions;
- Applicable fees or commissions;
- Access to educational content, expert insights, and analytical tools.
Binarium
Binarium markets itself as a broker geared toward those new to trading. The platform supports binary options trading and allows deposits in euros and US dollars.
While it provides some useful features, there are also areas where it falls short.
What Binarium Offers:
- A highly intuitive interface for traders of all levels;
- Low deposit requirements ($10) and minimal trade size ($1);
- Access to copy trading;
- Robust technical analysis tutorials;
- Demo accounts for risk-free practice;
- No hidden fees or withdrawal deductions.
Drawbacks of Binarium:
- Limited asset selection;
- A small number of technical indicators available;
- Missing key options types like Touch, Range, and Ladder, which add versatility to trading;
- Overstated earning claims of 90%, with real returns often around 50%;
- No evidence of licensing on the official website.
Binarium is a good fit for beginners who are just getting started with binary options trading, prefer uncomplicated platforms, and value the ability to copy the trades of more successful users.
For professionals, the platformâs limited range of tools and features may fall short of expectations.
Pocket Option
Pocket Option is a broker geared toward the general market, offering accessible mobile and desktop platforms for binary options trading on a wide selection of assets.
With its low deposit requirement and social trading features, the platform is an attractive choice, though deposits are only available in US dollars.
Pros of Pocket Option:
- Low entry barriers: $5 minimum deposit and $1 trades;
- Copy trading feature to follow experienced traders;
- Incentives like referral programs, cashback, and welcome bonuses;
- Extensive asset selection and diverse payment methods, including Visa, Mastercard, and Maestro;
- Multiple account types tailored to different experience levels (Beginner, Professional, Expert);
- Multilingual interface;
- Free demo account for practice.
Cons of Pocket Option:
- FMRRC and MISA licenses cited by the broker lack international credibility and serve more as formalities.
- Customer support is slow, with delays of up to 48 hoursâan unacceptable lag in the high-speed binary options market.
- Inadequate educational content. Beginners must seek external resources for market analysis and trading strategies.
- Reports of hidden charges, widened spreads, and unexpected trading volume requirements, which are often disclosed only after trades are executed or withdrawal attempts are made.
As a platform, Pocket Option is easy to navigate and offers a rich selection of tools and settings. However, for users who frequently interact with customer support, the service may come across as unresponsive or difficult to work with.
Additionally, the absence of built-in educational materials means that traders must rely on external resources, which cannot be cited legally in disputes with the company.
Deriv
Deriv (formerly operating as Binary.com) is a seasoned provider in the online trading space, known for its wide array of offerings, including binary options and derivatives like CFDs.
The platform is backed by a solid reputation and is regulated by multiple authorities, such as the Malta Financial Services Authority (MFSA).
Users can deposit funds using both fiat currencies (USD, EUR, GBP, AUD) and cryptocurrencies (BTC, ETH, LTC, BCH, USDT).
Strengths of Deriv:
- With over two decades of experience, the company has proven its stability and dependability.
- Regulated by MFSA, offering users enhanced security.
- An extensive range of assets, from forex and cryptocurrencies to commodities, indices, and synthetic indices.
- Flexible trading options with customizable expiration times to suit individual strategies.
- Affordable entry points: $5 minimum deposit and trade size. That said, small stakes may lead to frequent losses and impulsive trading.
- Features such as API access and algo trading expand possibilities for advanced users.
Weaknesses of Deriv:
- Delays in customer support responses and lack of live chat functionality.
- Periodic technical issues, possibly caused by high server loads.
- A challenging interface for those new to trading.
- Prolonged withdrawal times.
Deriv appeals to experienced traders thanks to its comprehensive set of tools and support for complex trading strategies.
Newer traders and those with smaller budgets will appreciate the platformâs low deposit requirements and competitive commissions.
That said, Deriv isnât the easiest platform to master. Its emphasis on short-term speculative trading requires swift reactions and a strong grasp of market behavior to succeed.
Binary Options: Wealth Generator or Trap for the Unwary?
For many trading novices, a common question arises: can binary options truly create wealth?
The reality is more complex than a simple yes or no. While binary options offer the potential for quick profits, the majority of users on these platforms tend to lose money rather than gain it.
What Makes Binary Options So Risky?
A basic understanding of game theory or probability theory reveals why binary options are among the riskiest trading tools. The chances of losing your entire investment are far higher than with regular margin trading on cryptocurrency exchanges.
Consider this scenario.
You simultaneously execute the same trade on a cryptocurrency exchange and a binary options platform, yet the outcomes could be polar opposites!
On the exchange, a trade predicting Bitcoinâs price increase will be profitable as soon as it reaches your take-profit level. On the options platform, the trade settles only at the expiration time. This means that even if your analysis is accurate, a brief dip in price below your entry point at expiration could turn a winning trade into a loss.
Accurately predicting price movements like these requires a solid grasp of financial markets, the ability to analyze data effectively, and well-honed trading strategies. Blindly following your gut or taking advice from self-proclaimed Telegram âexpertsâ is a recipe for disaster.
Emotional factors also play a huge role in binary options trading. The experience can resemble gambling, triggering addictive behaviors or âtilt,â where traders become desperate to recover losses.
If youâre not ready to face the risk of losing your entire capital or donât know how to adapt strategies to changing market conditions, itâs wiser to stick with more straightforward and traditional investment options.
