Binary option trading requires basic knowledge, patience and common sense. In this article we guide South African traders through all the steps necessary to place a successful trade in binary options.
As always, we recommend trading only with regulated and trusted brokers. Read more in our IQ Option review about added benefits such as a free binary options demo account, $10 minimum deposit and only $1 minimum investment. For more brokers, see our binary options brokers page. Let’s get started explaining more about binary option trading.
How Does Binary Options Trading Work?
Binary options are nothing else but a prediction of an asset’s price direction in a pre-specified amount of time. The price doesn’t have to go too high or too low for traders to make a profit. All they need to do is predict whether the closing price will go higher or lower than the opening price as shown in the figure above.
When you are engaged in binary option trading you must consider your binary investment trading as speculation. You are speculating in the direction of the market short term. You do not worry about Microsofts 10 year strategy and how they perform against the market in the general long term. You do not need to consider whether Tesla will actually take over the world as the current stock prices suggest that they will 20 years from now.
You have to come to the realisation that you are speculating and not investing in the traditional sense. The fact you bid on a positive trend of a certain equity, commodity or forex pair doesn’t mean you want to put your life savings into it. You could be reading Q1 results for BMW and quickly realize that the Corona virus didn’t in fact cause as much harm as the market in general believed. Therefore you can buy a CALL option END OF DAY in the belief that you read the results and market expectations better than the average person.
Binary Investment Trading
Your binary investment trading strategy has to be concise and fit your ability and time to follow the market news. If you see oil being traded for negative amounts as we saw during the COVID19 crisis you might buy an END OF MONTH call option in the beliefs that the market will recover during the given time period. You can also think it is only the start on something much worst and then buy a PUT option, which means you think the market price has to be even lower.
We on Binary Options South Africa are not investment advisors but only here to explain you have binary option trading works technically. We believe that binary trading options are ideal to learn more about market movements, especially if you do not have the time and energy to make 10-20 years plans for your retirement funds and look for something short term with higher risk.
What is Binary Trading?
Binary trading is named this way because the outcome is binary. There is only two options Up or Down. These binary options are called “Call” and “Put” when trading or “Higher” and “Lower”. If the price stays the same, then traders receive their investment back. If the trader predicts correctly, then the profit made can go up to 91% depending on the broker and the asset. On the other hand, if the prediction is wrong, then the trader loses the investment.
Binary Trading Broker
Registering with most binary brokers takes only two minutes. All you need to do is fill in the boxes with your email and a password. You also have the option to continue with your Facebook or Google account or simply fill in your personal details like name and surname. Some traders also opt to trade with the best binary robots, however we have to alert you that IQ option robot is closed not because of a IQ option scam, but because the CySEC regulators did not want them to have a binary option trading robot as part of their investment instruments.
Binary Trading Options Step Guide
Practice binary trading with a free demo account available to South Africans, before switching to a live account in order to get familiar with the binary trading platform. In this section there is a detailed explanation on how to place a successful trade with the legendary Binary.com minimum deposit of $5. Once you feel ready you can switch to live binary trading which is done exactly in the same way as explained below.
1. Select Asset
To start with, traders need to select their asset from the drop-down menu as shown here. A large selection is available as always by IQ Option.
2. Set the Investment Amount
Then, set the investment amount as shown below by clicking on the amount box at the right-hand side of the trading platform. This can be as low as $1 so that novices can start trading with a low investment capital.
3. Set the Expiry Time for the Binary Option
Once the investment amount is set, traders need to select the expiration time. There are binary options available from 60 seconds to the end of the month as shown below. You can even see that the profit percentage changes according to the expiration time. Longer expiration times will offer lower returns.
Once you choose the option’s expiration time then, you can place as many binary trades as you wish. It is usually possible to close a trade early however with a reduced win rate in case you are ITM (in the money).
4. Choose the direction (Higher or Lower)
This can be done by choosing the price direction, either by clicking on the higher button if you believe that the price will go higher than the opening price.
On the other hand, traders can click on the lower button if they believe that the closing price will be lower than the opening one as shown here.
5. Wait for the Binary Option to Expire
Finally, you wait until the expiration time comes and if you have won then, the amount will be shown in a green box as shown in the picture below.
Binary Option Trading Conclusion
We believe that binary option trading is a fun way to enter the market without being required to deposit huge amounts like the banks typically require to start trading on the stock market. Making a small deposit even in South Africa is simple and require only few minutes of your precious time to begin your binary options trading adventures.
So what is left? After you have made a broker account, simply click on the green deposit button at the right top corner as shown above and follow the instructions. You are now soon ready to start trading binary options.
Risk Warning: As always, we inform our readers that trading involves risk. Always invest funds that you can afford to lose.
We make it our mission to not recommend anything but the best – which, according to industry experts, is IQ Option, the top regulated broker for your country with a minimum deposit of ONLY $10!
Between 74-89 % of retail investor accounts lose money when trading CFDs