In recent times Binary Options have been the subject of a lot of negative press. The key question is whether this is a true ‘trading system, or merely gambling?
Whether you feel the edge that the trading sites have is unbeatable, or whether insights and knowledge of the markets can help you trade your way to riches – there are still big advantages to using Bitcoin instead of dollars or Euros to trade.
First up, this article looks at how Binary Options trading works and the associated pros and cons. After that, you’ll find some information on how to get started with Bitcoin Binary Options, aimed at those not familiar with crypto-currencies. Finally, some of the big advantages of BTC trading are discussed.[bitcoin-table title=”Top BTC Binary Options Sites”]
To begin with it is important to understand how Binary Options Trading works. This is the same whether you trade in Bitcoin or any other currency.
The ‘binary’ part of Binary Options comes from the fact that the outcome of any trade has only two possible results. You either win or lose.
There are many markets available, and you are betting that the price of a stock, commodity or currency will or will not be above a specific level at a set time in the future. Trades have different durations, ranging from 60 seconds to a week or more. Here is a simple example based on a stock.
The current price of a stock is $1000. You make a bet that the stock price of company X will be higher than $1000 by the close of the markets tomorrow, trading $100 on this outcome. This is a binary result, either the stock will be over $1000 or it will not. If it is, you will be paid $170 (the exact amount will depend on the site and your contract, though 1.7-to-1 is typical). If you lose then you’ll get $15 of your stake back (again, this can vary). If you preferred, you could also bet on the ‘below’ option, betting that the price of the stock will drop below $1000 by the close of markets tomorrow. This outcome has the same pay-outs.
Every time you make a trade in Binary Options, you will be trying to use your knowledge of the markets or individual companies to beat the spread and win some cash. This is not as easy as it seems on the surface, and the sites have a long term edge of up to 7.5% on the trades. Having said that many people do trade professionally, making a profit by staying selective or sticking to an area that they understand well.
Many of the earliest exchanges which allowed you to deposit and trade in Bitcoin only include contracts on the price of Bitcoins themselves. For example you could bet that the price of Bitcoin would go up by 5% in a set period (as measured in dollars). Nowadays, the exchanges which allow you to deposit and bet in BTC have expanded, and offer a huge range of markets including stocks, currencies and commodities.
There are 3 steps to get through before you can make your first Bitcoin Binary Options trade. These are all easy enough once you know what the process is.
First of all you need to buy yourself some Bitcoin. In order to hold this, you’ll need a Bitcoin wallet. There are two types – though the standard online ones offered by major sites including BTC-E and CoinBase are sufficient for general use. You can use those same global portals to buy your first coins (or micro-Bitcoins). Once you gain experience at using this currency, then you will be able to find other places to buy the coins and transfer them to your wallet.
Next you need to select a Binary Options site. Those that accept only Bitcoin will usually allow you to register anonymously (with only an e-mail address). Some other sites which primarily work with mainstream currencies will require some personal information. There are a lot of sites to choose from. It can make sense to do a little background checking before you jump in.
When you are ready to deposit, go to the cashier section of your Binary Options site and hit the ‘Deposit Bitcoin’ button. This will usually give you both a long string of letters and numbers and a QR code for mobiles. The string is the Bitcoin receiver Id – you will use this to transfer the Bitcoin from your wallet to the site. This transaction should be instant, and you’ll be up and running in just a few minutes and ready to make your first trade.
Withdrawing your winnings is just as easy. You’ll put the string which identifies your Bitcoin wallet into the cashier, and click the ‘Withdraw’ button.
Binary Options are gaining popularity at a rapid pace, and by trading in Bitcoin you can enjoy this new form of trading without the transaction fees and document checks associated with using mainstream currencies. However, as with all forms of gambling, be sure to exercise caution, as binary options websites have a larger edge than many other gambling games.