Center Of Gravity Indicator: How To Trade With COG

Center Of Gravity Indicator: How To Trade With COG

Center of Gravity along with other trading indicators are usually used by traders to analyze the asset price and to get a trading signal based on the price movement. With the help of indicators, you can manipulate the price data by using a mathematical formula.

From thousands of indicators, you can use this simple COG indicator wisely, which will bring a new addition in your trading system.

In today’s blog, we will provide basic information on COG indicators, how it works, and how to set up this indicator in your trading platform.

Let’s Start!

What is the Center of Gravity (COG)

John Ehlers is an inventor of Center of Gravity (COG) indicator. He developed this trading indicator in year of 2002. At the same time, he developed the indicator based on the sum of prices over a certain period.

The indicator is also known as COG indicator. With the help of this indicator, you can identify support and resistance level.

On the other hand, this graphical tool is a leading trading indicator to identify the potential turning points of future price action.

Moreover, the creator John Ehlers claims that it has a zero lag. It also has a smooth effect that helps to spot turning points clearly and without distractions.

How Center Of Gravity Indicator Works

The COG indicator consists of two lines. One is the COG line (GREEN) and the other one is the COG trigger (RED). Another name of COG trigger is the Signal Line.

As we mentioned before, these two lines work based on the sum of prices over a specified period. A simple moving average works as an indicator or a signal line, which generates buy and sell signals.

Remember that there are many versions of the COG indicator. One indicator is different from another. You can differ one indicator to another based on how they plot the indicator on the chart.

As per the rules, the standard settings for the indicator are the last 10 periods’ closing prices and a 3-period simple moving average of the COG. However, traders can adjust the settings.

How To Use COG Indicator In Trading

Look at the crossing of two lines that we mentioned before to interpret the indicator. It will show you the potential turning points in price.

There is a formula that traders used to calculate the Center of Gravity indicator:

COG = SUM of closing prices Pn x (n+1) / Sum of closing prices Pn

Consider the signal as a buy, when the COG line crosses above the signal line. When the COG line crosses the signal line, the signal to sell determined for traders.

Moreover, you can easily combine this COG indicator with other indicators.

At the same time, it is important to remember that the indicator will work tremendously when the market is flat. Similarly, it is quite inappropriate to use for a trending market. Instead of this indicator, you can use indicators like ADX to determine the current state.

On the other hand, it is possible to use COG if there is a strong trend. Moreover, Bollinger Bands could also be used.

For all types of traders, do not use more than 2-3 indicators in one chart. It is really important to understand the purpose of each indicator. Trade wisely and try not to receive duplicate signals form the same indicators.

How To Set Up In IQ Option Platform

Setting up the COG indicator is comparatively easy than other trading indicators. Firstly, you have to choose a selected trading platform to apply this indicator. Here, we choose IQ Option’s trading platform as an example.

You just to follow some steps which we mentioned below:

Click the “Indicators” button which is on the left side of the trading dashboard.
Go to the “Momentum” tab
You will find a list full of different indicators. From there, select the COG indicator.
Do not change the default settings and hit the “Apply” button.
Remember, you can easily adjust the period if you understand the principles behind the indicator and the way it is calculated.

The indicator is ready to use.

Try Center of Gravity and see if you can make it a part of your trading strategy.

August 19, 2019January 18, 2024

Trading vs Investing – Which Is More Profitable?

Trading Vs Investment Which Is More Profitable-Binoption

Trading vs. Investing - Which Is More Profitable?

This article will focus on one of the biggest rivalries in the world of finance – which of the two earns you more money.

Keep in mind that these two are not entirely separate from each other. They have their similarities; therefore, you should not get confused between the two.

After reading this article, you should be able to make a distinction between the two, and most importantly, decide whether you want to become an investor or a trader. Ultimately, it boils down to your preference.

To start with, let us define the two first:

Definition of Trading and Investing

Trading is the act of buying and selling of financial instruments via an exchange or a broker. You can trade thousands of these instruments (currencies, commodities, indices, stocks, crypto currencies, etc.)

You can perform trading via small brokers or large exchanges such as the NYSE or NASDAQ. With the advent of the Internet, trading has slowly transitioned into the online world via online exchanges.

Investment, on the other hand, is a process where an individual or a group invests money in something expecting a profitable return from it in the future.

The investment can be done in any sector or any good that has a monetary value. This can include commodities, land, companies, digital assets, various and goods and services.

From the definition, we have found the major difference between the two. Investment includes trading within itself. When you invest in an asset and buy/sell it for profit in the future, you are effectively trading.

As per Binomo, the popular options trading platform, here is what you can expect to earn when investing or earning:

Earnings From Investment

Investors look to invest in the things that earn them a profit in the future. The rate of profit increases in proportion with risk. That means higher profits equal higher risk.

Investors, thus, must be careful in deciding how much to invest, and the amount of risk they’re willing to undertake.

Therefore, they try to find a middle ground between profit and risk. The profit is enough to entice them to invest and the risk level is manageable so that they can recover from the losses.

Say, if the investor decides to allocate $10000 from his capital into various investments. No smart investor would invest his whole capital into one place. Therefore, he diversifies his portfolio and invests in different sectors.

In this case, he invests $5000 into shares of one of the top performing fortune 500 companies, $2000 into various currencies, $1000 in tech-startup, and the rest in gold.

Each arena has a different rate of return. In the best-case scenario, every investment of his turns out to be profitable and he manages to double his capital to $20000.

But in reality, this rarely happens as there risks and uncertainties involved with any form of investment. Say, some of his investments turn out profitable and some end up being a loss, and he earns $13000.

In this case, he scores a net profit of 30%. This is still a decent return. However, there are certain things to keep in mind while investing.

Investing is done on a long-term basis where they don’t need to actively monitor the progress. However, it will take months or even years to get the desired return.

Moreover, investing requires a huge investment of capital, so it might not be everyone’s cup of tea.

Now let us compare this the earnings of a trader.

Earnings From Trading

Traders have a different approach of dealing with their money when compared to investors. They don’t need to start with a huge capital.

A trader can start trading on different markets with as little as $300 and make crazy returns out of it, provided he knows what he is doing.

An advantage traders can enjoy is that they can trade the market in both the directions. That means, when the price of asset is expected to increase, they can buy the asset and sell it later at the higher price.

On the other hand, when the price of an asset is expected to fall, they can sell the asset and buy it back at a lower price.

Thus, even in the case of a falling market, traders can profit off it. This is where the hands of investors are tied.

It all boils down to correctly predicting the market. While investment is time consuming, a trader can expect to earn 90% return on a one-minute trade.

Therefore, it is evident that trading holds many advantages over investment. They can invest less, enjoy higher returns in lesser amount of time, and is it easier to get into trading than it is to become an investor.

In conclusion, for the average bloke out there, trading would be more profitable for him than investing.

To trade on more than 70 global assets, choose Binomo as your preferred choice of broker. Start today with as little as $10.

High Capital Risk Is Involved In Financial Trading

August 8, 2019August 9, 2019

The Best 5 Profitable Day Trading Tips Ever

The Best 5 Profitable And Winning Day Trading Tips Ever

As short-term traders, you need to pick the best day trading tips to obtain profits from the financial market. Traders are more active in day trading market to make a good amount of money. However, the long-term success rate is too low for day traders.

Basically, day trading is a trading style. Traders buy and sell financial instruments within the same day. But, you can perform trading multiple times.

In this article, you will get a collection of day trading tips to make profitable and winning trade. Moreover, these trading principles will help you to improve your trading skill.

So, read the blog to find out whether you are ready to trade day-trading or not.

Is It Possible To Make Money From Day Trading

For day-trading, options market could be a good example. Traders can use various short-term trading methods and strategies to make money.

Unfortunately, many people lose money while day-trading because they have a lack of basic trading knowledge.

It can be the worst trading method if you can’t take good advantage of it. So, it is wise to select a good broker platform to start your day-trading. Because scammers will try to dupe you by making false promises.

The significant advantage of a day trading is that you do not need to invest a lot of money to perform trading. You truly become a master of day-trading strategies that can deliver good profits.

The Best 5 Profitable And Winning Tips

You will find many traders who are successful in short-term trading business and maintain long-term success.

As a trader, it is obvious to have a proper plan and strategy to make each trade profitable. Remember trading is not the primary source of income while you are new in this field.

According to the popular options trading platform IQ Option, here are the best 5 tips that help you to make a unique trading style:

Know The Financial Market

Knowing the financial market is not required when it comes to general trading procedures. However, you have to understand the event types and importance. Because important news and events have a great impact on market movement.

The price of currencies and stock markets fluctuates in the time of news related events. So, before you start trading, try to follow the market in your spare time.

Remember that fundamental factors can still affect the outcome of your deals whether its a short-term trading or not.

It is also important to pick the right trading time to open your deals. Moreover, it is up to you to find the time that best suits your trading style and develop your trading strategies accordingly.

Allocate Funds And Invest Wisely

Allocate your funds wisely before investing money. On the other hand, do not invest a fixed amount while performing day-trading.

Do not put your real money without having a proper trading plan. You should know which trading asset you are going to buy or sell at a particular time.

It is also necessary to know how much you are going to trade. Experienced traders always invest less than 5% of the total balance on a single trade. Proper asset allocation will protect traders from losing streak.

Never Stop Learning

Knowledge is the key to success. From thousands of trading instruments, you have to choose a few profitable instruments to trade.

Stay up to date with trading news, events, and also trading guides. You will find online trading books from where you can collect your basic knowledge of trading.

On the other hand, brokers offer a demo account for traders. Via those practice accounts, you can implement your knowledge.

Manage Trading Risk

For day-traders, it is the high time to develop a risk management strategy. Because risk management strategy ensures traders an amount that they can afford to lose.

Moreover, for active traders, it will help them to cut down their losses. Use both technical and fundamental analysis to manage your trading risk.

Control Trading Emotions And Stay Realistic

Goals are an important part of the trading life. But, you need to be realistic. The trading result will depend on your trading experience and strategy.

No one can guarantee you that you will win all the trades. Here, a trading journal can help you by tracking your all trade. Follow your historical records and pick the best strategy that helped you to make profits in the previous trade.

Remove trading emotions and learn from your mistakes.

Finally, knowing what you are going to expect from the market will lead you a better trading result. These tips will definitely help you to know your capability and understanding the basics of good trading.

So, apply these tips in your daily trading activities.

July 28, 2019October 25, 2022

Weekly Market Analysis – Forex, Commodities, Stocks – Binoption

Weekly Market Analysis 28 July-Binoption

Weekly Market Analysis - Forex, Commodities, Stocks

We present to you our weekly market analysis on the most popular trading markets over the globe.

This market news involves the forex, stock, and commodities market and is powered by BDSwiss’s analysis team.

Starting with the EUR/USD pair:

EUR/USD Pair Expected To Drop Further

The European Central Bank (ECB) kept its interest rates stable during the Interest Rate meeting held on Thursday.

However, easing of the monetary policy was hinted by President Mario Draghi, who is to be replaced by successor, Christine Lagarde.

Mario, however, didn’t provide great details of this future monetary policy. The gist is that the EUR is not heading in the upward direction.

Juncker Shuts Down Brexit Deal Renegotiation

Jean Claude Juncker, the president of the European Commission has made it clear in his statement that there would be no chance of the Brexit deal renegotiation.

Juncker believes the existing deal is

“the best and only deal agreeable”.

Hence the chance of a no-Deal Brexit is becoming more probable.

USD To Strengthen Further

The USD is a good position currently. The pair to watch out carefully for would be the US/GDP pair. Depending on the market movement, the USD could accelerate further up high.

On the other hand, EUR is expected to drop lower over the course of the week as its economy lowers.

The AUD follows the similar sentiments as the EUR due to the statements from the RBA governor Lowe regarding his commitment to keep strong cutting rates.

Oil Price Soar Higher

Oil prices saw gains amidst the Middle-East tensions with Turkey being the latest country to be added into the mix.

Turkey faced pressure from the US to not deploy the Russian S-400 or face consequences

Gold Recovers After Slump

Gold recovered back to the crucial level of $1400 after it slumped hard by $20 on Friday. It was last seen trading at $1406, gaining half a percent.

Update: The XAU/USD is currently traded at $1418, a 0.28% gain.

Stock update: TSLA falls rapidly, Boeing biggest DOW loser

Tesla shares dropped a mammoth 13.6% lower following poor second-quarter results. The Dow dropped by 0.47% with Boeing being its biggest loser.

The drop is correlated to the schedule revision due to unavailable 737 Max jets.

That’s it for this for this week’s market analysis. Stay updated with us for more market news, analysis, and events.

You can trade the aforementioned assets with BDSwiss broker, the most reliable and trustworthy broker for Forex and CFD trading.

High Capital Risk Is Involved In Financial Trading

July 21, 2019October 10, 2022

Facebook’s Cryptocurrency Libra Explained

Facebook’s Cryptocurrency Libra Explained

For the last few weeks, the crypto space has been filled with news of Libra. And along with this name, you might have seen Facebook associated with it. So what’s the deal?

Well, Libra is Facebook’s new cryptocurrency. With all the hype and talk going on about it, let’s find out more about this crypto asset.

To start from the beginning, Facebook announced in May 2018 that it was starting a blockchain division that would be led by David Marcus. The reason to open this division was to research cryptocurrencies on a deeper level.

A few months later on December 2018, Facebook announced that it would be building a cryptocurrency for Whatsapp transactions. The crypto would be a stablecoin that would facilitate users to transfer money using Whatsapp.

Fast forward to June 2019, Facebook formally announced Libra and released a whitepaper that starts with Libra’s mission:

“Libra’s mission is to enable a simple global currency and financial infrastructure that empowers billions of people.”

The coin is expected to launch in 2020. The whitepaper starts by explaining the role of internet and mobile broadband in making information and knowledge accessible to billions of people. And there are still 1.7 billion people who lack access to a traditional banking system.

Basically, to summarize, they want to empower these people using their cryptocurrency. The main advantage Facebook has over other crypto projects is their existing 2+ billion user base. They can channel and advertise their crypto through their platform and expect mass adoption.

Libra Features

Libra has some distinctive features that set it apart from a lot of crypto coins. They are:

It is governed by the Libra Association but co-founded by Facebook
It is backed by a reserve of values that gives it an intrinsic value
Libra is built on a decentralized, secure, and, scalable blockchain
A unit of this currency will be called “Libra”.
Uses Move programming language to code smart contracts

But you might be questioning how is different from other cryptocurrencies. Let’s take a look at the familiarities between other cryptos. For instance, Libra will be completely digital like Bitcoin and other coins.

And Libra transactions will be recorded on the blockchain, which is a software ledger that is available to the public. Initially, there will be only 100 members that will manage the blockchain, but they plan to add more members in the future.

The main difference between Libra and other cryptocurrencies is that Libra will be backed by reserve assets. These assets will give it intrinsic value, and hence it won’t be volatile in nature. In contrast, Bitcoin and other altcoins are quite volatile in nature.

The assets will back its value is uncertain at this time, but the Libra Association has mentioned including “bank deposits and government securities in currencies from stable and reputable central banks”.

You won’t be able to mine any Libra. Its supply will be determined by its demand. If people want more Libra, then the association will buy more of the underlying assets and create Libra. Similarly, if they wanted out of Libra, the association would pay them and destroy their share of the Libra.

Now that you know about Libra, you can be a part of it by mid-2020 and get your hands on it if you are interested. Whether you trust Facebook or not, they clearly have shaken up the crypto space with this announcement.

July 8, 2019July 8, 2019

IQ Option Platform- Instant Invest With PWA App

IQ Option Platform PWA App-Option Invest

IQ Option Platform- Instant Invest With PWA App

IQ Option is a regulated trading platform which offers many features for traders. The platform offers numerous tradeable assets with various trading indicators. Recently, the broker came into this market with a new and progressive trading application, which will help traders in many ways.

Similar to the Android and iOS application, the platform allows traders to trade with a new trading app named Progressive Web App (PWA). So, as a trader, you can enjoy a new landing page for this application.

The major advantage of this trading app is that you don’t need to download this application in your trading device. You can install by clicking the “Add to home screen” button in any browser.

Let’s have a look at a complete overview of PWA application.

What Is Progressive Web App (PWA)?

A progressive web app (PWA) is an application that runs in a web browser. It looks and behaves like a native mobile app, but it doesn’t require the user to visit an app store or download any files locally. So, you can only add this application to your browser to run.

Moreover, the application is reliable, fast, and engaging. On the other hand, PWA application can be used in only an Android device or iOS device.

But what is the reason behind launching this application for IQ Option’s traders?

IQ Option Trading App - PWA Platform

As we all know, non-regulated users are not able to trade binary options from IQ Options trading app (Android and iOS). PWA application will allow traders to trade binary options from anywhere at any time. As we mentioned that you don’t need to download it in your trading device.

So, it is understandable now that trading with PWA app will bring benefits for traders.

Let’s have a look at the advantages of Progressive Web App (PWA) application:

Traders can trade binary options either they are regulated, or non-regulated users
Trading is possible without downloading IQ Option app in the trading device
Traders have to install the application to the web browser to execute a trade
The trading application is open for all countries
PWA application is fast and secure

Why Invest With IQ Option

IQ Option is an award-winning platform where any types of traders can execute trades. You can customize the interface depending on your preference. Moreover, it is possible to change the chart type along with the color and theme.

A demo account is available with full of virtual money to test your investing strategy. It will cost no money and also free of risk. To start trading with a real account, you can deposit a minimum amount of $10 without any depositing fees.

Withdrawal is possible using a wide range of available payment systems. So, no need to wait for a long time to withdraw your profits.

A support team is always there for you with your native language. You can ask any type of question regarding trading platform and knowledge. They are always there for you to help.

So, get ready to enjoy free access to the investment world with IQ Option.

July 2, 2019March 24, 2020

Why Do Binary Option Traders Need A Trading Blog

Why Do Binary Options Traders Need A Blog-Binoption

Why Do Binary Option Traders Need a Trading Blog?

Binary Options are exciting form of trading due to its features. They are simple to understand, easy to execute and offers a lot of variety to its traders.

You can trade multiple assets as binary options with varied expiry time ranging from a few seconds to few months.

All of this variety means variety in trading methodologies, strategies, and overall approach. With such diversity, traders might often get confused regarding their trading.

One of the most important aspects of trading is to be aware of what’s happening in the trading world currently.

This is where a trading blog comes into play. A blog keeps traders updated on the latest trading news around the world as it happens so they can take advantage of it.

News traders highly benefit from as they act on important global events that impact the assets they’re trading.

This is how they stay ahead of the curve and profit from trades others don’t foresee as an opportunity.

It’s not just recent news that is posted on a blog. A good trading blog contains all sorts of information that might benefit a trader.

This can include different trading strategies, trading tips and guides, broker updates, general trading information, and much more.

Some blogs even have insights on live trading so readers can follow the trading journey and learn from it.

At Binoption, we try to keep our topics varied so readers get refreshing content every week. For example, our blog posts for the past few weeks were as follows:

As you can see, we have covered everything from market overview to binary options educational content. There is also trading news, broker feature update, and stock market overview.

The best part about a trading blog is that it is absolutely free to read. It takes no more than 10-15 minutes to read a blog post but the benefits are numerous.

This knowledge gain directly translates over to your trading performance. You are able to make better trading decisions and act upon it.

Binoption Blog Gets Featured in Top 20 Binary Options Blogs

One reason for us to celebrate is that our blog got featured in Feedspot’s list of Top 20 Binary Options Trading Blogs. Such an achievement helps us work even harder and present you the best binary options content. In the future, we promise to deliver our readers more binary options tips, news, broker updates. Stay in touch with us and enrich your binary options trading journey. Happy trading.

June 17, 2019October 25, 2022

Weekly Worldwide Market Overview (US, China, Japan & More)

Weekly Worldwide Market Overview

This is Binoption’s first installment of our weekly worldwide market overview. Here, we will provide a summary of what’s going around in the trading markets over the week and some future insights as well.

The markets are divided into different regions such as the US, Europe, Japan, China, and other
markets.

Without further ado, let’s get started with the market overview.

U.S. Market Overview

Equities

Equities lose momentum this week. The week started strong as stocks boomed as a result of the deal between US and Mexico to prevent tariffs.

This momentum was lost however, later during the week. S&P 500 and Dow Jones Industrial Average ended up with moderate gains.

Coincidentally, the IT stocks started strong and withered down as the week progressed. These stocks were boosted by the news of salesforce.com, a leading CRM website acquiring Tableau Software, a data analytics provider.

Inflation

Weak inflation data helps the Treasury yields fall, with the yield on the 10 year Treasury note falling below 2.10%.

The trade war between U.S and China and the political tensions in the Middle East further benefited the Treasuries.

Energy Sector

The energy sector were pretty volatile during the week. The U.S crude oil dropped by 4% and news of oil tankers getting attacked in the Gulf of Oman resulted in a rally that saw a rise in price.

European Market Overview

Stock Market

The stock market flourished as a result of rising oil prices. STOXX, FTSE 100, DAX, and FTSE MIB all gained points

UK Conservative Party Poll

Former Foreign Secretary and London Mayor Boris Johnson won the Conservative Party’s first round of voting to replace the current leader Theresa May.

Johnson finished with 114 of the 313 votes cast. A further two more ballots would be cast before the final two candidates are announced.

Forex

The British Pound lost 1% against the USD due to the political uncertainty in the country. Another reason is the decline in car production in the U.K causing an economic decline.

Chinese Market Overview

Stock Market

The Chinese stocks showed miniscule growth as the Shanghai Composite Index grew 1.9% and the CSI 300 added 2.5%.

The industrial output rose by 5% in May and fixed asset investment rose by 5.6%.

Japanese Market Overview

Stock Market

Japanese stocks saw a positive change this week. Nikkei 225 gained 232 points meaning a rise by 1.1%. TOPIX gained 3.5%, which is moderate gains. The Yen stands at ¥108.38 per USD

GDP

Japan’s gross annualized GDP increased to 2.2%. Meanwhile Japanese exports fell for the fifth consecutive month in April.

Other Markets

Turkey

The stock market in Turkey fell by 3.2%. The reasons for this includes the increase in the oil prices due to the aforementioned attacks on the oil tankers and the tensions between the US and Turkey over Turkey’s purchase of Russian military hardware.

Mexico

Mexico and the US have come into an agreement to avoid tariifs. However, the Mexican stocks had a negative return of 0.4% for the week.

Brazil

Brazilian stocks saw minor changes according to the Bovespa Index.

The pension reform, if passed and signed into law, is expected to save 913 million reals over the next 10 years for Brazil.

That’s it for this weeks market overview. If you trade stocks, currencies, indices, commodities, and more, feel free to check out our broker section to find the best trading brokers.

Until next week, trade smart, invest wisely.

June 13, 2019January 22, 2023

Difference Between Various Option Types

Difference Between Various Option Types - Vanilla vs Binary vs Digital Options

There are different types of options and each has some unique characteristics. We have the regular ‘vanilla options’, and then there are others like binary options and digital options.

In reality, there are other exotic options too but we will focus on these three types of options as they are the most traded. Options are preferred over other trading instruments due to their simplicity in trading and ease of getting started.

We will now describe each option type in detail so you can distinguish between their features. Knowing this will help you determine which one to trade. Ultimately, choosing your preferred option type boils down to your trading preference.

Let’s start with vanilla options.

Vanilla Options

These are also referred to as classic options as they offer traders no extra features or characteristics and hence the term ‘vanilla’. These are the simplest type of option and the first option type among the rest to be traded.

They are not customizable as others, and hence, different option types were developed for specific needs, and they are more complex than classic options.

Vanilla options give the trader the right to buy or sell an asset at a set price at a certain date. This set price is known as the strike price. The strike price is the price at which both the buyer and the seller agree to exchange the asset.

As a trader, you can buy or sell the underlying asset depending on the market movement of the asset. If you think its price will increase, you will buy the asset, and if its price will decline in the near future, you will sell the asset.

To buy an asset, you need a call option, and to sell an asset, you need a put option. Keep in mind that call-and-put options give you the right, not the obligation, to buy or sell the underlying asset.

Note that you can either buy or sell these options. To buy an option, the buyer has to pay the seller an amount. This amount is known as the premium and is the only risk that is borne by the buyer. But the seller carries unlimited risk. The premium amount increases with time and volatility.

The payout in vanilla options is variable. It depends on the underlying price of the asset.

The buyer is known as the holder and the seller is also known as the writer. Every options contract has an expiration date. The latest date on which the option can be exercised is known as the expiration date.

Vanilla options are quite popular in the U.S. Here, the American style of options is followed. You can exercise your option on any day before the expiration date. While the European style of option trading allows you to exercise your options only on the day of expiration.

Typically, vanilla options expire once a month.

These are the basics of Vanilla options. Let’s explore binary options now.

Binary Options

Binary Options are referred to as ‘all-or-nothing’ options. Binary means either 0 or 1. And here, it implies two outcomes. You are either “in the money”, or “out the money”. You either win a payout or gain nothing.

Here, the payouts are known beforehand and do not depend on the underlying price, like in the case of vanilla options.

This makes binary options simple and easy to execute. In binary options, there are call and put options too and serve the same function.

In a call option, you are “in the money”, when the market price of the asset is above the strike price, and in put option, you are “in the money” when the market price of the asset is below that of the strike price.

Depending on your market analysis, you will choose either buy or sell the underlying asset. Keep in mind that the strike price of the asset is fixed.

Your payout depends on the payout percentage of the asset. This is determined by your broker and the type of asset you choose for trading.

The asset range in binary options quite varied. You can trade anything from forex pairs to cryptos to indices, commodities, stocks, and more as binary options.

Binary Options are neither European nor American options in nature, unlike vanilla options. All binary options is concerned with is the fixed payout.

Another major difference between these two is the expiration time. Like mentioned above, vanilla options expire once a month. On the other hand, binary options have varied expiry times ranging from a few seconds to many months.

This offers traders more flexibility in deciding how long their trades should last. This is not possible with vanilla options unless you are trading American style options.

Binary options are quite popular in Europe and there are regulatory bodies like CySEC which now regulate the binary options broker operating in Europe.

Now that we are done with the differences between these two option types, let’s take a look at another option type which is known as digital options.

Digital Options

Digital Options are a relatively new type of options that were introduced in the market by IQ Option and now Olymp Trade and other brokers provide it as well.

Digital Options combines the features of binary options and classic options into one and provide traders an attractive proposition.

The striking difference between digital and binary options lies with the strike price. In binary options, the strike price is fixed. In digital options, the strike price is variable and can be chosen by the trader.

The farther the strike price is away from the market price, the profit potential and risk increases as well. This allows of multiple levels of risk exposure to traders and thus caters to all kinds of trader.

The payout in digital options is far more rewarding than binary options. The profits reach up to 900% with digital options and so does the losses. This makes them 10 times more rewarding and riskier than binary options.

Another feature of digital options that makes them similar to classic options is that they can be sold before the expiration date. This will help traders manage their risk better.

There are other exotic option types such as barrier options, Asian options, Bermuda options, basket options and many more, but our focus was to touch on the most popular types of options that are traded.

Now that you know the difference between these option types and know the distinctive features of each, you can choose which one suits your trading style and trade them.

June 9, 2019November 28, 2019

Denmark Bans Binary Options To Retail Clients Permanently

Denmark Bans Binary Options Permanently-Binoption

Denmark Bans Binary Options To Retail Clients Permanently

Denmark’s financial regulatory body, DFSA (Danish Financial Supervisory Authority) plans to ban the trade of binary options to retail traders.

As per their claim, binary options are too risky and complex for retail investors. This move should come as no surprise for European traders. Other countries (U.K, Austria) have also taken similar measures against this financial instrument.

DFSA believes more and more investors are losing money on binary options. And the brokers that facilitate binary options trading often resort to breaking rules and regulations.

This isn’t the first time Denmark has taken a stance against binary options. As earlier, in 2016, they identified the dangers of binary options and compared it to gambling.

Denmark Bans Binary Options: Following ESMA's Footsteps?

Another prominent regulatory body to ban binary options is ESMA (European Securities and Markets Authority). Earlier they re-extended the ban from April to June 2019. The ESMA ban restricts the marketing, distribution, and sale of binary options to retail clients.

Keep in mind that the ban imposed by ESMA is a temporary one. DFSA, on the other hand, wants to permanently ban binary options in order to protect the retail investors.

DFSA also believes that the risk posed by binary options will continue to persist unless every national authoritative body permanently bans binary options trading.

These rules are come to effect in the early stages of July. From there on, there will be no marketing, distribution, and sales of binary options to Danish retail traders. This ban covers traders from and in Denmark, and also Danish security dealers and dealers operating in Denmark.

A Controversial Trading Instrument

Binary Options are financial instruments that have two outcomes, hence the name. You predict the price of the asset will be above or below a certain price point after a certain period of time.

You don’t have to pinpoint the exact price, just speculate if it is going to be above or below a certain price level.

If you are accurate in your prediction, you will win a payout. The payout is fixed and is known to the trader beforehand.

Binary Options Brokers offer attractive payouts ranging from 60% to 90%. This means if you invested $100 in trade and predict accurately, you get $180 if your payout is 80%.

Keep in mind that if you get your prediction wrong, you get nothing in return and lose your initial investment.

I get why Binary Options are compared to gambling but I personally believe these two are different things. Gambling involves testing your luck while trading binary options is a different ball game.

Traders analyze the market, carefully choose the asset, and perform fundamental and technical analysis, and then place the trade.

While binary options are getting banned in some countries, other countries are accepting it with open arms. The future of binary options doesn’t has a certain direction but it certainly is gaining more and more traction.