How is Bitcoin trading organized through binary brokers?
When working on crypto exchanges, a transaction means a real purchase of cryptocurrency, the trader becomes its owner. The crypt is withdrawn to the wallet or sold later, making a profit due to changes in its exchange rate.
Binary options brokers do not have access to crypto exchanges. By concluding a transaction, for example, on the BTCUSD instrument, the trader does not become the owner of BTC. There is no option to withdraw crypto to your wallet.
A binary option on Bitcoin means a dispute between two parties (trader and broker) about what the exchange rate will be at the expiration date of the contract. If the trader is right, after the transaction expires, 80-90% of the bet is credited to the account; if the option is closed “out of the money”, 100% of the bet is lost.
Binary Options - Bitcoin
With the popularity of Bitcoin and its acceptance as a currency, many binary options platforms have started adding BTC as one of the currencies for trading.
This has also contributed to the growth of binary platforms as well as the widespread acceptance of Bitcoin as a currency. Most brokers only offer it as a currency pair against the US dollar.
Bitcoin Binary Option, how does it work?
Bitcoin allows you to create smart contracts for binary options. The agreement itself holds funds for safekeeping and on a specified date, upon expiration of the period, pays all funds to the address of the Bitcoin wallet that was winning.
This allows you to completely eliminate counterparty risk. The solvency of the option issuer does not matter if the funds are already fixed in the contract itself. It does not matter if the company or party that issued the option disappears, defaults, or wants to change the terms of the contract. Eliminating counterparty risk allows long-term financial contracts to be concluded with minimal trust.
Smart contracts rely on an oracle to check external conditions.
The screenshot below shows 5 popular Bitcoin binary options exchanges:
Working hours and payments
Trading stops on both the Forex and stock markets on Saturday and Sunday. A number of brokers offer work on synthetic graphics, for example, the volatility index, but this is an artificial tool, it is created by the broker himself.
The situation with cryptocurrencies is different; cryptocurrency exchanges act as liquidity providers, and they do not have weekend breaks. Only short pauses in work for maintenance are possible. Therefore, you can work with BO on Bitcoin and other cryptocurrencies on Saturday and Sunday. The description of assets on brokers' websites indicates an hour break on Sunday.
As for payments for transactions closed “in the money”, for BTCUSD even in the evening on weekends the profit remains at the level of 75+%. Of course, this also depends on the broker, but payments are tied to volatility, and for Bitcoin paired with the dollar, long-term calm is rare.
This is the key advantage of working with BO on Bitcoin. On weekends, trading is not interfered with by your main job, and payments allow you to trade according to your usual strategy.
Bitcoin Binary Options Trading Strategies
Cryptocurrency lends itself to both technical and fundamental analysis. Therefore, today we will look at both methods of trading. However, let's say right away that we would recommend working on news and rumors.
Bitcoin trading on binary options based on news
News trading is almost never a good idea for news trading. When trading currencies, stocks, and indices, fans of fundamental analysis enter into medium- and long-term transactions. It is extremely rare to talk about trading with expiration, say, per hour. BO transactions on bitcoin are no different in this regard.
News and the level of demand for Bitcoin are the main price drivers. However, in this case, it is better to open transactions with an expiration date of at least several days.
Please note that the world of cryptocurrencies does not have its own economic calendar. Therefore, we recommend that you regularly monitor news portals to stay updated. Now let's look at the chart to see how news affects quotes.
For example, let’s take 2 news: negative and positive.
Negative. On September 4, 2020, news appeared that China banned ICOs (initial token sales that help startups and businesses raise money for the development of their projects). Now let's see how this event affected Bitcoin quotes.
You see a BTC/USD chart with the H4 time frame, and the black vertical line marks the date September 4th. And you also see how quotes began to fall. You may think that it is not news that is to blame and the asset’s quotes began to decline a couple of days before. But it is not so.
Initially, the price reached the psychological level of $5,000 for the first time. Naturally, after this, many began to sell part of the bitcoin in order to lock in profits. But then news comes out from China that the local Central Bank is closing the ICO, which forces investors to sell even more coins. After this, by the way, many cryptocurrencies began to fall.
Various rumors also began to appear that the cue ball would collapse, which also contributed to the fall as much as $3,000. And we see that this has been happening for several weeks.
According to the strategy for trading bitcoins on binary options, we recommend opening a deal with expiration on 1 day if you trade on the day the news is released. If you missed it, it is better to open a contract with an expiration of 1 week or more, since jumps in different directions are possible.
In general, each news can have a different impact on the market. Therefore, follow the events and register on the forums where this news is discussed. For now, let's move on to the positive news.
Now you see a serious uptrend from $3,000 to $5,600. Almost 100% growth in less than a month. And the news also contributed to this. Firstly, Amazon and some other major global platforms have announced cooperation with Bitcoin.
Secondly, Japan recognized BTC. Thirdly, a new fork was announced (a fork through which a new Bitcoin Gold token will appear). Everyone who has Bitcoin will also receive BTCG for free. Therefore, of course, many investors began to sell some altcoins and invest them in Bitcoin, which led to a sharp increase in the price. But not so sharp as to open trades with expiration in an hour. Don't forget that you need to log in for at least a few days.
Now let's move on to technical analysis.
Increased Bitcoin volatility
The specificity of binary options on Bitcoin is also related to the volatility of this instrument. If the exchange rate of the EURUSD currency pair changes by 1-2% per day, then in the case of Bitcoin, the value of the asset over the same period of time can either grow by 20+% or fall by the same amount.
Let us recall the specifics of how binary options work. Profit is not tied to the scale of growth or decline in the value of the asset. The only important thing is the position of the chart relative to the strike price at the time of expiration of the transaction.
Bitcoin growth by 25-30% with standard trading can double your deposit. In the case of binary options, we get a profit of 80-90% of the bet. The trader will not benefit from increased volatility and large movements.
Bitcoin options trading: where to start?
So, if you decide to start earning money in this way, you should learn some simple nuances for successful work. To make a deal to change the rate, you first need to select a number of order parameters:
- A period of time. When creating an option, users select the time period for which the forecast will be made. It can be almost anything: from a minute to several hours. This transaction parameter is called expiration. It can reach 24 hours in some cases;
- Option to open a deal. This can be an upward or downward forecast. You need to predict whether the exchange rate will fall or rise;
- Selecting an asset. The possible profit will depend on the type of coin you decide to trade).
After opening an order, the rate will begin counting from the transaction trigger point. After completion of expiration, the result of the exchange rate dynamics will be calculated. And based on it, you will make a profit or suffer losses.
News tracking and force majeure
Regardless of trading style, traders monitor the economic calendar. It contains the dates and times of news releases that affect the rates of currency pairs.
In the case of Bitcoin, there is no such calendar. The movement of the crypt is influenced by news, but you will have to look for it yourself. Usually monitored by bitcointalk.org, sites of crypto developers. From the news, we will highlight the upcoming forks, changes in the legislation of countries around the world on the legalization of Bitcoin and other cryptocurrencies, and decisions of the American SEC.
The bad thing is that the release of some news cannot be predicted. As a result, a bullish trend can give way to an impulsive decline in a matter of minutes.
The rate is also influenced by “whales” - holders of a significant volume of military-technical cooperation and those who transfer multimillion-dollar amounts in fiat to Bitcoin. The injection of even a couple of million dollars into Bitcoin causes a noticeable growth in the crypt.
"Eternal" uptrend
In the past, traders used the Buy & Hold strategy. There were hopes for a long-term upward trend in the crypt. This was also used in working with binary options.
Now the upward trend is broken, and Bitcoin has not yet returned to its growth trajectory. There is no global upward or downward trend, we recommend working according to the situation.
As for trading BTC with binary brokers, you can work with both BTCUSD and “pure” cryptocurrency pairs, for example, ETHBTC, LTCBTC. Any strategy is suitable - indicator trading tactics work on cryptocurrencies, as well as trading systems based on candlestick analysis and graphical analysis.
Examples of strategies for working with binary options on Bitcoin
No special indicators are created for Bitcoin. The same moving averages, Stochastic, RSI, and custom indicators work. From the graphical analysis tools, priority is given to horizontal levels and trend lines.
Bollinger Reversal
Bitcoin is a highly volatile asset, we use this property to trade binary options with an expiration of about 1-2 candles. The only indicators you need are Bollinger Bands with standard settings.
The only condition for entering the market is the closing of the candle outside the BB channel. Set expiration to 1-2 candles.
The tactic allows the use of a light martingale. There are sequences of several candles in a row that close outside the BB boundary; martingale allows you to compensate for losses through one transaction that closed in the money.
The strategy is not suitable for beginners, as it requires quick reaction and strict discipline (due to the martingale). It is inconvenient to work on small time frames due to the abundance of signals; you will have to constantly monitor the BTC chart.
Retest of the “box”
The following strategy for working with Bitcoin is more suitable for trading CFDs and on crypto exchanges, but you can also make money with it in binary trading. Indicators are not used; you only need a visual analysis of the chart.
To work you need:
- identify impulse movement on the chart. It is characterized by large candles compared to neighboring ones, the movement is recoilless, and a considerable distance is covered;
- after this, the chart enters the consolidation phase, highlight this area with a rectangle (box);
- if the border of the “box” is broken by an impulse, we wait for a correction and, on a retest of the broken level, we buy an option in anticipation of a rebound. Expiration of 5-7 candles is enough.
A retest is considered to be touching a previously broken level and rebounding from it. It is allowed for the chart to enter the selected zone and then close outside it - such signals are also taken into account.
Signals of this type are rare, but the probability of working out the entry point is high. The strategy has no restrictions on time frames; the main thing is to learn how to correctly identify impulses and corrective blocks.
Third touch
Like the previous one, this trading strategy is based on graphical analysis. Indicators are not used; instead, you will need the skill of constructing trend lines based on 2 price extremes.
The strategy is based on the rebound of the chart from the trend line. Marking on multiple timeframes is not needed. Evaluate the graph and, based on the last 2 clearly distinguishable High and Low, draw lines, extending them to the right.
When the trend line touches the third time and rebounds from it, an option is bought. Expiration is arbitrary, 5-7 candles are enough. To increase the reliability of signals, filter rebounds using candlestick patterns.
With each new approach of the chart to the trend line, the probability of its breakdown increases. The strategy is prohibited from using the 4th and subsequent approaches of the chart to the trend line as an entry point.
Build all possible options for trend lines. Then delete any unnecessary constructions.
Trading using CCI
Using the commodity channel index as a standard oscillator gives results on highly volatile assets. Leave the CCI period as standard.
The strategy places a bet on a CCI reversal from the area of extreme values. During impulse movements of the BTCUSD chart, the commodity channel index line goes to the area beyond the level of 300 or 400 and does not linger at these levels. In binary trading, a rollback of 1-2 candles is enough to make a profit.
When working:
- We reduce the scale and manually build levels - the boundaries of overbought and oversold zones. We do this so that most of the movements of the CCI line take place outside the overbought and oversold zones;
- As soon as the candle where the CCI line entered the zone closes, binary options on Bitcoin are bought in the expectation that a rollback will follow, lasting at least 1-2 candles. Expiration is set equal to 1-2 candles.
Since the levels do not adjust to changing volatility, they will have to be manually adjusted periodically. If you see that the win rate is decreasing, repeat the procedure with constructing zone boundaries on the CCI and the situation will improve.
Even on small time frames, this strategy gives low trading intensity. This disadvantage pays off with an increased win rate.
How to trade binary options on cryptocurrencies
Trading binary options on cryptocurrency is no different from working with other asset groups. First of all, you should analyze the current market situation. To do this, a trader can use his skills acquired while working with other instruments.
If there is an upward trend, and the forecast for the growth of the “cryptocurrency” remains valid, you should buy an option to increase CALL (“Higher”).
CALL and PUT - learn more about these “buttons”.
If the situation is the opposite, then you can consider buying a PUT option (“Below”). Some traders prefer to enter into transactions when a trend changes, if it is clearly visible.
Thus, you can buy options in both directions, regardless of the volatility of the instrument. The profitability of the transaction is displayed immediately, and to make a profit, a few minutes are enough, which constitute the expiration period of the option.
What does profit depend on?
There are several important points that affect the profitability of trading binary options on cryptocurrency. First of all, this is the number of successful transactions. Their number, of course, must exceed the number of unprofitable operations.
On average, if there are 3 losing trades for every 7 profitable trades, then you can be sure of making a profit.
In addition, it is important to follow the rules of money management, correctly calculating the ratio of investment to deposit size. When trading crypto, it is advisable to start with small amounts so as not to risk your money.
Another important point is the profitability of virtual currency. As mentioned earlier, it is often lower than for other trading instruments and this imposes certain restrictions on trading, forcing the trader to more accurately calculate his transactions.
Frequently asked questions about Forex
✅ Do I become the owner of BTS when purchasing a binary option?
No, the trader only makes a bet on what the BTC price will be after a certain time
✅ Why are Bitcoin binary options available on weekends?
Crypto exchanges provide liquidity, but they don’t have days off
✅ Is it possible to predict a sharp rise or fall?
This is one of the risk factors, they cannot be predicted, sometimes force majeure factors affect the schedule
✅ What binary options are available on Bitcoin?
Usually this is Call/Put, other types on Bitcoin are rarely provided
December 11 at 17:41
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| Article Rating: How to trade binary options on Bitcoin5 | Rated by people: 1 |
Visitor comments:
- What expiration is best to choose for binary options on Bitcoin. Are there any special recommendations specifically for crypto?
Valery
March 20, 2020, 5:49 pm ·
Comment helpful: 0 - Hello. There are no special methods for determining the optimal expiration for binary options on Bitcoin. Select expiration in candlesticks by studying the behavior of the chart on history. There are no other ways to calculate expiration.
Kalita-Finance
March 23, 2020, 12:43 ·
Comment helpful: 0 - This is not the first time I have noticed that my broker’s Bitcoin binary options chart does not match Binance. I use this exchange as a standard, what could be the matter?
Yuri Zhelitsky
June 23, 2020, 11:54 ·
Comment helpful: 0 - Good afternoon. Depends on what the difference is in the numbers, if the quotes differ by a few dollars, this is the norm. The BTCUSD rate also differs on different crypto exchanges, so do not rush to accuse the broker of fraud. The reason for concern is the difference in the configuration of the candles and a significant difference in quotes, the rest is nothing more than an error.
How to earn income on cryptocurrency, as well as the Bitcoin rate in Binary Options trading.
The level of popularity of a currency such as Bitcoin has increased significantly over the past 12 months. The main cryptocurrency began to increase in value at a rapid pace. World analysts predict the same active growth for 5 years. In this regard, the emergence of a new type of coins called altcoins has been noticed. These coins exist separately from Bitcoins.
For the first time in the entire existence of Bitcoin, its value rose above the $10,000 mark. This figure was achieved very quickly, and the forward movement continues to this day. If we compare the price that is today and the one that was 18 months ago, then it was only $600. It turns out that the original cost of Bitcoin increased by 1600%.
The level of potential required for growth continues to constantly increase as leading investors from around the world continually invest their money in this type of business. This can be explained by the fact that they are confident in great opportunities.
Choose a reliable broker trading cryptocurrency
Why is Bitcoin so popular?
This cryptocurrency is usually classified as a safe haven asset. It is worth saying that this is not even accidental. Bitcoin is put on the same scale as gold; it is predicted that in the future it will be one of the most important safe assets, the cost of which will be many times higher than the cost of precious metals. What's the point? Bitcoin is compared to gold for the simple reason that its supply has some limitation. This means that there may come a time when all of them will be mined and the process of replenishing coins will no longer be carried out.
At this point in time, data is known that suggests that there may be about 21 million Bitcoins in total. Once this amount is reached, further production will simply stop.
If we take into account the period of time until today, then there are already about 16 million Bitcoins. Each new coin makes the process of creating a currency even more complex, and at the same time the amount of costs increases. If you believe the statistical data, then this particular cryptocurrency is one of the most promising for investment today.
The main reasons for the high level of popularity:
- Today, only the lazy know nothing and have not heard about the famous Bitcoin, since its cosmic growth cannot simply leave one indifferent. The degree of interest on the part of investors is increasing daily due to the limited amount of cryptocurrency mined on our planet. For this reason, each purchased coin leads to a rapid increase in quotes. Today, successful online stores are striving to introduce the ability to use this currency into their work. Many countries are considering making Bitcoins a legal currency. If these plans come true, then it is quite possible that we will experience a significant increase in the Bitcoin exchange rate.
- Innovative technologies make it possible to carry out payments using Bitcoins in all corners of the planet. This process is not limited.
- Today, we can note a large number of prerequisites for a decline in quotes, but as for their fall, no. The main factors influencing the decline of such a well-known cryptocurrency can rightfully be called the fixation of investors’ income. In addition, low economic events, or rather the closure of Chinese stock exchanges and the like, are of great importance. Quite recently, we witnessed a conflict in China with depositors losing their deposits as the country's leadership took measures to close several large exchanges. Due to the refusal to conduct the trading process, as well as the tightening of some rules, Bitcoin decreased from $5,000 to $3,000. Despite this, the cryptocurrency was not at such a small level for very long, and after a short period of time, quotes began to rise again and again reached those high levels easily and quickly.
Choose a reliable broker trading cryptocurrency
What is the reason for such high popularity of Bitcoin? This can be explained by the fact that from the time Bitcoin was created, it began to generate huge income for its holders. It is precisely this factor, under the guise of better big income, that until today attracts an increasing number of people who want to invest their money. They see good prospects in this cryptocurrency.
Professional experts share the opinion that the most critical value has not yet been achieved. At the moment, there is a high probability of a significant increase in quotes to an indicator equal to $10,000. It is worth realizing that this market cannot be controlled, which may be why the level of risk here is so high. Despite this, investors do not stop investing their money and thereby receiving significant income.
Every month we see the emergence of a large number of coins, as well as cryptocurrencies, that have the opportunity to follow the path that Bitcoin took. In this regard, many investors are interested in investing their funds in altcoins. As an example, we can mention the move away from Bitcoin and the emergence of Bitcoin Gold. It is clear that there are those here who really support this cryptocurrency and predict a great and bright future for it, but there are also those who do not believe in its further development and growth.
The main points contributing to the growth of quotes:
Almost 12 months ago, Obama was replaced by Trump. Those involved in the market were not at all expecting this turn of events. This event was the main reason for the radical change in the situation, both in the stock and foreign exchange markets. As a result, the dollar was under significant pressure for a very long time. Since 2020, the dollar's position relative to other currencies has weakened greatly, especially when compared to the euro. This is precisely why the level of demand for assets classified as safe, or more precisely Bitcoins, has increased significantly.- The emotional state plays a very significant role in terms of increasing the growth of quotes. This is because today investors invest their money in an asset that cannot be regulated. At the same time, there is a certain fear and, accordingly, risk. They have hope that their fears will not come true, and they will not join the lists of those deceived, and Bitcoin, in turn, will not become another scam of scammers. This arrangement of things, built on the hopes of investors, as well as those who take part in the trading process, once again provides another impetus for new growth.
- The update to the blockchain of this cryptocurrency is a software update that appeared relatively recently. He managed to create a very great impression among investors. With this update, the level of transaction costs, as well as the procedure for processing information data, has been greatly reduced. All this made it possible to carry out all the above-mentioned operations much faster.
- Amazon, which is successful in the field of conducting trading on the Internet, today wants to provide a payment service for goods and services based on bitcoins. Since such successful and large companies decide to add Bitcoin to their list of payment systems, it is quite possible that other companies working in this direction will also decide to use a similar service.
- To date, there is no proper regulation of the cryptocurrency market. Against this background, there are certain concerns regarding a large number of such exchanges. There is information that Overstock and RenGen will create an ICO exchange in the near future. This exchange will be regulated by the SEC. This will launch the process of actively investing money on this trading platform.
Choose a reliable broker trading cryptocurrency
Summarizing
Having familiarized yourself with all the information presented above, you can once again focus on the fact that experts predict Bitcoin to increase by 100% in the future. This can be explained by the high level of demand for cryptocurrency and word of mouth, which arises as a result of high user interest.
Oddly enough, under the influence of the crowd, people also invest their money in such an interesting and not yet fully explored asset. A person is designed in such a way that he will grab with both hands and feet any opportunity to quickly and easily earn income. And Bitcoin just has the opportunity to accomplish all this.
There is no reason for quotes to decline, but even if there is, they are not significant enough to actually lead to this. It is worth paying attention to the fact that even such insignificant moments of influence can be used to create acquisition transactions at the end of the falling correction. Such transactions are characterized by low risks.
At the moment, most brokerage companies are introducing into the structure of their trading platforms the possibility of conducting the trading process with both Bitcoins and Ripple, Zcash, Ethereum, Dashcoin, Monero. There is no need to spend money on purchasing additional coins; you can earn income only from the difference in quotes.
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