A derivative financial product called an option is one that is based on any underlying asset, such a stock, a currency pair, oil, etc.
A non-standard option known as a “digital option” is utilized to profit from changes in these assets’ prices for a predetermined amount of time.
According on the terms of the agreement made by the parties to the transaction, a digital option results in a fixed income (in the amount of the difference between trading income and the price of the asset) or loss (in the amount of the transaction) at a time designated by the parties. real estate worth).
Because digital options are bought in advance at a predetermined price, both the possible profit and loss are understood in advance of the trade.
The time frame is another aspect of these arrangements. Every option has a unique term (expiry time or expiration time).
A predetermined dividend is always made in the event of an option win, regardless of how much the price of the underlying asset has changed (how high or low it has gone). Your risks are therefore only as great as the price at which the option is purchased.
What are the types of digital options?
You must decide the underlying asset the option will be based on before you may trade it. On this asset, your forecast will be based.
Simply put, when you purchase a digital contract, you are effectively placing a wager on the direction of the price of the underlying asset.
An “thing” whose price is considered when a trade is closed is referred to as an underlying asset. Often, the most sought-after products on the market serve as the underlying asset of digital options. There are four of these:
- Securities (Shares of world companies)
- currency pairs (EUR/USD, GBP/USD, etc.)
- Raw materials and precious metals (oil, gold, etc.)
- Indices (SP 500, Dow, Dollar Index, etc.)
The concept of a universal underlying asset does not exist. You are only allowed to utilize your own expertise, intuition, and various sorts of analytical information while making this decision. You cannot employ market analysis for any specific financial instrument.
How to trade digital options?
1. Choose an asset to trade: Currencies, Commodities, Crypto or Indices
- You can scroll through the list of assets. The properties available to you are colored white. Click on the asset to trade on it.
- You can trade multiple assets at once. Click on the “+” button on the left from the Property section. The property you selected will be added.
The asset’s profitability is determined by its forward percentage. The greater the proportion, the greater your potential profit.
Example. If a $10 trade with an 80% profit margin closes successfully, your account will be credited with $18. Your investment is $10, and you make a profit of $8.
Depending on the time the deal expires and the state of the market, the profitability of some assets may change from day to day.
Every trade is finished with the profit that was predicted when it was first opened.
2. choose an expiration time
Expiration period is the length of time after which the trade is deemed finished (closed), and the outcome is automatically added.
With digital options, you have the ability to separately specify the transaction execution time (1 minute, 2 hours, month, etc.).
3. Set the amount you are going to invest. The minimum amount for a trade is $1, maximum – $1000, or the equivalent in the currency of your account. We recommend that you start with small trades to test the market and get comfortable.
4. Analyze price movements on the charts and make your predictions. Choose an option up (green) or down (red) depending on your forecast. Press “Up” if you expect the price to go up, and “Down” if you think the price will go down.
5. Wait for the trade to close to see if your forecast was correct or not. If it were, the amount of your investment and the gain from the property would be added to your balance. If your forecast was wrong – the investment will not be returned.
you can monitor progress of your order under trades
Frequently Asked Questions (FAQs)
What are the possible outcomes of the trades placed?
There are three possible outcomes in the digital options market:
1) If your forecast to determine the direction of the underlying asset’s price movement is correct, you receive income.
2) If your forecast turns out to be wrong by the time the option expires, you have a loss limited by the size of the asset value (i.e., in fact, you can only lose your investment).
3) If the result of the trade is void (the price of the underlying asset has not changed, the option expires at the price at which it was purchased), you get your investment back. Thus, your risk level is always limited only by the size of the asset value.
What determines the size of profit?
There are several factors that affect the size of your benefit:
- Liquidity of your chosen asset in the market (the higher the demand for the asset in the market, the more profit you will get)
- Trading hours (liquidity of an asset in the morning and that of an asset in the afternoon can be significantly different)
- Tariffs of a brokerage company
- Market changes (economic events, changes in the share of financial assets, etc.)
How do I calculate the profit of a business?
You are not required to figure out the profit on your own.
Digital options have a predetermined profit each transaction that is determined as a percentage of the option’s value and is unaffected by how much that value changes. Let’s assume that you will profit 90% of the option’s value if the price moves just one position in the direction you predict. If the price moves 100 positions in the same direction, you will still profit the same amount.
You must take the following actions in order to calculate the profit:
Choose the attribute that will guide your decision.
Provide the amount at which you would have purchased the option.
Set the transaction time; following these steps, the platform will instantly show the precise proportion of your profit if the forecast was accurate.
Up to 98% of the investment can be made back through trading.
A digital option’s yield is predetermined as soon as it is purchased, so there is no need to wait for unpleasant shocks like a lower percentage at the end of the trade.
Once the trade is completed, your account will be promptly credited with the profit.
What is the essence of digital options trading?
You only need to accurately forecast which direction (up or down) the price of the asset you have picked will go in order to make money on the digital options market. As a result, you require:
Create your own trading techniques, implement them to reduce your risks, and increase the number of accurately forecasted trades.
You will benefit from examining analytical and statistical data that is available from a variety of sources, including the corporate website, expert opinions, analysts in this field, and other online resources, in order to construct strategies and look for diversification alternatives.
How to quickly learn how to make money in the digital options market?
You only need to accurately forecast which direction (up or down) the price of the asset you have picked will go in order to make money on the digital options market. As a result, you require:
Create your own trading techniques, implement them to reduce your risks, and increase the number of accurately forecasted trades.
You will benefit from examining analytical and statistical data that is available from a variety of sources, including the corporate website, expert opinions, analysts in this field, and other online resources, in order to construct strategies and look for diversification alternatives.
At what cost does the company pay the profit to the customer in case of a successful trade?
The business makes money from its clients. Therefore, since the company receives a portion of the payout for the client’s chosen successful trading strategy, interest in the proportion of profitable transactions greatly outweighs that of unprofitable ones.
Also, the amount of trades done by all of the company’s clients is transferred to a broker or exchange, who then joins the group of liquidity providers, which collectively boosts market liquidity. You are taken to the side. by oneself.
What is a trading platform and why is it needed?
A software system known as a “trading platform” enables the client to trade (operate) with different financial products. Also, it has access to a variety of data, including price quotes, current market circumstances, business activities, etc.
