Banned in Indonesia, this is all about binary options trading

Binary options are slowly returning to the public’s conversation after the number of digital advertisements offering these transaction advantages. With the lure of big profits in a short time, and can be used by beginners, binary options were suddenly loved by the public.

So what are binary options?

President Commissioner of HFX International Futures Sutopo Widodo explained that binary options are a form of online trading instrument where traders predict or guess the price of an asset will rise or fall over a certain period of time. So, Sutopo said binary options are more like gambling than as investment instruments.

How to play binary options is actually quite easy and simple. Users only need to register with a binary options provider and make a deposit. The deposit amount for each provider varies, but generally it is US $ 10.

In the transaction, the user will select an asset index, from currency, stock index, to commodities. After selecting the asset index, the next user enters the capital to stake. The minimum amount of capital used depends on the asset.

Then the binary options application will calculate the potential profit from the transaction. The range is quite diverse, ranging from 60% – 90%. Then, the user selects various transaction durations, starting from a few seconds, minutes, hours, or days.

Finally, the user is required to guess within the duration that has been selected, whether when the duration ends, the index price will be above or below the price when starting the transaction. If the guess is correct, the user will make a profit. However, if it is wrong, the capital used will be forfeited and become the user’s loss.

In Binary Options transactions, there are several terms that are different from the terms in forex, including Call or High (if the price is expected to go up) and Put or Low (if the price is expected to fall).

In addition, there is also a term in-the-money when a profit or out-of-money transaction is miscalculated. The amount of profit also depends on the figures paid by the broker to the trader.

There are several binary trading services that people can use if they are interested. Starting from Binary.com, Olymp Trade, IQOption.com, Binomo. However, some of these sites cannot be accessed without using a VPN.

Kontan.co.id is trying to do a simulation on one of the binary options platforms. By selecting EUR / USD assets, the platform offers a duration to choose from, namely minutes, hours, to days with a minimum duration of one minute. Then, the capital used in this transaction is US $ 5.

After doing the calculation, the platform offers two options, namely higher or lower than the price when entered. If you choose higher, when in one minute the guess is correct, the user will get a profit of 87.6% of the capital. If you choose lower, and when the guess is correct, the user will get 73% profit from the capital.

However, when the user’s guess, whether it is higher or lower, turns out to be wrong, the invested capital will be forfeited.

Sutopo said there is a clear difference between forex trading and binary options, both in the trading system and in the trading method. For example, for trading on forex, there is margin leverage and spread, while in binary options there is none.

“As for the trading system, in forex, investors can open, hold & close our positions indefinitely and at any time as long as there is margin. Whereas in binary, only guessing the price will go up or down in a certain period of time so that there is an expiration time, either in a loss or profit condition, it will be executed immediately, “explained Sutopo.

However, Sutopo does not deny that there are advantages to this binary option. Starting from a simple and easy method because you only need to guess. Then the losses you get match the capital at stake. Until there is no swap and spread.