Cyber futures are also known as digital futures, digital 100 options, digital options, over/ under options and all or nothing options. They are however most commonly referred to as binary options. Cyber futures or binary options as I will call them below are options that are design to allow you to speculate on the future movement of different financial instrument. They are basically a way to be able to “bet” on the stock market and other markets.
Many traders will initially lose money until they become more skilled at picking the right cyber options to invest in. You can avoid this fate by using your demo account that most brokers give you access to. A demo account can be used to trade for free until you are ready to start trading with real money. The demo account is one of the most valuable tools that you have access to as a binary options trader.
You can read more account demo accounts here.
How does it work?
Binary options are binary financial instruments. What this mean is that you can either make a large predetermined profit or you can lose your entire investment. There are no other outcomes. The option either matures in the money or not. Once you buy an option you know how much you will lose if it matures outside the money and how much you will make if it matures in the money. You can usually not sell you options or close your position early. There are however a low number of brokers that do allow you to close your position early.
All binary options are based on another asset. It is the market value of this asset that decides whether an option matures in or outside the money. The options can be based on a number of different types of asset such as stocks, currency pairs, commodities and indices.
When you buy binary options you are speculating on whether the value of the underlying asset will be higher or lower at the time of maturation. If you are right you earn a profit. If you are wrong you lose the price you paid for the option.
There are a number of different types of binary options. All of them work in similar ways but have slightly different terms, payouts and maturation times. Example of common types of binary options include regular binary options, one touch options and super short options (60 second options).
How do you trade?
If you want to trade with binary option you need to setup an account with a binary options broker. There are several brokers to chose from and you can read more about choosing a broker below. Once you have an account you can start trading binary options. It is very easy to to buy options. If you ever shopped online or used Facebook then you know enough to be able to trade. Simple navigate to the option you want to buy, choose how much you want to invest and click the buy button.
Buying an option is easy. Knowing which options to buy is a lot harder . You need to be very selective and only chose options that have a high likelihood of maturing in the money of you want to make money. If you just buy options at random then you will end up losing money (unless you re very lucky). 60-70% of all the options you buy need to mature in the money if you want to make money from binary options.
Always chose a few binary options based on a low number of different assets. By focusing on a low number of options it becomes easier to become an expert that can correctly predict the assets future market value. This in turn makes it easier to earn money.
Choosing a broker?
It is very important to do your research before you chose an option. You need to make sure that you chose an honest regulated broker that make it as easy as possible for you to make money. The binary options industry have been plagued by a number of dishonest brokers. Most of them have been driven out of business but new ones might enter the market in the future. This makes it important to research the broker before you start trading. Use a reliable third party review websites to find out which brokers you can trust.
Always consider you trading habits before choosing a broker. If you are a day trader you will need access to other trading software then you will need if you only do the occasional trade.
You should always look for a broker that gives you a high return when an option matures in the money. It is also very important that you look for brokers that specialize in options based on the assets you want to trade with. If you want to trade stock based options then it is important that you chose a broker that focus on stock based options, if you want to trade with FX based options then you should a broker that has a large selection of FX based options and so on.
I recommend that you always chose a broker that has a good mobile trading platform.
You should always make sure that the broker makes is easy to deposit and withdraw money.
Gambling or financial instrument?
Is binary options a type of gambling or a proper financial instrument? The answer to his question depends on who you ask. Some would say that it is a proper financial instruments and there are several jurisdictions that regulates binary options as financial instruments. Examples of such jurisdictions include Cyprus and Malta. Many broker has a license from one of these two jurisdiction.
Other would say that it is nothing more than a type of gambling. A way to bet on the future value of financial instruments. There are several jurisdiction that have chosen to regulate binary options as gambling. An example of such jurisdictions include Isle of Man.
The answer to the question of whether binary options are gambling or financial instruments is in other words hard to answer. It depends who you want to listen to. There is no doubt that the options started out as a casino games found in online casinos. But the options have matured and changed a lot since then and can now easily be seen as financial instruments.
It does however not matter whether it is a game or a financial instrument. In the end the answer to this question is completely unimportant. The only thing that is important is that a skilled trader can make money month after month. This is true regardless of how you want to classify the options. It can in fact be more beneficial if they are classified as gambling as that would make the profits tax free within the EU/EES zone.
Binary options are sometimes called a scam. This is not true. Binary options are high risk instruments that allows you to make a lot of money. But the trade is associated with very high risk and it is very important that you read about the options so that you understand how they work before you star trading. If you do not you might feel scammed when you learn how they work.
An important example of this is the fact that the broker acts as the option underwriter. Their is no central market for binary options and there is no third party involved when you buy an option. The transaction is between you and the broker. The broker takes the opposite position to yours. The broker will lose money if the option matures in the money and make money if the option matures outside the money.
All options are designed to make the broker money and you will always lose money if you buy random options. As a trader you have on big benefit that allows you to make a lot of money despite the fact that the option are designed to give the broker an edge. This benefit is that you can choose which options to buy. This allow you to overcome the brokers edge by skillfully choosing options that matures in the money.