Bitcoin binary options have become a popular form of investing in the cryptocurrency community. It gives you a chance to earn money in Bitcoin without having to trade for cryptocurrency. While the concept of binary options trading may seem complicated, it is actually quite simple. Today, we will look at cryptocurrency binary options and how you can use them to make short term investments in Bitcoin and altcoin.

The term Bitcoin binary options may sound like an overly technical term, but the term is an offshoot of options trading. Options trading is an all or nothing wager. You will either win or lose. This is different than standard options, which allows you to purchase a financial product. A standard option would have a strike price where you could buy a security before the option expires. You cannot do this with Bitcoin binary options. The payouts on binary options trading depend on the platform used.

Bitcoin binary options are considered a form of gambling due to the volatility of digital currencies.

This is unlike standard cryptocurrency trading, where one good buy can make up for months of downswings. Trading in Bitcoin binary options is much simpler than trading in traditional Bitcoin. To get started, find a legitimate trading platform and register for an account. Once registered, all you need to do is fund your account. Most trading platforms will allow you to purchase options using either fiat or cryptocurrency.

You can usually deposit using credit cards, e-Wallets, and even your bank account. Odds are you will have an easier time depositing at an options platform as they are not classified as online gambling sites. After making your deposit, pick the options you wish to trade-in. Most sites focus exclusively on Bitcoin, while others will allow you to trade in Litecoin, Ethereum, and other popular altcoins. Options range from 30 seconds to as much as a week or longer, depending on the trading platform.

Once your options are placed, just sit back and wait for the option to expire. One major downside to trading in Bitcoin binary options is that many fraudulent sites are offering the product. There are a few things you can do to help weed out these scams:. Licensing — First, check to see if a site is licensed by the Cyprus Securities and Exchange Commission, the Commodity Futures Trading Commission, or another primary licensing authority. If the site is not licensed, move on to another site.

Demo Accounts — Most legitimate options sites will allow you to test drive the site with a demo account. This is similar to playing demo casino games at Bitcoin online casinos. Research Companies — The internet is a fantastic research tool, and you can usually find information on scams easily by doing a Google search.

If you research on the internet, you will find dozens of websites that offer Bitcoin binary options trading. How do you know which are the best? Both sites have been in business for years and have stellar reputations. This state is relatively unstable—meaning that the prices are probably quickly going to reenter the bands. Breakouts are major events but they do not truly guarantee or even indicate whether it is a major break from the price trend up to that point or more of an anomaly that will swiftly correct itself.

For this reason, John Bollinger himself recommends combining BBs with other, uncorrelated indicators. This indicator is based on the famous Fibonacci sequence which is often found in nature—and many believe in economics—and is a string of numbers where the next one is the summation of the previous two starting with 0, and followed by one.

This translates in Fibonacci retracement into percentages: The simple—and arbitrary—nature of this indicator comes from the fact that the numbers are fixed, and the price points measured are decided at will. The idea is that if the price drops by any of the Fibonacci percentages during an uptrend, or drops during a downtrend, it indicates that it is time to sell or buy as it is likely to retrace—or reverse—to the previous value and go beyond it in the previous direction.

The idea is that you could apply this indicator on stocks you are interested in and at a glance see when they are behaving in a way whereby Fibonacci retracement would indicate time to buy or sell, and then do a more thorough analysis before either placing or not placing a trade.

Ease of movement is a volume indicator that is also useful for determining trend strength. This creates an oscillator that can give negative values. A large positive value indicates price increases on low volume—meaning that a smaller positive result shows price increases on high volume.

A large negative value hints towards price drops on low volume—and small negative numbers demonstrate a lowering price on large volume. This indicator is designed to show how easy the current trend is—the easier it is, the more likely it is to continue. Usually the greater the number is, the stronger the trend is. So, for positive results, it indicates a rise in prices—bullish—and for negative a downtrend—bearish.

Furthermore, they are generally best used to confirm the results of another indicator than on their own. Force index was created by Alexander Elder—a psychologist and trader—and published in his book Trading for a Living. It is considered a volume indicator and attempts to gauge the strength of a movement displaying its results as an oscillator. Force Index is calculated in multiple steps and is a lagging indicator that can cover various time frames.

It takes the current closing price, the previous closing price, and the volume for that period. These calculations can yield both positive and negative numbers.

A higher positive number usually indicates an uptrend featuring high volume. The same goes for negative numbers just for downtrends. Similarly, the force index tends to display less growth than the prices if the volume is comparatively low despite the rise in value. FI is also good at confirming whether breakouts are likely to succeed or fail. As such, it could be worth a watch when something like a massive breakout for electric vehicle companies is expected , or in case of another of many governmental debt ceiling reliefs that usually spur the stock market.

If a breakout occurs without the FI jumping along with it, it can indicate that the movement will fail. If both jump, a significant, longer-term rise in prices is likely. Still, since the force index is a lagging indicator it can often take a relatively long time—too long—to catch up with the market and can thus be of limited value.

This fault becomes increasingly true the longer the period calculated is. On the other hand, a short-term FI tends to show an aggressive zig-zag pattern that can be hard to read.

Furthermore, the force index tends to grow in reliability the more days it covers. It analyzes two distinct periods—one longer and one shorter—which can vary in length. MACD actually compares two moving averages which are themselves indicators used in technical analysis. The main tool of MACD is the difference between the longer period average, and the shorter one. If the shorter average is above the longer one, the indicator points to a rising trend. The longer one being higher hints at a drop.

This indicator can also tell you the strength of the trend, and—in case the lines are switching directions—can warn you of a reversal. However, just these reversals are the biggest weakness of MACD. It can often give false positives as a slowdown of a trend can show as a reversal on the chart. The RSI tries to determine whether something is being overbought or oversold, and is a fairly versatile indicator. Whenever you find an article claiming that an asset, product, or anything of the sort is being oversold, or overbought, it will usually at the very least mention RSI.

Two prominent examples of items becoming overbought in could be both cars as Matt Maley said on his on-air appearance at CNBC and GoPro in early October of the year.

So, now that we know it is widespread, what is RSI? The relative strength index puts a security on a scale between 0 and with a figure above 70 indicating too much buying and one below 30 pointing that is being sold a lot.

It gets its final number by first calculating the average gain and the average loss and then dividing the former by the latter. The average gain is calculated by adding together all the periodic gains in closing prices and then dividing the number by the period.

The average loss is calculated in the same way just by adding and dividing the losses. The common wisdom says that you should enter a long position when the result is around 30 or lower as it is being oversold, and a short position when around 70 or above—it is currently being overbought.

On the other hand, a long trend can cause it to lag with spotting the end of a bearish or bullish trend. Perhaps a bit ironically, this makes RSI most useful when the prices are oscillating somewhat regularly. RSI can also create self-fulfilling prophecies due to its popularity. A stochastic oscillator is a momentum indicator that compares a particular closing price to a range of prices of a certain security over a given period.

Stochastics are similar to RSI in that they are represented on a scale of A stochastic oscillator is another indicator of whether something is being overbought, or oversold. However, its common wisdom buying and selling thresholds are a bit different from RSI. Following the trend of the last couple of indicators, the main weakness of the stochastic oscillator is that it produces false positives—false trading signals in this case.

Unlike MACD which tends to do well in times of high volatility, stochastics usually produce most false signals during such periods. Furthermore, while there have been some who have proclaimed binary options dead and celebrated their passing back in amid pressure from the lawmakers, they are still alive and kicking. They have, along with Forex, that has actually risen in popularity during the covid pandemic, especially among the young. Since trading, in general, can be risky, and technical indicators are shared by binary options, forex trading , and several other investment vehicles, they are certainly worth getting well-acquainted with.

Practice makes perfect. It is a bit easier to find a good broker in the UK and Europe as institutions are somewhat more vigilant there. The US is a whole other game, and the top binary options brokers in America are relatively few and far between— Nadex is the only one that is fully regulated by the CTFC.

One more thing you should definitely look out for when picking a broker is whether they have a demo account option or not. While technical indicators are great, they indicate, not guarantee outcomes. This means you should always take things with a pinch of salt and will have to make judgment calls repeatedly—putting things on autopilot is never a good idea when dabbling in binary options trading.

This is why we put so much emphasis on practice, and a big part of practicing is coming up with a good strategy for binary trading. You could view technical indicators much like birds used for auguries in ages past. They fly low and rain might be coming, or land might be near if you are an ocean-going captain… or Noah. And this is probably the healthiest philosophy when it comes to avoiding the pitfalls of technical indicators.

Remember their limitations and remember that nothing happens in a vacuum. A very concrete step to mitigate the shortcomings of indicators is to always try and hedge your bets. Apart from awareness, taking advantage of the fact that indicators come in so many flavors is a very, very good idea.

Using multiple technical indicators, especially from different categories—trend, momentum, volume, etc. A very common combo is looking at RSI and MACD together. They form an excellent synergy as they both look at how overbought or oversold a security is while falling under different categories—RSI measures the trend and MACD the momentum.

If they both point towards the same conclusion you can be fairly certain that the prediction is right and you are making a winning trade. Obviously, nothing is stopping you from adding more indicators to your analysis to gain an even clearer picture. Another indicator pair with good synergy is Ease of Movement and Average True Range as when ATR is applied to EOM it can generate trading signals otherwise lacking from the latter, and less reliable on the former alone.

Another element you could include with technical indicators is simply to observe the bigger picture—nothing happens in a vacuum. Apart from checking out the potential political factors, we could look at what industry professionals and big-shots are doing. Between March and May Tesla did experience significant price drops but kept steadily rising for the most part from mid-May through October of Not to beat a dead horse but this also highlights the importance of technical indicators.

Properly employed technical analysis would have looked at all the factors and would have given you the heads up that the trend was about to reverse with more certainty than any hunch or article. Binary options seem to be threading an ever-darkling path—the endless backlog of The Times of Israel articles regarding binary options fraud is evidence enough.

Particularly interesting among these articles is one of undercover journalism in an Israeli binary options firm. Considering this situation, maintenance of discipline when trading—especially with using technical indicators to concoct a secure strategy—and not giving into the victory rush of a successful trade, are more than worthwhile. If you play your cards right you can potentially turn big and quick binary options winnings into a long position and a very secure financial future.

There is no single best technical indicator for binary options. A very common combination of indicators that traders use is RSI and MACD and, generally, using multiple indicators is usually recommended as they all have their strengths and weaknesses. Trends in binary options trading are best identified by utilizing technical indicators aimed at detecting them. Momentum indicators include the Relative strength index RSI and Stochastics. While being both fraught with allegations of fraud and often cited as gambling, there is nothing inherently fraudulent about binary options.

However, extra vigilance should be maintained as only a few of the brokers in the US are fully regulated—Nadex being the notable exception. The situation is somewhat better in the UK and Europe as regulators are harsher there. Either way, you should take extra care to research and practice before entering the world of binary options—preferably by honing your skills and understanding of technical indicators through a demo account.

Commodities, Crypto, Forex, Options, Indices, Stocks, CFDs, Binary Options. Forex, Stocks, Crypto, Commodities, ETFs, CFDs, Binary Options, Digital Options. By Tim Fries. Tim Fries.

Reviewed by Shane Neagle. Shane Neagle.

When there are only two outcomes and risk-reward is high, you want every tool you can get—including technical indicators. Tim Fries is the cofounder of The Tokenist. He has a B. in Mechanical Engineering from the University of Michigan, and an MBA from the University Meet Shane. Shane first starting working with The Tokenist in September of — and has happily stuck around ever since. Originally from Maine, All reviews, research, news and assessments of any kind on The Tokenist are compiled using a strict editorial review process by our editorial team.

Neither our writers nor our editors receive direct compensation of any kind to publish information on tokenist. Our company, Tokenist Media LLC, is community supported and may receive a small commission when you purchase products or services through links on our website. Click here for a full list of our partners and an in-depth explanation on how we get paid. The stakes appear so high for every trade—you either lose it all or win utterly.

This can make them very addictive and, since they are often very short-term, can incite you to act before you think. Humans are pattern-seekers, and since charts and other data are readily available, it is easy to quickly identify trends and figure out where the prices are going.

Compounding these issues are allegations of fraud and lawsuits against options platforms that seem to be ever-coming, it is easy to understand why Australia has banned binary options trading for retail investors, thus joining numerous other countries in a crackdown on the practice. Still, binary options should neither be so easily dismissed nor condemned. While registered with the gambling commission in the UK, they are considered a game of skill rather than chance.

A big reason behind this distinction is the existence of technical indicators. But what are they, why are they important, and how can you use them to stop gambling and start trading?

Since humans are built to recognize and make sense of patterns, technical indicators might appear redundant—market movements are clearly discernible just by looking at the charts. However, we should never forget that, as H. Mencken wittily put it, there is always an easy solution to every human problem—neat, plausible, and wrong. By all account, technical analysis has been introduced in the vibrant financial climate of the 17th-century Dutch republic to mitigate the shortcomings of innate human pattern recognition—trading-wise at least.

Technical indicators constitute an important element of analysis in stock trading and are indispensable when it comes to binary options due to their all-or-nothing nature.

In a nutshell, technical indicators are mathematical formulas applied to prices and price fluctuations of an option, currency, and mostly anything of the sort. Since there are countless types of indicators, there are countless things they indicate—though they all do tend to fall under a limited number of categories. First, there are leading—those that try to peer into the future—and lagging indicators—that draw lessons from the past.

Most of these indicators try to discern what the trend, momentum, resistance, volume, volatility, and support is. Of course, we will be delving deeper into all these types of indicators and providing examples for some of the best, and most popular ones. When facing a decision, and an overwhelming amount of data relating to that decision, you have two main options—ignore or utilize the data.

Now, while ignoring the data is certainly the more straightforward way, it is hard to argue that—especially in binary options trading —it mostly amounts to gambling.

Considering the amount of information thrown at the trader, even trying to make sense of it all can be futile if too many cooks spoil the dish. However, technical indicators are true game-changers here, literally, as they turn this game of luck into a game of skill. This combination of automation and predetermined points of analysis makes technical indicators truly shine in a binary trading scenario. By giving you an outline to follow and superimpose on a chart, you can quickly deduce whether your hunch about a price going up or down is a faulty guess or a smoking gun.

So just summing up, technical indicators are fast and reliable tools that help you make sense of the charts and streamline the otherwise unmanageable amount of information.

They help you not only confirm your conclusions but also reveal opportunities that would probably otherwise be hidden behind an unreadable amount of data. While all technical indicators try to measure the market in a way useful for binary options trading, they have some variation. These indicators are further divided by what exactly they are trying to determine. Indicators that measure support and resistance are looking for signs that the prices have reached a peak or a bottom—when the prices are going to stop dropping and start rising and vice-versa.

Fibonacci retracement and Pivot Point PP are such indicators. Bollinger Bands and Average true range are indicators measuring volatility. These indicators are especially valuable for traders going for options with target prices such as one-touch options.

Ease of movement and Force Index look into the volume of options. Just like with stock volume , this determines the number of shares bought and sold and, thus, how bearish or bullish the market is. Trend indicators try and determine how decisive the current trend is—how much you can rely on the way the market is currently moving when making decisions for the future. Finally, momentum indicators look at how decisive the force behind a trend is.

Relative strength index RSI and Stochastic oscillators are momentum indicators. The biggest strength of lagging indicators is that they are based on facts. That is to say, they look at things that objectively did happen and are happening up to the present time on the market. The leading indicators take this a step further and not only tell you what happened but try and predict what will happen.

Still, neither of these types of indicators should be viewed as anything approaching a crystal ball. Their goal is always to separate weeds from the crop within data and help you better understand what you are looking at. On the other hand, due to the popularity of some of the technical indicators, they can become a kind of self-fulfilling prophecy.

Since a lot of traders are hinging their bets on technical analysis, they tend to nudge the market in the direction indicated. Average true range is a volatility indicator—it determines how stable the prices are. This indicator requires only historic data to be calculated and to generate trade signals. It tends to be applied for day periods but can be altered to analyze any amount of time.

The number of signals tends to be higher the shorter the time chosen is. The range is calculated by subtracting the low from the high of any chosen timeframe. True range is represented by the largest of:.

The average true range is usually employed to determine when to enter or exit a trade but can also be used to inform you of the size of the trade you should make. Simply put, a low average true range means that the volatility is low, while a high result indicates that the prices are unstable.

These make ATR relatively weak when used alone and should always be employed in conjunction with other technical indicators. The Bollinger bands are another indicator of volatility. It was created by financial analyst John Bollinger—whom you might have recently heard talking about the future of cryptocurrencies. Bollinger bands consist of three averages—mid, low, and high—that together create bands that show how the current price relates to the moving averages within a specified timeframe.

Bollinger bands have two central concepts—squeezes and breakouts. Squeezes simply imply the level of volatility. The closer the bands are to one another, the less volatility there is, and vice-versa.

Breakouts happen when the actual price goes above the upper band or under the lower one. This state is relatively unstable—meaning that the prices are probably quickly going to reenter the bands. Breakouts are major events but they do not truly guarantee or even indicate whether it is a major break from the price trend up to that point or more of an anomaly that will swiftly correct itself.

For this reason, John Bollinger himself recommends combining BBs with other, uncorrelated indicators. This indicator is based on the famous Fibonacci sequence which is often found in nature—and many believe in economics—and is a string of numbers where the next one is the summation of the previous two starting with 0, and followed by one.

This translates in Fibonacci retracement into percentages: The simple—and arbitrary—nature of this indicator comes from the fact that the numbers are fixed, and the price points measured are decided at will. The idea is that if the price drops by any of the Fibonacci percentages during an uptrend, or drops during a downtrend, it indicates that it is time to sell or buy as it is likely to retrace—or reverse—to the previous value and go beyond it in the previous direction.

The idea is that you could apply this indicator on stocks you are interested in and at a glance see when they are behaving in a way whereby Fibonacci retracement would indicate time to buy or sell, and then do a more thorough analysis before either placing or not placing a trade. Ease of movement is a volume indicator that is also useful for determining trend strength.

This creates an oscillator that can give negative values. A large positive value indicates price increases on low volume—meaning that a smaller positive result shows price increases on high volume. A large negative value hints towards price drops on low volume—and small negative numbers demonstrate a lowering price on large volume. This indicator is designed to show how easy the current trend is—the easier it is, the more likely it is to continue.

Usually the greater the number is, the stronger the trend is. So, for positive results, it indicates a rise in prices—bullish—and for negative a downtrend—bearish. Furthermore, they are generally best used to confirm the results of another indicator than on their own. Force index was created by Alexander Elder—a psychologist and trader—and published in his book Trading for a Living. It is considered a volume indicator and attempts to gauge the strength of a movement displaying its results as an oscillator.

Force Index is calculated in multiple steps and is a lagging indicator that can cover various time frames. It takes the current closing price, the previous closing price, and the volume for that period. These calculations can yield both positive and negative numbers. A higher positive number usually indicates an uptrend featuring high volume.

The same goes for negative numbers just for downtrends. Similarly, the force index tends to display less growth than the prices if the volume is comparatively low despite the rise in value. FI is also good at confirming whether breakouts are likely to succeed or fail.

As such, it could be worth a watch when something like a massive breakout for electric vehicle companies is expected , or in case of another of many governmental debt ceiling reliefs that usually spur the stock market. If a breakout occurs without the FI jumping along with it, it can indicate that the movement will fail. If both jump, a significant, longer-term rise in prices is likely.

It gives you a chance to earn money in Bitcoin without having to trade for cryptocurrency. This fault becomes increasingly true the longer the period calculated is. However, just these reversals are the biggest weakness of MACD. This creates an oscillator that can give negative values. These make ATR relatively weak when used alone and should always be employed in conjunction with other technical indicators.

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