Investments and trading are excellent sources of passive income. One can win and earn returns and rewards up to twice to thrice the deposit within a span of a minute.
But, there are so many options available like CFD, Forex, stock investment, crypto trading, etc. That may make it difficult for a newbie to start with this golden opportunity to earn money.
That’s why we bring you a new article that hardly anyone has talked of- Binary Options vs. Crypto Trading: Which is better?
What are Binary Options?
Let’s start with an overview of how everything works. Simply said, binary options are a product that one can trade on any market or instrument. They are appealing due to their simplicity. Before you make a deal, you know exactly how much you could profit or lose. There is no need for advanced math or a calculator. This is why they’re called ‘all or nothing’ transactions.
Suppose you can predict news headlines, quarterly reviews, or worldwide trends ahead of time. In that case, you may be able to accurately predict whether the price will rise or fall at a specific date in the future, allowing you to benefit.
You can choose from a variety of derivatives. Commodity values, such as aluminum and crude oil can be traded as binary options. A stock price, such as Amazon or Facebook, is an option.
All of the major and minor currency pairs are available as foreign exchange rate alternatives. Bitcoin, Ethereum, and Litecoin are just a few of the cryptocurrencies on the table.
A quick overview of events
A thorough study of binary options’ roots will be beneficial if you wish to start trading them full-time. Binary options, often known as “digital” options, have been around for a long time. Initially, though, the authorities restricted access to massive institutions and the super-rich. The US Securities and Exchange Commission, on the other hand, opened the floodgates in 2008 by permitting binary options to be traded on an exchange.
Since then, the internet and technological advancements have made these ‘digital’ possibilities available to everyone on the planet. With low entry barriers for skilled day traders and a straightforward presentation, demand for these digital trades is expected to grow.
What is Cryptocurrency trading, and why should you do it?
Let’s define trading before we move on to bitcoin trading. The economic notion of purchasing and selling assets is referred to as trading. Goods and services are examples of assets that are traded between trading parties. We’re discussing financial markets, which are places where financial instruments are traded. Stocks, currencies, cryptocurrencies, margin goods, and other financial instruments are examples of this. Many people are misled by the idea that trading is only for a brief period. In addition, we’ll go through the many sorts of trading later, such as day trading, swing trading, and trend trading.
Buying and selling cryptocurrencies on a cryptocurrency trading platform or exchange is referred to as cryptocurrency trading.
Coinbase, Binance, CoinDCX, and others are some of the most well-known cryptocurrency trading platforms. The goal of bitcoin trading is to make money over time. Trading is not the same as investing, and we’ll go over the differences in detail.
Many variables and specific steps must be followed when trading cryptocurrency. Before investing time and money into cryptocurrency trading, experts advise that you should have a thorough understanding of cryptocurrencies, crypto exchanges, cryptocurrency security, and all of the relevant terms.
In today’s frantic cryptocurrency market, it’s critical to have the correct techniques in mind to make sound trading decisions and be aware of the potential for danger at any time.
Despite the fact that cryptocurrency trading is not the same as stock market trading, you can use some stock market techniques for cryptocurrency trading. As a result, knowledge of the stock market can be helpful when it comes to crypto trading.
What is a better choice: Binary Options trading or Crypto trading?
Before arriving at any conclusion, we should first learn about all the aspects of both trading methods.
Binary options are a vast financial instrument to trade with, unlike cryptocurrencies are unidimensional trading is available.
You can trade on stocks, news, forex, and even cryptocurrencies on binary options. But crypto trading lacks this diversity.
But that’s not the only difference between the two. Below we have summed up everything related to binary options trading and crypto trading that will give you a better view and a clear idea of what to choose.
#1 Investing vs. trading
Investing differs from trading in that trading is based on making a profit quickly, whereas investing is based on holding assets for an extended time. We must look for long-term patterns while making any investment and ignore short-term market swings. The primary purpose of cryptocurrency investing is to acquire additional coins. If you buy four bitcoins at a specific price, the value of your entire asset will increase proportionally to the coin price after a few years.
On the other hand, trading is concerned with short-term swings; therefore, understanding the daily market is vital. The main objective is to generate money in the form of dollars or other currencies.
If you want to succeed at cryptocurrency trading, experts recommend learning about market trends and short-term price trends. It’s more like buying low and selling high and then hoping that the trends will work in your favor. In order to make the most money in cryptocurrency trading, you’ll have to drop coins frequently.
Meanwhile, on binary options, there is not a concept to hold the investment in a particular asset and let the money grow for as long as you want. However, some trade options allow holding a trade for as long as a few months.
#2 Trading strategies
Strategies for Crypto trading
We use four active trading methods in the market. A reliable buying and selling strategy based on short-term market trends and profiting from market volatility is known as an active trading approach. According to most experts, active trading differs from long-term methods in which investors buy and retain assets.
Scalping, day trading, swing trading, and position trading are the four strategies, and they are described below:
Many professionals use scalping as a short-term trading strategy to make quick money. The coins are held for a few minutes or seconds in this sort of exchange. However, compared to other trading systems, the profit is not as significant. Scalping’s goal is to make tiny earnings that add up over time. When the market is extremely crowded, the best time to trade is when you have the most possibility of making a profit. Scalping is a method of profiting from minor price changes used by qualified bitcoin traders and specialists.
- Day Investing
The assets are held for a day in this sort of bitcoin trade. Intraday trading is a type of day trading in which traders enter and exit positions simultaneously. You can use technical indicators in fundamental technical analysis to help you understand current market conditions and identify trends in the specific trading style. This method of trading likewise yields minor earnings, but it maintains investors far from night market volatility. Day trading often lasts a few hours.
So, depending on your needs and resources, you can choose from a variety of bitcoin trading tactics.
Strategies for Binary Options trading
There are various Binary Options strategies available not only on the web but also on the binary options brokers’ websites.
In the demo version, you can apply as many trials and errors as you want and use the strategies or copy trading technique to fetch the best profit, among others.
The most common strategies available for binary options trading are Pinnochio Strategy, Rainbow strategy, Momentum strategy, End of day strategy, etc.
#3 Liquidity and volatility
The level of risk involved is a fundamental distinction between crypto trading and binary options trading. You can either win or lose in binary options trading. This implies you’ll get your amount plus a profit if your forecast is correct. If you win a $10 trade with an 80% payoff, you will make $18.
On the other hand, you will lose everything, including your initial investment, if you lose your deal.
Because crypto is a relatively small market than binary options, smaller sums of money can have a more significant impact on the price of crypto. We could expect the values of all crypto to double if you put an additional $220 billion in the market. In binary options, however, for the same input amount, there will be a slight variation. As a result, binary options have lower volatility than cryptocurrency.
Higher volatility entails greater risk for investors since there is a more significant likelihood of exponential upside and huge, financially catastrophic losses. Because more people are naturally drawn to a calm market, higher volatility also implies less liquidity (easy trading). Binary options can better absorb financial turmoil because of their low volatility and relatively lower liquidity. Binary options offer a better chance of recouping losses than crypto trading.
With binary options, the trader knows exactly how much money they will make and how much money they will lose. This means that market volatility has a lesser impact on trades. There’s also less risk because losses are limited to the initial investment.
Binary options have swiftly acquired interest among active traders since they do not take large initial deposits and provide a good source of earnings.
Meanwhile, you may need various brokerage accounts and platforms to access these assets in crypto trading because they are all located in different marketplaces. Access to one, two, or all three is available through several services.
Coinbase, for example, only offers cryptocurrencies, but TradeStation and Interactive Brokers offer cryptocurrency, forex, and stock trading.
Users may not be able to withdraw their cryptocurrencies to crypto wallets or have a safe room to house their private keys attached to their unique cryptocurrencies if they choose to trade crypto using an investing app. Specialized cryptocurrency exchanges like Binance and Coinbase enable you to withdraw your virtual cash to a crypto wallet.
You can also withdraw virtual cash and load it onto untraceable prepaid debit cards to use at ATMs.
#5 Trading pairs
The use of “trading pairs” is another distinction between binary options and crypto trading.
When you exchange one currency for another – for instance, dollars for euros – the conversion will reflect the relative value of the two currencies. You’ll see how much a single unit of the first currency would cost to buy the second currency (known as the quote currency) (base currency). You purchase the base currency and trade the quotation currency when you trade binary options on a currency pair.
When trading USD for EUR, you might see a stated price of $1.20 to acquire one euro. This means that each euro costs $1.20.
Currency pairs are trading pairs in binary options that include the US dollar. “Currency crosses” refer to pairings that do not involve the US dollar.
The same concept applies to crypto trading. Trading one cryptocurrency for another, such as Ethereum/Bitcoin Cash (ETH/BCH), is known as crypto trading pairings. (Note: one can exchange not all crypto for another fiat or virtual currency.)
Since one can only purchase some cryptocurrencies with other cryptocurrencies, trading pairs are essential to know if you want to diversify your cryptocurrency assets. This allows investors to trade between trade pairs and compare coin values.
#6 Fees and commissions
You can deposit a small token fee as low as $5 or as much as $1,000 or more on cryptocurrency exchanges. Because most exchanges charge per-trade fees, it’s best to trade large sums at once.
Meanwhile, to start with binary options trading, one can start with as little as $1. Binary options are known for their low deposit fee and zero commissions. However, some brokers do charge a small account activation fee along with commissions on deposit and withdrawal.
On the other side, there are types of fees one has to pay regardless of the platform in crypto trading.
Before getting started with crypto trading, one should be well aware of the exchange fee, Wallet fee, and network fee.
Both Binary Options trading and crypto trading have their respective advantages and disadvantages.
For instance, in crypto trading, one gets a chance to make a long-term investment in cryptos which enables one to get the best returns as soon as the value spikes high.
Meanwhile, trading cryptocurrency in binary options provides traders with numerous ways to win quickly. This financial site is the most liquid, as it allows you to enhance your income in only a few minutes by employing proven tactics.
However, maximum profit from crypto binary options trading is only achievable for experienced traders; newbies should first practice demo accounts.