Bitcoin and binary options, it's an intriguing pairing. The world's newest payment system meets a modern twist on a classic trading strategy previously only available to the world's super rich. Put the two together and you have a recipe not only for controversy but also a potentially perfect modern trading match-up.
Bitcoin is never far from the headlines these days. One minute it's derided as a flash in the pan, the next it's allegedly the currency of choice for cybercriminals worldwide. Binary options have attracted a similarly knee-jerk response recently with more than one distinguished commentator writing them off as little more than the trading equivalent of betting on flies climbing a wall.
The truth is naturally a little more nuanced. Using Bitcoin as a deposit/withdrawal method for your binary options trading account can actually make an awful lot of sense. In this article, we'll dive a little deeper into both of these brave new worlds and find out why savvy traders are increasingly insisting on using binary option brokers that accept Bitcoin.
Some Background On Bitcoin and Binary Options
Let's set the scene a little before we get down to specifics. Binary options are still a relatively new concept for many traders after all. Elite investors have long used put and call options to mitigate risk or stake out a potentially profitable position on future scenarios. Binary options are simply a variation on this where the option automatically exercises.
For many years, these types of trades were largely out of reach for ordinary investors, hidden away as "exotic instruments" and available only to institutional investors or high net-worth individuals. This all changed in 2008 when, against the chaotic backdrop of a global market in freefall, binary option trading platforms started to emerge online. Around the same time, a revolutionary approach to online payments was starting to gather steam with Bitcoin. Fast forward a few years and the two are increasingly being used in tandem with more and more binary option brokers that accept Bitcoin emerging.
If all of this is completely new to you, fear not! We'll go over the basics of both Bitcoin and binary options a little later and provide some useful resources for further reading. To begin with though, let's explore what makes Bitcoin such a great choice for use with binary options and consider some of the key things to keep in mind when looking online for binary option brokers that accept Bitcoin.
Why You Should Insist On Binary Option Brokers That Accept Bitcoin
From modest beginnings, the amount of binary option brokers offering their services online has skyrocketed over the last seven years. Not all of them accept Bitcoin however. Whether you decide to fund 100% of your trades in Bitcoin or not, it's still sensible to seek out a binary option broker that accepts Bitcoin. Let's look at reasons why that's the case.
To begin with, brokers that accept Bitcoin are almost by definition actively keeping abreast of the latest technological trends - a good sign in any online trader. They're also far more likely to be offering interesting markets on Bitcoin itself as a currency. In addition to being an interesting asset to trade, Bitcoin also offers several key advantages as a funding source. Chief among these are the following.
- Speed of transactions: Bitcoin transactions are near instantaneous so, whether you're funding your account or cashing out, you won't be stuck with the often ridiculous "processing" times that characterise other payment methods.
- Anonymity and security: By its nature, Bitcoin offers a level of anonymity and cryptographic security that sets it apart from other payment methods. In using Bitcoin, you're effectively putting a firewall between your financial details and the broker you trade with.
- Lowered transaction fees: Bitcoin transaction fees are usually either negligible in comparison to other payment methods or actually non-existent. By cutting down on these you're securing a larger portion of the upside of any transaction for yourself.
Put these reasons together and the Bitcoin/binary option combination starts to look a very attractive one. Let's drill down to the account level and examine what you should be keeping an eye out for when weighing up the respective merits of competing binary option brokers that accept Bitcoin.
A Checklist For Binary Option Brokers That Accept Bitcoin
It's often a sensible precaution to establish two binary option broker accounts for your trading from the outset. Brokers' offerings tend to vary across factors such as the range of assets available, investment conditions and the type of guidance they are prepared to offer to investors. By starting with a minimum of two accounts, you add some useful redundancy to your trading setup and give yourself a platform from which to compare providers while you seek to stretch your retirement savings.
Naturally, you'll also want to make sure you do your basic due diligence on any brokers before committing to them. Examine their online reputation, look for existing positive feedback from active traders and ensure your broker is fully verified and compliant with appropriate regulatory requirements in your jurisdiction. And of course, make sure you're operating within your own online budget.
Once you have those basics out of the way, pay particular attention to the following areas:
- Investment conditions: Firstly, check Bitcoin is available as a deposit method. Remember to also closely review the minimum and maximum trade amounts on offer. As a new trader, you may be more interested in lower minimum trades to start off with. Many binary option brokers also offer the possibility of conducting virtual trades. This can be a great way for beginners to get their feet wet before plunging in.
- Available assets: Brokers tend to specialise in asset classes they are familiar with and so should you. Make sure you're dealing with a broker who offers the type of trades you're interested in and can provide further expert guidance if necessary.
- User interface: The speed of binary option trading puts a particular emphasis on the usability of the platform you're working on. Don't settle for second-best here. If you find yourself hampered by an unwieldy interface after just a few trades, be prepared to take your business elsewhere.
- Customer support: Brokers aren't simply there to provide the bare bones of transactional functionality. They are also there to support you with any questions you may have. Insist on fast response times and a full range of customer support options.
- Alerts: Reaction times and market knowledge are what separate a good binary option trader from a great one. You'll be leaning heavily on your platform's alerts system so make sure it's up to scratch.
- Withdrawal process: Trading platforms are obliged to make their funding and withdrawal options as transparent as possible. Unfortunately, this is still an area where many brokers fall short. Ask your broker to walk you through the exact steps involved for Bitcoin withdrawals and if they falter move on.
Binary options refresher
We've assumed a basic level of familiarity with binary options so far but, as it's a relatively new instrument, a quick refresher on some of the basics might not be out of place at this point.
As implied by the name, a binary option is an option with only two possible outcomes. It's a yes/no scenario. This is in contrast to more traditional options where you are dealing with a spectrum of potential payoffs on the up and downside. You'll also hear binary options referred to as 'all-or-nothing' or 'digital' options.
One of the advantages of this type of trade is you know what your win/loss exposure is going in. You can either place a Call (where you think the value in question will rise) or a Put (where you think the value will fall).
More sophisticated variations are also available such as range binary trading where you are operating within a specified spread of target values or the always tempting one-touch option where you're backing a particular value being reached on a one-off basis e.g. Apple's market cap to hit $1 trillion in the next 12 months.
You can review more of the basics of binary options in our getting started guide.
Getting To Grips With Bitcoin
Bitcoin is well and truly entering the mainstream these days and getting started with using it has never been simpler. If this is your first time dabbling in Bitcoin, take a few minutes to get up to speed with the overall concept first:
To start using Bitcoin to fund your trading you'll need to firstly obtain your own Bitcoin wallet and then securely convert some currency to Bitcoin using a reputable Bitcoin merchant such as Coinbase. You'll be up and running in no time!
A Lifetime Of Learning
As you mature as a trader, you'll want to dive deeper into the fundamentals of trading theory. There's a world of eBooks out there, of often dubious value, claiming to reveal the secrets of binary options riches. Our advice is to ignore these, stick to the classics of trading wisdom and branch out from there.
We've selected three evergreen trading titles for you to sink your teeth into and one bonus read on the background of Bitcoin. Start with these and you'll be well ahead of the chasing trading pack:
The Intelligent Investor by Benjamin Graham (http://www.investopedia.com/articles/07/ben_graham.asp)
- Trading For A Living by Alexander Elder
- Keene On The Market by Andrew Keene
- The Age Of Cryptocurrency by Paul Vigna and Michael Casey
You might also be interested in checking out interview with Dr. Alexander Elder for more on his specific strategies:
We hope this article has successfully outlined some of the many advantages of seeking out a binary option broker that accepts Bitcoin. Stick with it as a trading option and you'll be reaping the rewards for years to come and taking full advantage of a modern way to invest your retirement savings.
Binary option brokers that accept Bitcoin