A Very Simple yet Powerful Trading Method
binary system asks the user a very simple yes or no question, “Will this market be above this price at a given time or not”? If the answer is “yes” then the trader will buy and if the answer is “no” then the trader will sell. Once the trade expires, based on the outcome, the user will either get the trade value of $100 and if they guessed wrong, they earn nothing. In addition, the trader can never lose more than they paid.
AITrades binary options offer their customers much more flexibility. For one thing, the user has the ability to leave a trade at any time up until the expiration of the trade; either to lock in profits or minimize the loss. A simple 4-step process allows the customer to apply intuition and discipline of traditional trading while utilizing all available data. AITrades also allows their clients to trade cryptocurrencies from one account which guarantees limited risk.
Every binary option is valued at $100. Given the current market situation, each trader answers the same binary question, “Will this market be higher than this price at a set time?”- If the answer is yes, the customer buys, if the answer is no, the customer sells.
When the trade is completed, if the customer guessed correctly, they receive the full $100, if they guessed incorrectly, they receive nothing. In a binary system, the customer can never lose more than they paid for the option.
Binary options are short term financial instruments based on a simple yes or no question. It is comprised of three elements:
Bitcoin > 6240.00 (4:15PM)
This binary options identifies the market, strike price and expiration time.
Market: Bitcoin (cryptocurrency)
Strike Price: $6420/BTC
Expiration time: 4:15PM today
In this example, if the Bitcoin is priced higher than $6420 at 4:15PM today, the buyer of a binary option would receive $100; if the Bitcoin is priced lower than $6420 at 4:15PM today, they would receive nothing.
Binary options focus on one trade at a time with the trader answering a straightforward yes or no question. For example:
• Will the price of Bitcoin be higher or lower than $6420 at 4:15PM today? Yes or no?
• Will the Ehterium be higher or lower than $5000 at 1PM today? Yes or no?
• Will the ETH/LTC exchange rate be higher or lower than 3.61183 at 6AM today? Yes or no?
If the customer believes the answer is “yes” then they will buy the binary option; if they believe the answer is “no” they will sell the binary option. Once the option expires, whoever is correct, either the buyer or the seller will receive the full $100 option value.
AITrades also allows its users to withdraw prior to the expiration time without penalty. As the underlying market rises and declines, traders might determine their trade is no longer correct and withdraw from the trade. Responding to the underlying market, the customer can trade their option just as they would any other trading instrument: buy low and sell high.
Binary options are an inexpensive way to learn the cryptocurrency market. A new trader might start with a binary option below $100. Users determine their maximum risk and reward up front. If a trader buys a binary for $30 and hopes it will expire at $100, they only risk $30 but could profit $70. The user can never lose more than they spent on the binary option, even if the market completely crashes.
The built-in profit target also allows users to plan their exit strategy as well. The trader can hold the option until it expires or exit early and take the profit. For example:
A trader purchased a binary option for $20 with the hopes that it would expire at $60, targeting a profit of $40. As the market rises and falls, the buyer might see the price hit at $60 prior to the expiration time and sell immediately, thus taking their target profit early.
Contrarily, if the customer sold a binary option for $60 and the current value is $80, that seller can now withdraw from the trade with a loss of only $20 vs a possibly $60 when the trade expires.
There are 4 steps to trade binary options:
Customers make use of the same strategies as trend trading: trend lines, indicators, moving averages, Fibonacci, support and resistance. These challenges still affect binary option trading but because the amount of the potential loss is limited, it’s far less risky than other trading methods.
AITrades offers several benefits over both traditional trading as well as standard binary option trading:
• AITrades binary options offer customers the ability to profit in flat, trending and volatile markets alike, thus offering limited risk.
• AITrades allows customers to know both their potential profit and loss before making the trade which eliminates the need for a margin call.
• If the market does not favor the client’s position, the loss is limited to initial entry value; no additional loss can be incurred.
MMost traders utilize the safety net known as a “stop-loss” to mitigate losses in a fast moving market that is moving against their position. The goal is to prevent the loss of more than the investor has in their account which would lead to a margin call from the broker to cover the difference. This is not a fail-safe method, which is why brokers’ disclaimers discuss the possibility of “unlimited risk.”
Traditional trading requires perfect timing; enter at the wrong time and position and even with the best information and tools, the trader might not benefit from their knowledge. Binary options limit the risk while rewarding the trader for their knowledge and skills. Regardless of what the market does, the risk of loss is predetermined. The trader will not be stopped out before they profit either.
Traders using traditional methods face uncertainty which could lead to significant loss. The typical way to manage the potential of this kind of loss is with a stop-loss order. A stop-loss order forces an end to trading when the loss reaches a predetermined threshold. In a fast moving market, the stop-loss order could also eliminate the ability to react to an uptick and potentially loss profit as well.
AITrades has binary options which include both built-in floors and ceiling levels; our traders know the possible loss and profit beforehand. Assuming that the customer does not withdraw the trade stays active until the expiration. There is no automatic stopped out, regardless of whether the market declines during the duration of the trade. This allows the trader to remain in the trade and ride out the ups and downs without losing opportunity due to the built-in floor restriction.
The basic principle of successful trading is to buy low and sell high. The market needs to move in order to generate meaningful profit because the difference between the purchase price and sales value provides the proceeds from the trade to the investor. AITrades binary options allow customers to realize a significant profit even in a market that is barely moving at all. Even if the price of the binary option at the expiration time is merely 1 tick higher, the buyer will realize the same profit as if the market was 1000 ticks higher. The all-or-nothing outcome means that the underlying market does not need to move significantly higher to make large profits.
Margin trading is a method of trading using funds involving borrowed funds. This allows the trader to invest money they don’t actually have in their personal account. AITrades offers margin trading with a 1:2 and 1:3 leverages on BTC/USD, BTC/EUR, ETH/BRC and ETH/USD pairs. We are working to allow more options in the near future as well. Fees associated with margin trading are available on our website.
Why Should One Margin Trade with AITrades?
• Funds may be borrowed automatically
• Funds can be simultaneously borrowed and placed in position
• No extra account links necessary
• No margin accounts to set up to allow trades using leverage
• Negative balance protection
• Our unique risk-preventing system ensures margin trading cannot move account balance to negative values
• Multiple leverages available
• Open position with 1:2 or 1:3 leverage depending on needs
• Guaranteed stop loss
• The platform reserves part of the order book to be closed at the price, without a greater loss than the stop loss indicates.
• Efficient rollover fee
• Rollover fee is only charged when the position is opened; is not charged for the first 4 hours.
Leveraged trades can be extremely risky and better left to experienced traders. The loss can exceed the deposit exponentially. For example, if the trade is a leveraged trade of 1:5 is $1000, the deposit is $200. If the asset drops by only 20%, then the deposit has already been forfeited, and the trader could find themselves owing $800 more at the expiration time.
Conventional wisdom recommends that only experienced traders attempt trading on margin. An understanding of the technical analysis and full knowledge of the underlying market is critical to making good decisions. Enacting a thorough plan, the client can minimize the risk of loss. AITrades provides a platform which allows customers with little understanding of neither market nor technical knowledge to make informed margin trading with a very short learning curve.
Arbitrage is the simultaneous buying and selling of an asset on multiple markets in order to profit from the price fluctuations between the markets. For instance, using arbitrage in the cryptocurrency market, one would search for a specific coin which is cheaper on Exchange A than on Exchange B. The trader then buys the coin on Exchange A and sells it for a higher price on Exchange B, retaining the difference as profit.
Arbitrage trading is not unique to cryptocurrency; this method has existed in the stock, bond and foreign exchange markets for several years. The rapidity of the cryptocurrency trading has added a new element to arbitrage trading. The development of systems which can spot differences and execute trades across multiple platforms quickly has made arbitrage trading unreachable for most retail traders.
Yet arbitrage opportunities still exist in the cryptocurrency market. The large volume and fast pace accentuate inefficiencies between exchanges and results in price variances. Larger exchanges with higher liquidity drive the price of the rest of the market. Smaller exchanges don’t typically follow the prices set on the larger exchanges and this allows for price differences and opportunities for arbitrage.
Arbitrage is trading among two separate markets simultaneously, taking advantage of the price difference to realize a profit. In a market with high trading volumes where the liquidity of a particular coin is high, the prices are typically low. In a market where the supply of a particular coin is small, the prices are usually higher. Traders can benefit by buying the coin on the lower priced market and selling on the higher priced market exchange, profiting from the difference.
Arbitrage opportunities are also created by reversing this process; buying on the smaller exchange and selling on the larger one. The rise in popularity of cryptocurrency trading has created a dramatic rise in trading volumes and an increase of exchanges worldwide. These exchanges are not connected and with variances of trading volume, they don’t make comparable adjustments immediately. The resulting price differences allow arbitrage traders to exploit the movement and take their profits.
While there are many strategies utilized by arbitrage traders, the most common are the following:
• Simple Arbitrage – Buying and selling simultaneously on separate exchanges.
• Triangular Arbitrage – Similar to the simple arbitrage method, triangular arbitrage involves trading across three separate currencies. For instance, the trader would buy BTC in USD, sell it to make EUR and then exchange the EUR back to USD.
• Convergence Arbitrage – This strategy allows the trader to buy a coin on one exchange where it is not valued and short sell the coin on another exchange where it’s over-valued. The point where the prices meet allows for profit from the amount of the convergence.
What are the benefits of cryptocurrency arbitrage?
• Quick Process – Traders can realize their profit in the time it takes to perform the relevant trades. This eliminates the need to buy and hold cryptocurrency until the trade expiration date and time.
• Greater Options of Exchanges – There are currently considered to be 180 exchanges worldwide on which one can trade cryptocurrencies. The potential for price differences is immense.
• Crypto Markets are Emerging – Cryptocurrency trading is currently unregulated and disjointed which means the transfer of information and price changes is slower than more traditional investment markets. There are fewer traders and less competition as well, which creates an opportunity for arbitrage trading.
• Cryptocurrencies are Unstable – The prices of cryptocurrency have fluctuated dramatically over the past year. This instability creates tremendous opportunities for arbitrage traders to profit from the cryptocurrency market changes.