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Binary Options: High-performance trading in the 21st century!
Technology is rapidly changing the way we communicate, the way we work, the way we travel and even the way we research. It is no wonder, that technology is also having a big impact on the way we trade and manage our investments. The Internet is only one part of this development. Sophisticated trading platforms and even automated trading robots are all part of the future. Actually, the future is already here!
Twenty years ago only a few privileged individuals or high-net-worth institutions could afford to trade with option contracts or to use automated trading software to make more money. Now, the doors are wide open and even private investors with a few hundred Pounds, Dollars or Euros are able to participate in the international financial markets. This is very exciting and opens a plethora of opportunities.
Among these are Binary Options. There are many advantages over more traditional trading and investing forms – like fixed asset investment, Spot Forex trading or buying stocks. With Binary Options you are able to trade any of these underlying asset classes and still mitigate the risks. How so? You are limiting the trading size. Every options contract limits the amount of money to a fixed value. This pre-determined fixed value is your decision. You have a finer control over the trade and therefore are able to better control risk.
Binary Option basics are not easy to master, but they are easier than many other investment forms or methods. You are able to take a calculated risk and to dedicate a fixed amount of time. In the past, trading required many hours of analysis, special charting packages and many other technical tools. Nowadays, you only need your computer and an internet connection. You can even trade with your Smartphone or a Tablet. The flexibility is just incredible. Never before was it so easy to access the international financial markets. The speed of execution and the clear way of trading, make Binary Options one of the most attractive trading opportunities of the past 20 years.
Welcome to the Binary Trading Club
This Binary Trading Club is dedicated to inform, educate and train a new generation of financial traders. In particular: Binary Options Traders. The markets are becoming more transparent and it has become easier to understand what is happening at an international level. All this information can be transformed successfully into profitable trades. There are plenty of tools and resources to help you to become profitable with your new endeavour. There is no reason, why you should not be able to join the ranks of other traders and to generate profits from Binary Options. Take a lesson from the Banks. Now, this opportunity is also open to you and other private investors. This is no longer the privilege of a few. Take the opportunity and start trading Binary Options today! We will do our best to help you. The Binary Trading Club was created with the explicit intention of offering information about top Binary Options services – like using trading signals, binary options managed accounts and education – to every aspiring binary options trader so that they too can take their profits to unimaginable heights.
On this site, you can sign up to get all the information that you will require to succeed at binary options trading; it is completely free to sign up and as a member you will receive regular updates about where to get the best training and education for binary options and forex, where to access the best trading signals and how to find other services such as managed accounts for binary options and/or forex that have a proven history.
Plus, in addition to that, learn where to trade binaries and forex with only safe, secure and genuine binary option brokers.
Binary Options Trading
Trading Forex online used to be about buying currency in the spot market with an online broker. This allowed individuals to make a profit from the movement of forex values.
When trading spot FX, gains and losses usually went hand in hand. This is because brokers allowed trading on borrowed money (leveraged trades).
This increased risk usually meant that new traders were usually quite uncertain about dipping their toes into the market. However, it was the introduction of Binary options in 2008 that finally allowed retail investors to potentially profit from this relatively simple instrument.
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A binary option, in it’s simplest form, binary options allow investors to place a bet on whether a security will increase or decrease in value over a period of time. The payout for binary options is either the full amount or zero (hence the term binary).
The reason that binary options are appealing is because maximum gains and losses are known at the beginning of the trade. Unlike spot forex trading, the maximum that an investor will lose is limited to the cost of the option. They are also an excellent way for someone to start trading without a large capital outlay. Investors may start out with a limited amount of funds and start trading. Although initially introduced for the Forex market, Binary Options are now available on all asset classes from Equities to Commodities.
Best Binary Option Brokers
Why trade Binary Options?
When it comes to financial instruments, Binary Options have the best risk / return profile. They provide a extremely high returns for the investor with a relatively limited capital outlay. Moreover, from the beginning of that trade, the investor knows how much return he will make (as well as potential loss). The returns an investor can expect range from 65% to 90%. Unlike traditional Forex options, Binary Option expiry times can be as short as 60 seconds. This means that the investor can make these returns in a very short period of time.
Unlike spot forex trading, you do not own the actual currency. You are merely taking a view on the direction of movement of the currency itself. Therefore, irrespective of how much the currency pair moves itself, as long as you predicted the movement correctly, your investment will pay off. Binary options on Forex are also a continuous market. This means that you are able to trade whenever you feel like it. From the early hours of the morning to late at night, there is always the opportunity to make money from trading binary options on forex.
Are Binary Options Regulated?
Many people are skeptical when it comes to investing in the financial markets. This is because of a number of recent crises where financial “experts” in highly regulated countries like the United States have lost a lot of money for their investors (and the U.S. Government). It is for this reason that normal people choose not to invest and trade online.
Given the introduction of Binary Options, many investors have seen a relatively easy way to partake in the financial markets. However, due to the fact that most of the brokers are located in Cyprus, they are more hesitant. They somehow view Cyprus as a “weakly regulated” and backward country chosen specifically by the Binary Brokers for nefarious reasons. This thinking has sadly led to many avoiding brokers who are located in Cyprus entirely.
This, however, is completely incorrect and off-base. The reason that Cyprus is chosen the prime location for binary option brokers is it’s favourable tax treatment. The corporate rate of tax in Cyprus is much lower than those of other countries such as the U.S. and other countries in Europe. This is a common practice among many multinational online companies. For example, Apple, Facebook, and Google all have their European branches headquartered in Ireland even though most of their clients are located in other countries within the E.U. Ireland, like Cyprus, has favourable tax treatment for companies. Why question the legitimacy of binary option brokers and not the credentials of Facebook and Apple?
If you are interested in more in depth analysis of the current Binary options regulations around the world we have covered it extensively. Although Cyprus tends to be the regulator of choice for most of these brokers, more of them are deciding to broaden their regulatory presence including with bodies such as the UK’s FCA or Australia’s ASIC.
An Overview of CySec and MiFID
It is also important to note that not only is Cyprus a member of the European Union but it is also in full compliance with the Markets in Financial Instruments Directive (MiFID). This directive was created in 2007 in order to harmonise regulation across the E.U. and increase competition and consumer protection in investment services.
This is an important point which needs to be noted. The individual investor protections are provided by the Cypriot regulations are stronger than many countries that are not in the E.U. The U.K. for example, was never fully compliant even though it was a member of the E.U. Now that the UK has chosen to leave the EU, it will not be bound by the rules and regulations that need to be followed by it’s members (these include the MiFID). Hence, over the near term, the investor protections that are provided by a broker registered in Cyprus are more favourable.
Moreover, given that binary options used to be traded Over The Counter (OTC), they were self regulated . The recent explosion in their popularity among average investors means that the rules and regulations in countries like the U.S. and the U.K. have not kept up pace. Cyprus, on the other hand is one of the only countries to have implemented regulations governing binary options. This means that the Cyprus Securities and Exchange Commission (CySEC) will act in the case of brokers who intend on manipulating investors.
This does not mean that some CySec regulated brokers have not acted with a level of dishonesty. Indeed, Banc de Binary which used to be one of the largest Binary Option brokers decided to close its doors and give up its licence in response to bad press. CySec wanted to be on top of the ball when it came to global binary options regulations.
Hence, in 2020 and 2020 CySec implemented some of the most sweeping changes to the Binary Options regulations which were aimed at reinforcing their oversight and shoring up trader’s confidence in the Binary Options industry.
Are Binary Options a Scam?
Binary Options are a financial instrument so it would be hard to classify them as a scam. There have indeed been a number of scam brokers and traders who have taken money from individuals. This is what could have created a certain perception that Binary Options trading was dubious. However, there have also been a number of reported cases of Forex brokers who have scammed individuals as well as stock brokers. Indeed, one of the best ways in order to avoid being scammed is to be able to spot a scam. There are a number of things to look out for in order to avoid falling into the Binary Options scam trap.
However in order to put your mind at ease, we here at FXaxe go to great lengths to appropriately review all binary brokers and make certain they meet our stamp of approval. Hence, if a broker is listed and reviewed on our site, you can be certain that they will have been thoroughly investigated.
Finding the Right Broker
When you start trading binary options, there are a number of important decisions that you must take. Indeed, some of these decisions are just as important as what types of options that you will invest in and what assets to trade.
One of those is the broker that you will be trading with. Indeed, choosing a broker can determine how profitable your trading experience turns out to be. This is because factors such as spread, platform functionality, regulation and payout policy are critical.
That is where broker reviews on sites such as FXaxe can be quite helpful. They allow the trader to read about the the broker’s offer and get a clean and unfiltered perspective on whether they should consider trading with the chosen broker.
Of course, the trader should always do extensive due diligence and compare a number of different review sites. Although most of them do try and provide their honest opinion of the broker’s platform, some may be affiliate marketers who have a vested interest in you signing up with a particular broker.
Moreover, given the number of brokers currently offering a binary option and CFD trading, it can be a bit overwhelming when it comes to finding the broker right for you. Even knowing what exactly to look for is not immediately clear. We have put together a guide that you can follow when choosing a broker
An introductory guide to Trading Binary Options
Binary options are one of the most simple financial instruments on offer for new investors. However, we at FXaxe want to make certain that you know as much as is possible about these investments. Along with our numerous training guides, we would like to make certain that you are able to make the best decisions with as much knowledge as possible.
We have previously explained binary options from the perspective of a new trader. However, below we given a short overview of some of the ways in which you can trade binary options, the instruments that you can invest in and the way their payout structure works.
Part One: What is a Binary Option?
A binary option is a simple example of more traditional stock and forex options. A traditional or “plain vanilla” option is a financial instrument or contract which allows the owner the right but not the obligation to purchase (or sell) a specific underlying stock, currency or commodity at a pre-specified price on some date in the future (expiry date).
Whereas traditional vanilla options may have a number of payouts at the expiry of the option, a binary option only has two; 0 or 1. This is where the term “binary” option comes from. In computer programming, the binary number system refers to numbers which are represented digitally by either a 1 or a 0. Hence, Binary options are also sometimes termed “digital options”.
When it comes to choosing what trading position to take, binary options also only have two possible trades one can place. These are to decide in which direction the price of the underlying security will go, either be above or below the price now at expiry of the option. Therefore, as a binary option investor, at the beginning of the trade, you have to decide on whether the currency pair (or stock or commodity) will go up or down in the life of the option (expiry time).
There are three key inputs that are required before you place any trade. These are the Strike Price, the Expiry Time and the Payout Amount.
The Strike Price is the price that you agree to enter the trade at the beginning of the trade. A strike price that is chosen to be the current level of the security (spot price) are said to be struck “At The Money”.
The expiry time is the period of length that you have chosen for the option contract to be valid for. It is the time difference between when you enter the trade and when it expires. This can be chosen by the investor at the outset of the trade and can range from a months down to as close as in 60 seconds time.
The payout amount is the percentage that a broker will pay on a winning trade. If, however, you lose a trade the money that you initially staked will also be lost. Yet, there are some brokers who offer some of the initial lost stake back as a proportion of the initial trade.
The standard binary option which allows you to bet on an up or down movement is more commonly called the “up down binary trade”. One can bet that the price is going to go up by buying a “call” option and bet that it is going down by buying a “put” option.
When it comes to determining the price of a binary option, it can be quite a complicated matter. In fact, this is something that quantitative analysts at large investment banks embark on. Binary Option pricing is calculated using a combination of the above factors together with others such as implied volatility and prevailing interest rates. For the standard retail trader though, understanding how it is priced is less important.
A Simple Binary Trading Example
For this example, we are going to take a look at an actual live trade at this moment. Currently, the spot price of pound sterling in dollars (GBPUSD) is $1.3295. Assume that you would like to stake $20 on this trade that sterling will go up and you have chosen an expiry period of 5 minutes. On this particular trade, the broker is offering a 90% payout ratio. If, after 5 minutes sterling has appreciated (increased in value) then you will have won the trade. The payout in this case will be your original bet back ($20) as well as an 90% payout of the original bet ($18). Therefore, the broker will pay you $38 for the winning trade. If, on the other hand, GBP has depreciated (decreased in value), you will have lost your initial bet of $20. Of course, the trade works the other way as well if you bet that Sterling will depreciated (decrease in value).
Part Two: Other Types of Binary Options
Although the Up Down binary option is the most standard binary option, there are a number of other binary option varieties that one can trade. The types of options that you will be able to trade does, however, depend on the type of broker. These are some of the other binary options that you can trade:
The 30 Second Binary Trade
As the name suggests, the 30 second binary option trade allows the trader to buy options with an expiry time of only 30 seconds. What this means is that there is more opportunity to bet within a defined period of time and make the most of a trending currency pair. Some binary option traders prefer to use 30 second options for two main reasons.
It is important to make certain that the broker you choose to trade with allows you to trade options over a 30 second timeframe. Currently, only 24Option and Finrally offer this.
One Touch Option
A one touch binary option allows an investor to bet whether the price of a security will touch a pre-defined level over the life of the option. If the option reaches the chosen level, the investor gets the full payout of the binary option. If, on the other hand, the option does not reach that level, the investor loses his initial stake on the option. The one touch level can be above or below the current spot price and can be a put or a call.
This type of binary option is ideal for an investor who is certain that the price of the security will reach a certain level but is uncertain as to whether it will remain above or below that chosen level. As seen with fundamental traders who use 30 second options, the price of a security can adjust and retrace which mean the investor may not profit from the initial movement.
No Touch Option
This is a simple variant of the one touch option above. As the name suggests, a trader will bet that the price of the security will not touch a certain level over the life of the trade. If at the expiry time, the no touch option has not reached the level then the investor will get the payout of the trade. However, if during the life of the option, the security has touched the no-touch level then the investor will lose the initial stake.
This type of option is ideal for an investor who is certain that a security will not cross a certain level. This is usually helpful for those investors who use technical analysis and resistance / support levels to inform their trading.
Boundary options are ideal for investors who prefer to “range trade”. An investor will have to decide whether a security will breach or remain within a certain range. At the outset of the trade, the broker will present the bounds of the trading range. If this looks familiar, it should be. A boundary option is just a combination of two one touch or no touch options.
This is beneficial for investors who have views either on a stable or a volatile price range. If an investor is certain that the price will remain within the range, he will place a trade on an “inside bounds” binary option. If, on the other hand, he is certain that it will breach this range and be very volatile (but is uncertain of exact direction) then he will place an “outside bounds” trade.
Some more Binary Trading Examples
The Euro is currently at 1.1147 dollars (EURUSD=1.1147). Germany is about to release some important GDP numbers that you are certain will move the Euro exchange rate. There are three different types of trades that you can place. These are dependent on whether you have a view on whether the number GDP numbers will have a positive, negative or uncertain effect on the exchange rate.
If you are certain that the GDP number will be better than expected and it will lead to an immediate jump in the Euro, you can enter a one touch call option at 1.120. If the exchange rate reaches 1.120 within the expiry time, you will win the trade. If, on the other hand you are certain that the number will underperform and disappoint, you can enter a one touch put option at 1.1110. If, during the expiry time, EURUSD touches this level, you will win the trade.
Of course, there may be a situation when you don’t know whether the GDP number will be above or below expectations. However, you are convinced that the number will surprise and have a large impact on the exchange rate. In this case you can enter an “Out” boundary option you are betting that the EURUSD will break through and out of a boundary. In this case, the boundary levels are 1.1210 (upper boundary) and 1.1100 (lower boundary). If the number does move the market as expected (either up or down) and breaks through the boundary, you will have won the trade.
If, on the other hand, there exists a situation when you are certain that the GDP number will be broadly in line with the consensus and have no effect on the exchange rate. In this case, you can enter into an “In” boundary option. In this bet, you are certain that EURUSD will trade within a defined range. So, looking at the above boundary levels, if at option expiry EURUSD has not touched the 1.1210 or 1.1100 levels then you will have won the trade.
Binary Options Day Trading 2020
Binary options trading hinges on a simple question – will the underlying asset be above or below a certain price at a specified time? If so, you can make substantial profits with one of the most straightforward financial instruments to trade. But what exactly are binary options, and what are their benefits and drawbacks? This page will answer those questions, as well as detailing how to start day trading binary options, including strategies, tips, and regional differences to be aware of. Use the broker top list to compare the best binary brokers for day trading 2020.
What Are Binary Options?
Firstly, let’s have a look at how it all works. Put simply, binary options are a derivative that can be traded on any instrument or market. They appeal because they are straightforward. You know precisely how much you could win, or lose before you make the trade. No complex maths and calculator is required. This is why they are also known as ‘all or nothing’ trades.
If you anticipate news announcements, quarterly reviews, or global trends, then you may be able to make an accurate determination as to whether the price is going to increase or decline at a certain point in the future, turning a profit.
There is a whole host of derivatives to choose between. You can trade binary options on commodity value, such as aluminium and crude oil. You can opt for a stock price, such as Amazon and Facebook. There are foreign exchange rate options, including all the major and minor pairs. Even cryptocurrencies such as Bitcoin, Ethereum, and Litecoin are on the menu.
A Brief History
If you want to start trading binary options full-time, a detailed understanding of their origins will help. Binary or ‘digital’ options have been around for decades. Originally though, it was only large institutions and the fabulously wealthy that had access. However, 2008 saw the US Securities and Exchange Commission open the floodgates by allowing binary options to be traded through an exchange.
The internet and technology have since given the whole world access to these ‘digital’ options. As it stands, with low barriers to entry for savvy day traders and a simple to understand preposition, the demand for these digital trades will only increase.
There are a number of different option types to choose from. The most popular types are listed in the brief glossary below.
Another important component of binary options is expiry times. This is when the trade will end and the point that determines whether you have won or lost. These times can range from 30 seconds and 1 minute (turbos) to a full day (end of day), and even up to a whole year.
As an intraday trader though, you will be more concerned with trading 5 and 30-minute binary options. Opt for binaries with 1 minute expiry times though and you have the ability to make a high number of trades in a single day.
Is Trading Binary Options Legal?
Despite the somewhat negative reputation, the reality is binary options are legal. The majority of companies operate fairly. Opinions have been split because there are some out there that operate scams.
Regulation in certain regions has meant binaries have been withdrawn from the retail market. In the EU for example. But professional traders can still use them. In regions such as India and Australia, binary are legal – but traders should make sure they use a reputable broker, and read our section below on avoiding scams.
Scams & Frauds
The binary reputation has suffered from dishonest marketing and cybercrime. Too many unregulated brokers promise quick cash, whilst operating frauds. Regulators are on the case and this concern should soon be alleviated.
Binaries themselves are perfectly legitimate, but steer clear of ‘instant money’ promises, brokers that cold call, and celebrity endorsements, plus any claims that you can ‘start trading binary options for free’.
So it isn’t a question good or bad, it’s simply a question of being alert to the dangers and knowing what to look out for. If you’re unsure about a broker, ask the question in a live trading room to check they’re properly regulated.
Binary Options Vs CFD Trading
Although in some ways similar, there remain some crucial differences between binary options and CFDs. With CFDs, you have potentially unlimited risk. If the price of the asset moves significantly, the value of the trade can grow very large, very quickly – for better or worse.
Whereas binary options work slightly differently. Whilst you are still investing without owning the asset in question, the gain and loss rate is fixed. With a call option, it doesn’t matter if the price rockets, you retain the same percentage as if it rose by just a couple of pips.
Likewise, if the price sinks to zero, you’ll only lose what you put in. So, to define the difference – with binary options you get fixed risk.
Having said that, just as if it was binary options versus forex trading, you are restrained in your profit potential.
Why Trade Binary Options?
If you want to profit trading binary options, you need to first understand both their pros and cons. You need to make sure binary options will suit your trading style, risk tolerance, and capital requirements.
There is a whole host of attractive benefits to trading with binary options. The greatest advantages have been outlined below.
Whilst there are plenty of reasons to delve into trading on binary options, there remain several downsides worth highlighting:
Binary Trading via Mobile App
How Does Trading Binary Options Work?
Trading binary options for beginners is straightforward. Simply follow the steps outlined below.
Step 1 – Find a broker
This is one of the most important decisions you will make. You need a broker that meets all your requirements and who will enhance your trade performance. But with so many options out there, how do you know what to look for?
If you’re high-frequency binary trading each day, the commission fees and costs will quickly rack up. You want to maximise your profits so look for brokers with a competitive and transparent fee structure, and remember, different asset classes pay out different amounts.
One point worth investigating is rules around minimum deposits. Whilst some brokers will offer binary options trading with no minimum deposit, many will expect a deposit of close to $50, and some $100. A broker offering low minimum deposits is ideal if you’re strapped for cash. Trading binary with JC and GCI are good choices if you’re looking for low deposits.
Some brokers will specialise in certain assets. If you’re set on crude oil, it may be worth finding a broker that’s geared towards those binaries. You may benefit from relevant news feeds and the most prudent option choices available. Trading binary stocks with 212, for example, is ideal for those interested in stocks.
With scams out there it’s important you check your broker is properly regulated by the relevant financial body, e.g. FCA, CySec, CFTC. Trading with 247 Binary Options, IQ option, and Binary.com are all safe bets.
Binary options platforms are your gateway to the market and where you’ll spend many hours a day. There are now many online trading platforms, so, make sure it’s easy to use and offers all the charts, patterns and tools you need to make smart and accurate trade decisions. For example, will you be trading binary options with candlesticks or more obscure charts?
Both Keystone and Nadex offer strong binary options trading platforms, as does MT4. Before you buy, conduct a thorough trading platform comparison and check reviews.
Any problem could cost you time, and as an intraday trader, time can cost you serious cash. So, check the broker offers reliable support. Some brokers will offer 24/7 customer support through calls, live chat, and in a number of languages. Binary options trading with Etrade and 24 Option are smart moves if you want top quality support.
A growing number of people use mobile devices and tablets to enhance their trading experience. However, software for trading binary options varies hugely. So, it’s worth checking whether your broker offers cross-platform capabilities. Also, check the charting tools you need will work on your iOS or Android device. Binary options trading with IQ Option, for example, offers fantastic trading apps.
Many brokers will sweeten the deal with some useful add-ons. Some may offer free trading plans, courses, and lessons. So, find out first if they offer free courses online to enhance your trading performance. Some brokers will also offer free binary trading trials so you can try before you buy.
You could also benefit from trading bonuses, tips, the best strategy and trading signals reviews, plus free, practice demo accounts. Not to mention some brokers allow for binary options trading using Paypal. However, don’t be put off by no binary options trading deposit bonus, these can be a sign of potential scams.
For newbies, getting to grips with a demo account first is a sensible idea. Funded with simulated money, you can try numerous assets and options. It’s the perfect place to make mistakes and learn before you put real capital on the line. In addition, you’ll find most free binary options demo accounts require no deposit, so you can start practicing whilst you save that initial capital.
There is no universal best broker, it truly depends on your individual needs. Some brokers offer minimum trades of just a couple of pounds, whilst others require hundreds or even thousands. The solution – do your homework first.
For more guidance on making the right choice, see our brokers page.
Step 2 – Choose An Instrument/Market
You can trade binaries in pretty much everything, including stocks, forex, indices, and commodities. You can bet on anything from the price of natural gas, to the stock price of Google. Opt for an asset you have a good understanding of, that offers promising returns.
Step 3 – Decide On An Expiry Time
As a short-term trader, you’ll probably be more interested in 30 seconds, 1 minute and end of day expiry times. You need to balance binary options trading volume with price movement. Whilst the more trades you make means greater profit potential, it’s better to make fewer and more accurate trades. Also, find a time that compliments your trading style.
Step 4 – Decide On Size
In the binary options game, size does matter. The greater your investment the greater the possible profit. On the flip side, remember the entirety of your investment is on the line. You need an effective money management system that will enable you to make sufficient trades whilst still protecting you from blowing all your capital.
Step 5 – Choose An Option
You will have any number of the options outlined above to choose from. Think carefully about how confident you are in your determination. Consider factors that will jeopardise your investment, and select an option that gives you the best chance of succeeding. Don’t automatically select a ladder trade because you want huge returns, consider which options are the relatively safe bets.
Once you’ve made that decision, check and confirm your trade. Then you can sit back and wait for the trade payout.
Below is a video explaining how to trade binary options on the platform of a leading provider:
Binary trading strategies will differ from trade to trade. What may work for a ladder option in forex, may prove useless in a range option on gold. Having said that, there are two reasons you must have a strategy.
Firstly, a strategy prevents emotions interfering in trade decisions. Fear, greed, and ambition can all lead to errors. A strategy allows you to focus on the maths and data.
Secondly, a strategy allows you to repeat profitable trade decisions. Once you’ve found out how and why that binary option worked, you can replicate it to create consistent profits.
Building A Strategy
There are two crucial elements to your binary options trading method, creating a signal, and deciding how much to trade. The second is essentially money management. How do you go about determining these two steps then?
Step 1 – Creating A Signal
The signal will tell you in which direction the price is going to go, allowing you to make a prediction ahead of time. The two main ways to create signals are to use technical analysis, and the news.
Charts, Patterns & Indicators
If you can identify patterns in your charts, you may be able to predict future price movements. They rest on the idea that ‘history repeats itself’. You can start trading binary options using Heiken-ashi, other candlesticks, and line charts. Armed with charts and patterns, successful traders will build a strategy around their findings.
You can then build indicators into your strategy, telling you when to make a binary option, and which binary option you should go for. These technical tools can prove invaluable, so make sure your broker offers the features available to conduct thorough market analysis.
One of the great things about trading binary is you can use any number of your normal indicators, patterns, and tools to help predict future binary options movements. So, you can start trading with/using:
For more detailed guidance, see our charts and patterns pages.
You can trade binary options without technical indicators and rely on the news. The benefit of the news is that it’s relatively straightforward to understand and use. You’ll need to look for company announcements, such as the release of financial reports. Alternatively, look for more global news that could impact an entire market, such as a move away from fossil fuels. Small announcements can send prices rocketing or plummeting.
If you can stay in the know you can trade your binary options before the rest of the market catches on. To do that you’ll need to be tuned into a range of news sources. You can browse online and have the TV or radio on in the background. Some of the most useful news sources in terms of trading information are:
Step 2 – How Much You Should Trade
If you’re just starting off it’s often best to keep things simple. Trading the same amount on each trade until you find your feet is sensible. Below are 3 binary options trading strategies for both beginners and experienced traders.
Binary options using the martingale trading strategy aim to recover losses as quickly as possible. To do this you’d trade larger amounts of money in the trades following a loss. So, you’d set an amount that you trade each time, say $250. However, if you lose on that $250, you’d bet $500 on the next trade. If the trade wins, you’ll already be back in the black, rather than being stuck around the break-even mark.
The problem with this strategy is that if you go on a losing streak you can lose a serious amount of capital in a short space of time. So, only use this strategy if you’ve got a relatively accurate means of making trade decisions. If you’re still in the trial and error stage, consider a different approach.
A percentage based system is popular amongst both binary options traders and other traders. The idea is you specify a percentage you’re willing to risk. Between 1-2% is common. So, if you’ve got $10,000 in your account, and your risk value was 2%, you could trade $200 on a single trade.
If you have a greater risk tolerance and consistent results you may want to increase that risk margin to 5%. The benefit of this system is that you should never lose more than you can afford. This makes it an ideal approach to take if you’re new to trading on binary options.
This example is best employed during periods of high volatility and just before the break of important news announcements. This technique can be utilised by traders of all experience levels. It gives you the capability to avoid the call and put option selection, and instead allows putting both on a specified instrument.
You aim to utilise put when the value of the instrument has risen, yet you think that it’s going to decrease soon. Once the descent has begun, place a call option on it, anticipating it to bounce back swiftly. You can also do it in the reverse direction. Simply place a call on the assets prices low and put on the rising asset value.
This significantly increases the chance of at least one of the trade options producing a profitable result. If you’re in a volatile market, this simple system could you see turn handsome profits. This works well as a binary options trading 60 seconds strategy, and will also cover expiry times of up to one day.
Bots & Algorithmic Trading
Once you have honed a strategy that turns you consistent profits, you may want to consider using an automated system to apply it. These robots usually rely on signals and algorithms that can be pre-programmed.
The bots then do all the leg work, trading options on your behalf. The plus side is they can make far more trades than you can do manually, increasing your potential profit margin. They can also trade across different assets and markets.
It’s worth investigating your brokers offering when it comes to auto trading and checking for robot reviews. Many allow you to build a program with relative ease. You can use your own entry points that rely on Bollinger bands, RSI/MFI patterns, and moving averages.
However, even when you’ve got your system up and running, you can’t go into trading binary options on autopilot, you need to stay tuned in. If any mistakes take place, you need to be there to remedy the problem. Technical crashes and unpredictable market changes can all cause issues, so stay vigilant.
Many binary option strategies pdfs fail to sufficiently consider time variables. Certain strategies will perform better with specific time options. You may want to look specifically for a 5-minute binary options strategy. Alternatively, trading 15-minute binary options may better suit your needs. So, whichever strategy above you opt for, ensure you take time into account.
Summing Up Strategy
Trading binary options with success rests on finding a strategy that compliments your trading style. So, consider the instrument you’re going to be trading. Then, employ an effective money management system and use charts and patterns to create telling indicators. Also, utilise news announcements to your advantage.
If you’re trying a new fence, gap, hedging, or any other binary strategy for the first time, why not try it on a trading practice account first? This will allow you to address any issues before you invest your own money.
For more detailed guidance, see our strategies page.
Binary options trading 101; immerse yourself in educational resources. As Benjamin Franklin asserted, ‘an investment in knowledge pays the best interest’. The top traders never stop learning. The markets change and you need to change along with them.
To do that, utilise some of the resources detailed below.
All of the above will play a key part in your binary options trading training. Free trading videos and examples will help give you an edge over the rest of the market, so utilise them as much as possible.
There currently exists no binary options university. So, explanations as to why that option didn’t work can be hard to come by. Keeping a journal with all your binary option trading results in could solve that issue. A detailed record of each trade, date, and price will help you hone your strategy and increase future profits.
Whether you keep it an excel document or you use tailor-made software, it could well help you avoid future dangers. As an added bonus, it can make filling in tax returns at the end of the year considerably easier. A journal is one of the best-kept secrets in binary options, so now you know, use one.
Trading binary options successfully isn’t just about having the right strategy. If you can’t control your emotions you will make costly mistakes. As Robert Arnott stated, ‘what is comfortable is rarely profitable’. When the pressure kicks in, fear and greed can distract you from the numbers.
You need to accept that losses are part of trading and stick to your strategy anyway. If it’s based on accurate maths and careful technical analysis then you have to keep your faith. As soon as you start acting inconsistently your profits will suffer.
As the popularity of binary options grows across the world, regulatory bodies are rushing to instill order. That means where you trade and the markets you break into can all be governed by different rules and limitations.
If you’re day trading binary options in the UK, for example, you will require a license from the UK gambling commission. If you opt for a broker regulated by the Financial Conduct Authority (FCA), you’ll be guaranteed an extra level of protection. Beware some brokerages register with the FCA, but this is not the same as regulation.
Brexit has brought with it complications to trading regulations. The MiFID II guidelines were set to be implemented across Europe enforcing rules around binaries, however, the UK may not now implement the guidelines. This means the UK is no longer under pressure from Europe to reclassify binaries as financial instruments.
Binary options trading for US citizens is limited by a choice of just two brokers. Nadex and CBOE are the only two licensed options. Fortunately, they are both huge firms offering competitive prices and a range of different assets to trade binaries on.
Rest Of World
In Australia, the Australian Securities and Investments Commission (ASIC) runs the show. If you’re interested in brokers based in Cyprus and Israel, then check they are regulated by CySec. In Dubai and the rest of the UAE, binary options are regulated by the Dubai International Financial Centre (DIFC).
You can also start day trading binary options in Canada, India, Pakistan, South Africa, Malaysia, Kenya, New Zealand, Nigeria, Vietnam, Indonesia, and the Philippines. Each has their own regulatory bodies and different requirements.
So, if you want protection, ensure you do your research before you sign up for a binary broker on the other side of the world.
Another important regional distinction comes in the form of taxes. Some countries consider binary options as a form of gambling, such as the UK. This comes with notable benefits. The HMRC will not charge you any taxes on profits made through binary options. However, in the future binaries may fall under the umbrella of financial derivatives and incur tax obligations.
Having said that, if day trading binaries are your only form of income and you consider yourself a full-time trader, then you may be liable to pay income tax. Whilst you are probably still exempt, it is worth seeking clarification.
Outside the UK, tax regulation differs hugely. Binary options in Japan and Germany come with vastly different tax obligations, for example. So, before you start trading seek advice to ascertain whether you’ll be exempt from tax. If not, will you pay income tax, capital gains tax, business tax, and/or any other form of tax?
For more detailed information, see our taxes page.
Can Trading Binary Options Make You Rich?
Although exciting and dynamic, to make a living trading binary options you’ll need to use this page and other sources as guides. Can trading binary options make you rich then? Done correctly, yes it can. There is no question of binary options potential profitably, this is evidenced by numerous millionaires. To get there though, you’ll need the right broker, an effective strategy, and you’ll need to invest in your trading education, by utilising the resources outlined above.
Are binary options legal?
Yes, but regional regulation varies.
In India and Australia for example, binary options are legal.
In the US, binaries are available via Nadex, and perfectly legal.
In the EU, binaries have been withdrawn for retail investors, but it is still possible to trade binary options legally, by professional traders. Certain criteria need to be met in order to be classed as ‘professional’.
Can you trade at weekends?
Yes. There are two ways to trade at weekends. Firstly, forex markets are still open in some parts of the world during the “weekend” in other parts. Binaries can be traded on forex during these times.
There are also ‘synthetic’ markets with some brokers (such as binary.com) but traders should note there is no underlying market with these options. They are ‘virtual’ markets created solely to cater for traders looking to trade anything at all. They are not for sophisticated traders.
Are binary options banned in Europe?
Binary options have been withdrawn for retail traders by the European regulator, ESMA. Brokers not regulated in Europe may still offer binaries to EU clients.
It is also possible for EU traders to nominate themselves as professional traders. This waives their rights to regulatory protection, and means binaries are free to be used again.
Some synthetic markets can also be traded by EU traders, and while the product works exactly as a binary options, they are referred to slightly differently.
Do binary options work on MT4 or MT5?
There are no binary options brokers offering Metatrader integration. It is however, possible to perform technical analysis in MT4 and place trades on a separate trading platform.
Can you use binary options on cryptocurrency?
Yes. The leading binary options brokers will all offer binaries on Cryptocurrencies including Bitcoin, Ethereum and Litecoin. As a derivative, traders will not “own” any cryptocurrency, they will purely be speculating on the price. This does mean however, there is no need for a Crypto wallet or crypto account.
Best Binary Options Brokers 2020: