In the era we live in, there are virtually limitless possibilities to earn money either as your main income stream or earn passive income. Binary options are one of those possibilities which offer some fixed return either in the form of cash or assets, depending upon the outcome of the option. Income through binary options is linked to the output of options.
Binary options derived from the name binary due to the “yes and no” possibility for the future of the underlying asset (currency, commodity, stocks, etc.). Investors earn money if the option expires in the money when it expires.
The basic principle and working behind the binary options are simple, and investors don’t need to learn complex market strategies to invest in them. For example, a binary option for the shares of a firm offers the yes or no possibility for shares’ price to go above a certain level.
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If the trader makes the decision of yes, it means that he is rooting for the price to go higher than the current point. We assume that a trader, based on his insights or instincts, thinks that the share price of ABC Company will go above $40 on the specified date and time, and he bets $100 on this option. It doesn’t matter now how the price behaves before the expiry of the option; it just needs to be above the price level exactly at the expiry time.
If the price stays above the $40 all day long, but right at the time of expiry, it goes down the level; the contract will expire at a loss for the trader. But if the price does end up on the higher side of the $40, the trader will receive the pre-decided payout. If we suppose the decided payout was 50%, the trader will receive $150 from the broker. Traders lose all their money if their bet is proven wrong.
Binary Options have a number of pros when compared to other financial instruments. It is quite easy to enter the market through binary options. Traders experience better control over their profits and losses.
There is also sufficient training material available online to learn how to choose the right options. Trading is simple, and there is a low chance of loss if the trader is professional. The amount of profit or loss is pre-determined, and even if the traders experience loss, the amount of money lost is known to them, which makes the financial as well as mental loss bearable. This makes risk management easy.
The earnings against binary options are added to the trader’s account immediately. There is no limitation on market and location when you are trading in binary options. Binary options are available almost everywhere globally, and most brokers offer their services across the devices, making it easier to trade even on vacations.
However, there are also some cons of binary options. This financial instrument is relatively new, and laws and regulations are still being developed for them. In some countries, binary options are not regulated, and the risk of exploitation and fraud exists with brokers. For example, one of the rare binary platforms that accepts US traders is reviewed in our Nadex review.
No doubt, Binary Options are an exotic financial option, but we suggest you build a considerable experience before you start risking your money.
You need to go through a binary options broker who will work for you. These sites all have slightly different nuances on their trading policies—especially when it comes to the assets offered and the rates of return you can earn—so it is important that you do your research before you commit to a particular place. There is no rule saying you can’t have two or more brokers, so this is not a binding decision, but you will save yourself a lot of hassle if you go with the best broker from the beginning.
You want something that you are knowledgeable of and something that you are comfortable with predicting the price motion. Having a wide variety of assets is a good thing, but more importantly, you want the assets you want to trade included. Think about it this way: if you are going to only trade two or three assets, does it matter if the broker has a hundred others listed on their site? It really doesn’t matter, honestly, if they have assets listed that you aren’t going to ever trade. It only matters that the site has the assets you want. The rest is just background noise.
For those of you who intend on trading the most widely available underlying assets, what’s more important than the dozens of assets that you will never consider is the rate that you will be earning on your trades. If one place is offering 70 percent and another is offering 75 percent, this might not seem like a huge difference—especially considering other factors—but the higher payout will always be your best choice.
Of course, this isn’t always just that easy. Some institutions offer a rebate on losing trades, too. So you need to know how often you are correct, on average, and calculate just how beneficial trading with a particular broker will be. If you are incorrect often enough, the rebate will come in handy by saving you up to 15 percent per losing trade.
If you want to trade Apple shares and gold, but two different brokers offer higher payouts on these two underlying assets, using both for their respective underlying asset will be in your best interest. Basically, you want to ensure that you are always getting the most out of your trading capital and diversifying your trading funds between two or more different places can be a smart choice for maximizing profits over the long haul.
Binary Brokers are extremely competitive amongst each other. Some of the most popular brokers these days are covered in our Deriv.com review, Expert Option review and Olymp Trade review. Although they don’t usually offer bonuses anymore they may have some for of incentive. Just remember, not all sites work with the country you are located in.
Choosing the right binary options broker is important, but don’t be distracted by things you do not need while making your decision.
If you want to start trading binary options, you need to register yourself on an online trading platform. In the previous section, we guide you on what to look for when choosing a binary options broker. Once you are done with that, you will need to register on the selected platform.
The registration process is different for every broker. If you are good with technology, you shouldn’t face any difficulty registering on any of those platforms. But if you are not well familiar with the computer and the internet, registering yourself on the platform will be difficult.
We will guide you through the process of getting registered as a binary options broker.
You may think that sharing your personal and financial details online is not a good idea. With all the frauds and scams online, you are absolutely right to be skeptical, and this very thing will help your trading online.
Before starting the registration process, please check the status of the regulations and licenses of the platform. Also, check the website security, which you can easily do by searching online. The registration process itself will reveal whether the platform is safe or not to share data.
The binary options brokers are bound by law to gather certain personal and financial information, so you get a pretty good idea about whether or not the broker is regulated just by the look of it.
The first step in creating an online trading account is to decide the type of account traders want, the real account, or the demo account. The next step is to provide your personal information such as name, address, and contact information. We advise you to share real information as brokers are bound by law to verify your account and your account can be blocked if you provide faulty or misleading information.
Personal information can be verified independently by the broker, or they can also ask you to upload your ID or one of the utility bills. Traders often refrain from uploading a scan of bills or ID and do not get registered. This is not the right decision because the broker is legally bound to verify your ID from these documents.
The last but most important part is choosing the payment method for your account. You can choose banks, cards, e-wallets, or crypto-accounts to deposit into or withdraw funds from your broker’s account. If you are interested in crypto currencies make sure to check our bitcoin reviews for more info.
If you want to start trading Binary Options online, you need to sign-in to your online brokerage account. In the previous section, we guided you through the registration process on an online binary options account. Once you have an account with a password, you can start using your account to trade.
One of the most important things you need to keep in mind about your binary options platform ID or similar IDs is that you need to keep this ID to yourself and not share it with anybody. Your online account is as important as your card pin. If you share your login details with any person, your account, as well as your related financial and personal data, can be compromised.
The signing-in process itself is really easy and simple. It involves just one or two steps to sign in to your account. However, you can turn on extra security by choosing two-step verification for every sign-in attempt by e-mail or text message on your phone.
Your login history is also maintained on most of the top binary options platforms. You can check your login history to see if your account is being used by some other person. If you experience any unusual logins in your history, you should immediately contact your brokerage and inform them about it so that they can sort it out.
Binary options trading is a difficult way to make money and they often entail a lot of risk. This is why having a demo account is so important. This is basically a risk-free way to trade in real time without actually using your money.
You can simulate trades here to learn the craft. Whether you are a new or
experienced trader, a practice account is a great way to get the screen time you need under your belt in order to help reduce the risk that is inherent to new traders.
Binary options do not actually allow you to trade the assets you are dealing with. Instead, the assets are actually underlying assets; you are not trading them directly but rather trying to predict price. A trader doesn’t have to worry about taking ownership of an asset and this gives you a lot more freedom.
When you initiate a trade, you first choose an asset and a timeframe. If you want to choose Apple’s stock over a period of one hour, this is where you would make that decision. You are given the choice of whether you think the price will go up or down. You must next choose how much to risk. Once these factors are all accounted for, you push the button and execute the trade. Then you wait. If your prediction was correct at the end of the expiration time, you are given the previously agreed upon profit. If you are wrong, you lose all or a portion of your money.
If you are a new trader, it’s really important, however, that you use a broker for your demo trading that doesn’t have time requirements on how long the account can stay open. This doesn’t mean that you need to stick with that binary broker forever, but when you are just getting your feet wet, you will need more than a few days to really learn how to effectively trade in this new marketplace. Trading is tough, regardless of what you’ve hard, so being able to keep up within this marketplace is extremely important. You can’t do that without a good deal of practice under your belt.
Opening an account does require an initial deposit in pretty much every case, but the benefits are well worth the out of pocket cost. The things you will learn through prolonged virtual trading are going to benefit you for your entire career. Here you can make the mistakes and errors that you would naturally make learning this type of trading, but in a risk-free setting.
With a binary options demo account, traders can experience an actual trading process and find out if this is the right thing for them. Brokers provide virtual funds in the demo account for as much as $10K, and traders can trade that money like it is done with real money.
The only difference is that the traders cannot make binary withdrawal of any profit they earn using the demo account. Demo accounts are improving with time, and brokers equip these accounts with more and more features.
In the race to beat the competitors to attract more and more traders, brokers keep adding new features to the demo account. One of those features is tips and guides for traders to learn how to trade better and learn skills.
Binary Options Demo accounts provide an invaluable service to both new and experienced traders alike. If you want to learn how to trade, or just want to brush up on your practice with a new platform, you need to heavily consider using one. The risk that you are taking on is nonexistent; even if you have to make a deposit to open one. You can always not use the deposited money and withdraw it. This is free of charge in most cases. Don’t make mistakes because you haven’t practiced enough. You can easily remedy this problem before it begins.
Online trading experience is as good as the software behind it. The software plays an important role in the success or failure of online binary traders. MetaTrader4 is one such software that allows traders to trade binary trading options in real market time. The platform is advanced and highly operable. MetaTrader4 was launched in 2005, and since then, it has evolved in almost every aspect.
With high automation and customization levels, new traders enjoy MetaTrader4’s demo account to the highest degree. A demo account at MetaTrader4 allows traders to develop trading skills without risking their hard-earned money.
Accounts can be opened by providing simple personal information as well as initial deposit and leverage. After providing the required information, login ID and password are issued by the platform, which you should keep safe with you and try not to share it with anybody.
$10,000 in the demo account proves to be more than enough for the trader to get familiar with the platform and financial instruments. MetaTrader4 provides live data on your trades and markets accurately, and you can evaluate your strategies according to that data.
Another unique and interesting feature of MetaTrader4 is its Copy Trading System, in which you can copy the trading strategies of the professional and successful trader onto your trades. These strategies can also be copied to an automated trading software who can trade for you even when you are physically away from the platform.
You can easily find the highest-paid traders and learn closely from them and then copy their moves to your demo account. Expert advisor apps also help MeraTrader4 become a top trading platform for binary options. These are automated trading robots created and offered by third party professional traders who charge money for their expert advice.
Experienced traders also appreciate MT4’s advanced analytical capabilities and charting systems. Professional traders can also build and design their own indicator charts. Customization of user interface and setting up charts and curves as per your choice allows traders to set up their interface as per their liking.
Technical support is also available in several international languages on the MT4. Traders can seek guidance from detailed support articles on MetaTrader4, and the broker provides live support for your trading queries.
Although there is much competition in the market for MT4, such as MetaTrader5, the latter is more focused on CFDs, Futures, and binary stock options. So if you are looking for the most suitable platform for binary options trading, MetaTrader4 is the best option for you.
One of the most important benefits of binary options trading is the ease of doing trade. Binary options trading platforms work on the principle of providing traders with the best possible trading experience they can get.
Along with simplicity and high profitability, binary options traders experience better control over their profits and losses than any other financial instrument. The profits and losses are controlled due to the pre-determined nature of trade. Usually, an early trader is not very fortunate with money, and faces difficulty replenishing the initial funds required for the trade.
Minimum deposit requirements for online trading accounts are usually very low in binary options trading, and the amount required for trade is not huge, and it’s up to the trader how much he wants to risk.
For this reason, brokers don’t usually put high limits on the initial deposit, and even if the initial deposit requirement is high, the trader does not risk with a huge amount early on, so in the real business terms, it really doesn’t matter what the limit is because the money just sits there in your account.
The most popular binary options platform set a minimum deposit limit on $10. This minimizes the risk of a huge loss of money. Although some traders allow you to deposit money as low as $1, but with $1 dollar, a trader needs to learn to really hear and focus on building an account from $1.
Some experienced traders may think the low initial deposits are the platform’s gimmick to attract more traders; however, a low minimum deposit does make a difference for new traders. Amateur traders don’t want to trade with a large amount, so the low minimum deposit brokers get more traffic.
IQ Option is arguably one of the best online brokers because it has almost all the qualities which a good online broker should have. IQ Option has a minimum deposit limit of $10, but it offers minimum trades of $1. So even if you initially have to deposit $10 initially, you can make 10 trades with that amount even if you lose on all trades. Not bad for gaining experience but again, you can do that with a demo account also. Nevertheless, being able to trade with as low as $1 is a great thing to have.
Over the past two decades, technology has evolved more than we envisioned, and the world is heading toward automation and synchronization. Cloud computing and big data, along with the introduction of 5G technology, have paved the way for the second generation of the smartphone revolution.
Everything is heading towards the smartphone app. In this scenario, binary options brokers also needed to acknowledge this, and they launched mobile trading apps for traders to provide them the facility to trade wherever they go. Most top tier binary trading brokers have launched their mobile app supported by Android and iOS.
This has also eliminated traders’ reliance on one or two particular mobile operating systems. Binary options brokers are developing apps for all operating systems, and they keep on improving apps to enhance functionality and ease of use.
However, the question of whether you need a mobile app or not? If you do need an app for trading, how do you select the perfect broker app for you?
Traders’ needs differ from one another. Some experienced and seasoned brokers may feel more familiar with the desktop platforms and prefer using them in the future, while young and novice traders may see the mobile app as a more convenient way of doing trade.
One way to decide for you whether you opt for a mobile app or stay with the desktop version is to use both for some time. Create a demo account on the platform of your choice and trade on both – mobile apps and desktop versions for at least one week. You will get a pretty good idea about your preferred trading system.
Users share their experience online on both devices, and you can seek guidance from them if you want an outside opinion.
Some investment and trade analysis websites post reviews for binary trading platforms along with their devices’ versions. Once you have decided that you are going to opt for the mobile version of the trading platform, the next step is to select the best app available in the market for this purpose.
Here is the list of parameters for choosing your desired platform app to help you make the right decision for you.
The mobile app may not be a deal maker or breaker for some traders. You must take costs, profits, regulations, and overall rating of broker into consideration, but having a facility of making trades on mobile with just a touch is an exciting thing.
The term all or nothing in binary options means; you’re either going to win your trade with a guaranteed percentage or lose what ever invested. It’s a bit scary to think about, if you are a new trader. When you have the chance to earn 90% on a trade, the risks go up just as well. The important factor here is to always understand your risk before entering the market.
This fixed return will be determined by the broker and the strike price you get in at. Assuming you take a call option on Google Stock at $800 a share for $100. Your return on investment will be set before you enter the trade. Say you take this trade for an 81% return if the trade finishes in your favour. This would mean you will get back $181 into your account. If the price finishes anywhere below the strike price, your return will be $0 or a loss of $100.
There are several types of binaries that traders can use. You have the simple call and put option, boundary options, and touch or no touch options. These are all forms of all or nothing binaries. It’s best to test each of these before risking real money trading them.
There are also so many different types of timeframes you can trade these. You have the shortest timeframe of 60 seconds up to weeks. Our favorite style of option is the 10-15 minute binary. This gives your trade enough time to work itself out. You can even trade over the weekend on an all or nothing trade, but these are extremely risky. Keep in mind that it is important to know what is the best time to trade binary options.
Here are some examples broken down.
Call Option – Say you take a call option on the EURUSD hoping for the price to go up. Should the price finish above your strike price or the price you entered, you will have a winning bet. The percentage was determined before you entered the trade. Should the price go down instead, you’ll most likely end up losing the whole investment.
Put Option – This is the opposite scenario of the trade above. This time you want the price of the EURUSD to go down. If the price moves in your favour, the determined percentage will be rewarded to your account. Should the price move up, even by 1/10th of a pip you will lose the whole investment.
Touch and No Touch – In this all or nothing scenario you’re seeking a trade whether you think the price will touch a certain price or not touch. All the price needs to do is touch the price point for a winner. If the price doesn’t reach that high or low, then you’ll lose the total investment. It is that simple. When trading this method you need to be very careful and look for the best setups.
The Boundary option is similar to the touch or no touch, but this time you are looking for the price to stay in a certain range. Should it do this you will have a winner. Of course, if it doesn’t, the investment will be lost.
Once you learn the different types of trading models you should start to practice on a demo account. This will help you get better with your entries. Over time you will learn what to look for, so you can take the best trades only.
A call option within the world of binary options is a prediction that indicates a belief that the price of an asset is bound to increase. With this type of trade, it doesn’t matter how much the increase happens to be—it can even be a fraction of a penny. If the price rises by even this small of an amount, the call option is considered to be successful and the payout will be received. This is the most basic of all types of option and is coupled with its opposite, the put option, on the vast majority of brokers’ online.
Choosing a call option is as easy as pushing a few buttons on your screen. Many platforms use the call/put option as their default setting, so you only need to choose the up direction next to the asset of your choice and decide how much you want to risk.
These can be executed across the widest range of timeframes. Some brokers have limited choices for the very short and very long term options, but call/put options are generally available for all assets and all timeframes. This is true even of 60 second and two minute options. For the longer options, call options are still one of the most popular types. You can find these present even in options up to one whole month long.
The downfall that you will find with call options, especially the shorter ones, is that their payouts are not as attractive as other types of trades. For example, a high yield boundary trade might return as much as 350 percent of your investment. These big return trades are notorious for being difficult to be right with, though, so even though a traditional call option might only return 75 percent, you will be right far more often. A few of these calls—when predicted correctly—will more than make up for the loss of profits because of the lower rates. Of course, it doesn’t make sense for brokers to offer high yield call options since the definition of a call option is that it has gone up, even if it is only slightly. Offering a much higher rate for this would be detrimental to the survival of a broker.
Another thing you may notice with the short term call options is that they do not return as much as the long term options. This happens for a very specific reason: when you go for a month long timeframe, your money is tied up for longer and thus cannot be instantly put back to use for you such as with a 60 second option.
If you are looking for a versatile type of trade that is easy to master, call options might be your best choice. These are the type of binary option that most closely resemble the traditional purchasing of stocks. With these, you are not taking ownership of anything, but like buying stock, you are hoping that the price you enter the trade at will be a low point and that the price will keep going up for as long as you are actively trading calls.
So whether you want to trade currency cross pairs at the 60 second level, or you want to trade U.S. stocks over the course of a month, you can use call options to help increase your profits. This is a simple, yet powerful type of trade. Even though it is the most basic trade you can conduct and is really easy to understand, it is very customizable, and this gives you a big advantage when it comes to making yourself some money.
In the world of binary options, a put option is the opposite of a call option. With call options you are predicting that the price of an asset will be going up, but with a put, you are hoping that the price of the asset will drop in value. This feature gives you a lot more flexibility than you would find in the traditional world of stocks. With stocks, you do have the choice to sell a stock short, but to do this, you need to have a margin account, and this can be a very expensive thing to maintain. $10,000 is the legal minimum for how much you need to have deposited in order to use this feature. With binary options, however, you can use as much or as little as you have in your account, as long as you meet your broker’s minimum trade amount—usually this is no more than $10, but it does vary from broker to broker.
This opens up a lot of doors to traders, especially those that want to start out small. Not having to meet strict financial guidelines is only one of the many benefits here, though. You are also alleviating a lot of risk when you trade like this. If you sell a stock short, in theory, if the price of that stock soars upward and you do not quickly cover your position, you can be at a potentially limitless amount of risk. This is not a good thing. But with binary options, this risk is greatly alleviated. The only risk you take when you trade a put option is what you type into the box on your broker’s trading platform. And even then, many brokers will pay you a small rebate when your trades are on the losing end of things.
In fact, trading put options is much simpler than just about any other type of trading. All you do is select an asset, click the down or put button, type in how much you wish to trade, select an expiration time, and then click the button to finalize the trade. All of this can be accomplished on the same screen in the matter of mere seconds.
This brings up another positive feature of trading these. You have a very wide range of assets at your trading disposal, and you will never have to change sites or platforms to access them. From the same web page you can trade currencies, stocks and stock indices from around the world, and even many of the most popular commodities. This creates a sort of one stop shopping for your trading and can be a great way to help save time and consolidate your trading.
If you are new to actively trading, put options can open up a lot of doors for you. They are easy to learn, and when used in conjunction with call options, they can give you a lot more control over your financial decisions. As you will quickly see, the more power you have over the decision making process, the more likely you will be to create more profits for yourself. And after all, this is the main point of trading in the first place. Binary options give you a lot more freedom than pretty much every other type of trading out there, and thanks to the varying scales of amounts you can use per trade, this type of trading is a potent tool for both the hard core experienced trader and the individual brand new to playing the markets. Put options alone open up many doors that you simply don’t have elsewhere.
One of the most attractive features of trading binary options is the risk/reward scenario laid out in front of you before you commit any money. This is by far the fastest way to trade binaries. Anything faster wouldn’t make sense. It’s imperative that you have a strategy that wins at a high rate.
Unlike the 15 minute binary option, the 60 second trading presents an opportunity to invest and make money in the fastest amount of time on the web. This fast paced process requires you to be on top of your game. Once you hit the call or put button, there is no turning back. Having a good working idea of how to trade like this will determine your chances of making money. Without preparation and practice you might as well just not bother. Trading this on a demo platform is a must before you risk any capital.
One of the most important tools in trading Forex on the short term binary market is the MetaTrader chart. This charting package allows you to keep track of each currency available to trade. Using these charts will allow you to find better entries than with the binary platform the broker gives you. The only way to be successful with this form of trading is by having the tools on your side like Metatrader 4.0.
In order for you to maximize your chances of making money this way, try to follow all trends that show up on the charts. No method is full proof, but it will help you visualize a decent setup this way. It’s been said many times over, that sticking with a trend is your best bet.
Most likely, if you’re thinking about trading sixty second options, then you are willing to be more aggressive. As a day trader, you could be done with your day in one minute. Although you may want to trade this style all day, you’re better off mixing it up with the other formats. This will definitely keep your risk down over the long run. We recommend you come up with a good working strategy to allow you the best chances. Approach this with smart binary options money management as well. Don’t just trade to trade either. Get the Demo account and practice first.
Gold is a hot commodity these days. There is a lot of talk about struggling economies, fading currencies, and political turmoil. This has opened the doors for more reliable assets to take the place of stocks, indices, and currencies, and gold is one of the most widely traded commodities out on the market today. However, gold is quite expensive, and investing in it can prove to be quite difficult. This has opened up an opportunity for alternative trading methods to come to prominence. Gold binary options play an important role here because they are cheap and they are very simple and easy to understand.
One of the good reasons why you should trade binary options rather than futures is the timeframe. A gold futures purchase might take months or longer before you will see a profit. Your money will be tied up in the trade this whole time, and that is not conducive to using that money to help you make more money. With binary options, you can execute trades that last as little as 60 seconds. This helps you structure your days more efficiently, and your money will never be in someone else’s hands for very long.
Profits are your number one priority when you are trading. There’s no guarantee that you will be successful in any given market, but with binaries, the potential for money-making is much higher. A stellar gold future might return you 25 percent of your investment if you’re lucky, but with a single gold option, you can make 75 percent or more, depending upon your selected timeframe. Most traders will not risk as much on a single binary option as they would on a future, but if you can string together ten 75 percent options trades with $100 risked each time, you will gain $750. A $2,000 future—risking twice the amount—with a 25 percent return will only net you $500.
Also, investing in gold bullion or futures is a long term proposition. If you buy bullion, it can take years before your investment will be worthwhile. Binary options present you with a unique opportunity to profit off of gold’s minute short term fluctuations, and still reap big rewards. If the price of gold goes up $0.01 per ounce, a bullion investor will likely see no difference in their portfolio. But a $100 option can give you a quick profit of $75 in about five minutes.
The other advantage that stems from the shorter timeframe is that a different skill set can be used to make money. Long term trades rely heavily upon fundamental analysis methods, and this excludes a lot of people that rely upon technical analysis methods. One of the strong features of technical analysis is that it is transferable. Someone that looks at a chart for a stock will see the same thing when they look at a chart for gold. Only minor differences exist, so someone that can analyze the short term changes in a price chart for Apple’s stock will also be skilled at analyzing gold’s price chart. If you buy bullion, this will not help you at all, but if you are trading 15 minute options, this skill will be of a big benefit to you.
So trading gold binary options can be profitable to you if you are a short term trader. This can be a good way to get more balance out of your trading and diversify. It can be very beneficial to a trader with limited trading capital, too. You don’t need nearly as much money to be an effective gold options trader than you would with a gold future.
Oil is the world’s most heavily traded commodity. Thanks to the predominance that this has throughout the world as a source of fuel, people in every nation use massive amounts of oil on a daily basis. Trading oil can be quite confusing though. You need to have the knowledge to read price charts and fundamental indicators, but you also need a firm grasp upon how futures work and just how long it will be before the price hits an acceptable level for you to make a worthwhile profit. Also, the price of entry when it comes to trading commodity futures can be pretty steep, and this eliminates many traders from testing the waters.
Oil binary options can be a great way to circumvent these problems. This type of trading is much cheaper to begin with, for starters. A commodity futures trade can cost tens of thousands of dollars, in some instances, while a typical binary option can be purchased for $10 with most brokers. Your purchasing power is much stronger with binary options, too, since you can make bigger gains while risking much smaller amounts. You won’t be right all the time with your predictions, but a $100 options trade, for example, will only lose you $100 if you are incorrect. A futures contract could lose thousands of dollars if you’re wrong and cannot unload your position quickly enough. In other words, the stakes with binary options are much lower, and this makes them much more attractive to smaller traders and those just starting out in their trading careers.
Binary options are simple to understand, especially in their most basic form: the call/put. Basically, you are given a starting point and you are trying to decide whether the price will be higher or lower by the time the expiry is reached. So if oil is currently at $96.00 and you think that 15 minutes from now, the price will be at $96.05, a call option will be your choice. A standard binary option over this amount of time will return 70 to 85 percent to your trading account—even though the price increase was only $0.05. So if you are buying a call option for $100, you will have a profit of anywhere from $70 to $85, depending upon the broker and the current market conditions. If you were to speculate the same amount in the traditional oil marketplace (assuming a commodities broker would allow this), your return would only be a few cents—this gives binary options a big advantage in this instance.
Another big issue is the timeframe over which oil is traded. A futures contract might take six months or longer to mature. If you are hoping to make a quick profit, you can sell off your contract if there is a demand for contacts that have not yet reached maturation, but for the most part, your money will be tied up for quite a while. Binary options avoid this. There are even some options that can last as little as 60 seconds. The return on these types of trades are fairly high, too. It’s not uncommon for a 60 second option to return as much as 72 percent of your initial investment amount. This is a rate that a six month futures contract will only meet in very rare instances. So for a fraction of the price, over a tiny fraction of the total time, you can make even more money with an option than you could with a futures contract.
Binary options aren’t always the best way to trade, but they do have some huge benefits, especially when it comes to trading commodities like oil. They are easier for the average person to trade, and this will likely cause the binary options marketplace to keep growing.
Indicators are an essential part of any good binary options trader’s toolbox. By using indicators effectively, you will be giving yourself a large advantage over people who trade based solely upon the feel of an underlying asset. While these traders might be right, sometimes even more than 50 percent of the time, they are not using one of the best and most effective tools that currently exist for traders.
There are indicators that exist for all types of traders, and binary options trading is no different. In fact, the best part about binary options trading is that indicators are often more effective when it comes to making a profit. This is because with binary options, you don’t need to have a large price increase or decrease. Instead, you only need to be right by a miniscule amount in order to get the full return.
Trading Indicators Broken Down
A good, long term, indicator strategy will look for signals that a price trend is going to continue. If you are trading the longer termed binary options, you definitely want an indicator that will tell you when a trend is most likely to continue, but if you are looking at shorter termed options, such as the 60 second binary option that many sites now offer, this doesn’t necessarily need to be the case. You can look at indicators that might point to price reversals here. In fact, this will give you an extra advantage because you will be able to trade both up and down without increasing your risk.
There is another choice when it comes to indicators, as well. Buying an indicator service’s assistance can be of great help here. These services often have great track records when it comes to correctly predicting the movement of a specific market, and while they aren’t exactly made for binary options trading yet, you can usually get a good feel of where the market is headed by reading their commentary. Again, these services don’t need to tell you that Asset XYZ is going to jump up $25 in price; they only need to be correct by a minute amount in order for you to get the full benefits of binary options trading. The small price you pay for a monthly subscription can easily be offset by your profits if you get on with a good and reputable service. Of course, there are some services out there that you should not waste your time with, as well, so make sure you do thorough research in this area.
Indicators can make you a great trader, but where do you start? First, look at past data for the assets you will be trading. What are the similarities that they experienced when going through certain trends? What similar factors contributed to a price reversal? Even if you are trading within trends, you still need to know the warning signs of reversals so you can know not to trade in these instances. Trading is a two way street, and you won’t be right all the time, but with a good amount of study, you can begin to inch your way over that random chance line of 50 percent and start turning a profit.
Binary options are perhaps the easiest type of trading to do because you don’t need to be right by as much. You still need to look for only the strongest of indicators, however. These will increase your correct trade rate and thus enhance your bottom line. Trading is all about making money, and sometimes making money is very difficult. Go with only the best indicators you can find and you will soon see that your correct trade rate is moving in an even more profitable direction.
We talk about price action throughout this site. Watching the pattern of the candlesticks is what gets us excited everyday. This is an art, when it comes to binary options trading and will take a lot of time for most people to really get a good understanding. Instead of using trading indicators such as the MACD and RSI, we watch how price forms certain levels. These levels are what we look for when trading. The key to price action trading is to only take the best setups. You really want a few things working for you before executing. Without the catalysts on your side, price action will not work for you.
Without applying indicators you can still see lines drawn on the charts. Each line represents some kind of price action. The four major factors we will discuss are Trends, Support and Resistance, whole numbers and old trading levels. Each of these represent price action in some form or fashion no matter what you’re trading. We will look at each, in a binary options point of view.
Although there are several other factors to price action, these are some of the variables we look at on a daily basis. If you can learn and incorporate them into your trading, things will become a lot more simple. You won’t have to worry about a ton of squiggly lines and delayed data. With a solid chart platform like Metatrader, you can have all the tools you need right in front of you. You want real time price action telling you what to do, which will definitely find the most authentic trades. It does take a lot of time and practice, but over time you’ll be a lot better off.
Many traders rely upon a signal service to help them gain an advantage within the marketplace, and you can even use this to help you move your binary options trading forward. However, you do need to be careful with these. Some of these services are not as effective as others. Signals can be generated automatically by a computer, or they can be written up by a computer. Some signals will be accompanied by an explanation while others will not. Basically, what you should be looking for out of these is timely and accurate advice. As these are predictions, they will not have 100 percent accuracy, but you do want something that is well above random chance.
The first thing you need to ask yourself is why you want a signals service. Do you want something to help supplement your own predictions so you can double check your work, or do you want someone else to do the work for you? Either choice is fine, but it will influence your decision making process. How the signal is sent is also quite important. You want something that you can receive automatically because of the quick paced nature of trading. Having a downloadable program that allows you to receive updates instantly will be your best choice, but receiving texts or emails are also options.
When you are trading binary options, signals can be very effective, especially when it comes to predicting the end of a current trend. You want to also make sure that your signals service matches the type of trading that you will be doing. If you trade 60 second options, a service that emails you once per day will not be effective when it comes to helping you. If you trade short term binary options, you want something that will alert you instantly as soon as a signal becomes ready.
The main benefit of a signals service is that it can give you a more exact approach toward executing trades. Instead of guessing or approximating an entry point, a good signals service will give you an exact entry and exit point. You can use this method for giving your trading a mathematical edge, or you can rely completely upon it for making your decisions. The thing you need to remember is that the majority of services rely on technical analysis, which means that they are geared more toward the short term trades. At these, they can be very effective. Whether you want to rely solely upon a service, or you simply want to have a professional helping you to supplement your own strategy, a good service will be able to spot more trading opportunities than you would be able to find on your own. Even if you decide not to use all of these, you will be expanding your reach and broadening your choices, and this will be a good thing as it increases trading flexibility.
The big problem with a signals service is that most of them are geared toward a very specific timeframe. If you want to trade 5 minute options, for example, you might find that not all services can predict this effectively enough to make a consistent profit. Furthermore, because binary options are still fairly new, most services are not designed especially for binary options. This doesn’t mean that they won’t help you, but a certain amount of adaptation might be necessary. A service can still be a very lucrative choice if they are being used in a correct fashion. Just make sure the service you use will benefit your style of trading.
Every career choice has success stories to present and also failures. If you are looking for easy money and dream about becoming a millionaire in just a few days, you need to clear your head and set your life straight.
Trust me when I say this, there is no easy money. If a binary options broker is offering you high returns and targets your dream of becoming a millionaire to lure you into trading, turn around and run!.
Becoming a millionaire by trading in binary options is definitely possible, but you need to work hard and smart to achieve that. You will encounter success stories and failures every day along the journey, but you must stay focused. You can’t earn a million in just a few trades or in a few months.
Here are a few tips for you to follow if you aspire to become one of the binary options millionaires;
That’s it. Simple and effective. Follow these simple steps and stay in the game. Don’t allow anyone to take advantage of your ambitions. Don’t quit only because you suffer loss in some trades. Success and failures are part of the journey. Even the most successful traders suffered losses. Be persistent and be ready to become the next big thing in binary options trading.
There are a lot of people that like to trade currencies within the Forex marketplace because of its 24 hour availability, the leverage that most brokers provide, and the lack of commissions. But there are still many barriers to success here that a good portion of these folk experience after a brief time. Binary options, when used correctly, can help solve some of the problems created by the Forex market.
When you are trading currencies, you are trading within the world’s biggest marketplace. More dollars are traded in Forex than in any single stock market. Billions of dollars change hands every day here, and because currencies are traded all around the world, there is always a market open. The major trading centers are in Japan, Europe, and the United States, and this allows the Forex market to stay open in some capacity all day, every day. This allows for a lot more trading freedom.
When you trade binary options, you do have the ability to trade currencies, and many brokers—even domestically based ones—will keep their currency options running in a limited capacity 24 hours per day.
But binary options have several advantages over straight Forex trading. One of the biggest of these is the concept of the spread. If you are trading the EUR/USD pair in the traditional sense, you have a gap that you need to overcome in order to turn a profit. So you might use U.S. dollars to buy Euros at $1.2990 each, but if you try to sell them immediately, you might be quoted at only $1.2983. This doesn’t seem like a big gap, but if you’re looking for short term profits, you will be out of luck in most cases. It can take quite a while to overcome that 7 pip spread, and even when you do, the price might not increase more than enough to give you a profit of a few pennies.
This is a problem that binary options have corrected. If you want to trade EUR/USD, you only need to be correct by a single pip in order to gain a profit, sometimes as much as an 85 percent return. The broker still needs to make money though, and this is why when you are wrong with a trade you lose 100 percent, but only gain 85 percent when you’re right. Still, to make a profit of 85 percent in the traditional Forex market, you would have to either be really lucky, or grind out small gains for several months. Binaries offer a profit level that is unmatched within all other marketplaces.
Leverage is another issue that needs to be addressed. For the savvy Forex trader, this can present a huge advantage. But for most people, it can be a really big problem despite its helpful appearance. Some Forex brokers will allow you 400 times the purchasing power that you are risking. So if you are buying $100 worth of Euros with your dollars, you will actually be able to trade $40,000 worth of Euros. This is great when you’re right since it will help you to increase your profits, but this is a double edged sword. When you’re wrong, you will lose a lot more—and the broker can stop your trade at any time in order to recoup what they’ve lost because of your trade. With binaries, you always know exactly what you’re risking, and exactly what you will earn. There is no leverage with this type of trading, and this offers both new traders and pros an extra level of protection not found within the traditional Forex market.
Trading in any capacity is risky. You do have the potential to make a lot of money, but you can also lose a lot of money, too. Whether you are trading in the stock market, commodity futures, or within the binary options marketplace, you are going to have to assume a level of risk in order to stand the possibility of making a profit. There are many things that you need to take into account before you begin trading as a result of this, but one of the prime considerations is your risk to reward ratio. Ideally, you want to have as much reward possibility as possible with as little risk as possible. Finding a good balance here will be the key to your success, and binary options can help you in a big way while finding this balance.
The first thing to look at before you even begin trading is your bankroll. How much money have you set aside to trade with? This is important, and you should never need the money you trade with for anything else. If finances are tight, or you cannot afford to lose this money, you should avoid trading. Losing your mortgage money can have serious consequences that you would obviously want to avoid. You should also have enough in your bankroll to warrant trading with the amounts you wish to trade. A good starting amount is about $10,000, but you can trade effectively with more or less. Many brokers will allow you to open an account with $200, but your risk of ruin will be very high with this level. Another question you should answer is your end goal. If you want to make a living off of trading, $200 is simply not enough.
Next, look at what your level of knowledge is. There is no cutoff here, but a general thing to take into account is that the less experience and knowledge of the markets you have, the lower your correct trade rate will be. If you are just starting out, you will want to risk as little as possible in order to minimize the losses that you will face. There is a steep learning curve here, so you will want to be careful. One good strategy is to use a demo account for as long as possible. This will help you to learn the ropes a bit and cut down on the amount of newbie mistakes that you will inevitably make. Demo trading allows you to figure out how to use the platform and gives you an introduction to what real time trading looks like—this makes it a very valuable tool for both experienced and beginning traders alike.
Minimizing risk can also be accomplished by diversifying your trades. This is quite easy with binary options since most brokers give you many different asset classes and multiple timeframes to choose from. By varying what you trade and attempting to trade from a few different timeframe angles, you can achieve a sense of diversity that other marketplaces cannot easily supply you with. You will also want to practice smart money management techniques such as not risking a lot when you don’t have a clear edge over the market. This will become easier for you to see with several months of experience and keeping records.
Your risk will never completely disappear, but with these methods, you can minimize it as much as possible. There’s no guarantee that you will be a profitable trader week in and week out, but practicing safe trading techniques can push the odds a little bit more into your favor.