Welcome to the most clear and concise guide to trading binary options online. Trading binary options is actually a very simple way to increase your income, but sometimes new traders can be overwhelmed with too much information. The contents of this page are simple yet informative, as we want to help worldwide traders discover how to invest and succeed in binary options. OK, let’s begin!
What is a Binary Option and How Do You Make Money?
A binary option is a fast and extremely simple financial instrument which allows investors to speculate on whether the price of an asset will go up or down in the future. For example, an asset can be the stock price of Google, the price of Bitcoin, the USD/GBP exchange rate, or the price of gold. The time span can be as little as 30 seconds, making it possible to trade hundreds of times per day for all sorts of assets.
In binary options, before you make a trade you know exactly how much you will gain if your prediction is correct. The payout (or return) is usually 70-95%: meaning if you invest $100 you will receive a payment of $170 to $195 on a successful trade. This makes risk management much more simple than other financial products.
The outcome is always a Yes or No answer – you either win it all or you lose it all – therefore a “binary” option. The risk and reward are known in advance, and the known profit is a major advantage to traders.
To get started trading you first need to open a trading account from a regulated broker. Pick one from our recommended brokers list, where only trusted brokers are included.
If you are completely new to binary options you can open a demo account at most broker sites. You can try out their platform and see what it’s like to trade before you deposit real money. Again, please visit our recommended brokers list, and see each broker’s demo account and other free services.
The number of assets and diversity of assets you can trade with varies from broker to broker. Most brokers provide trading on popular assets such as major forex pairs including EUR/USD, USD/JPY and GBP/USD, as well as major stock indices such as the FTSE, S&P 500 or Dow Jones Industrial. Commodities including gold, silver, oil are also generally offered.
Individual stocks and equities are also tradable through many binary brokers. Not every stock will be available, but generally you can choose from about 25 to 100 popular stocks, such as Google and Apple.
The most common type of binary option is the simple “Up/Down” trade. However, there are also different types of options. All options have one thing in common: the outcome will have a “binary” result (Yes or No). Here are some of the option types available:
・Up/Down (or High/Low) – The basic and most common binary option. You predict whether the price of an item will finish higher or lower than the current price, at a future point in time.
・In/Out, Range (or Boundary) – This option sets a “high” figure and “low” figure. Traders predict whether the price will finish within, or outside of, these levels (or ‘boundaries’).
・Touch/No Touch – These have set levels, higher or lower than the current price. The trader has to predict whether the actual price will ‘touch’ those levels at any point between the time of the trade and time of the expiry.
・Ladder – These options behave like a normal Up/Down trade, but rather than using the current strike price, the ladder will have preset price levels.
***Each binary options broker offers many types of options, but we recommend you try the simple Up/Down option first. Then you can make more money with the other options when you gain more experience.
How to Make a Trade – Step by Step Guide
Below is a step by step guide to making a binary option trade:
1. Choose a broker – Use our broker reviews and comparison tools to find the best binary trading platform for you.
2. Select the asset to trade – There are many assets like Commodities, Stocks, Cryptocurrencies, Forex, and Indices. The price of oil, or the Apple stock price, for example. Or the current price of USD/EUR. Choose one that you are comfortable with.
3. Select the expiry time – Options can expire anywhere between 30 seconds to up to a year.
4. Set the size of the trade – Input your investment amount. You can start with just $1 or $5 or $10 or $100, whatever you are comfortable with.
5. Click Call / Put (or Buy / Sell) – Just choose if the asset price will increase (Call) or decrease (Put). Confirm trade, and now we just need to wait until expiry time.
As you can see, it is very simple, and does not require too much financial knowledge. This is why binary options have become so popular recently, because hard-working traders can make steady money with binary options.
Choosing a Broker – Things to Consider
We want you to choose the best broker for your trading needs. Here are some tips for you:
- Compare All Brokers – You should compare the features and customer service of all recommended brokers. Another major factor is the percentage of profit (usually from 70% to 95% or higher).
- Bonuses and Offers – Some brokers offer bonuses when you make your first deposit. However, do not rely only on the bonuses and promotional offers. Select the best platform for your long-term trading needs.
- Low Minimum Deposit – Check out brokers that allow you to begin with just $10. These are good brokers because you do not have to invest too much in the beginning. Some brokers require $100 or more to start, which is too much for the average person when exploring a new financial product.
- Demo Accounts – Absolutely take advantage of platforms that give you $10,000 free in virtual money. You can start practicing on the website right away. For Free!
Regulations & Jurisdictions
Recently binary options have been very popular for all traders and investors. However, sometimes there are scam platforms and obvious bad people. To protect traders, there are now many regulators all over the world. The major regulators currently include:
Cyprus Securities and Exchange Commission (CySEC) – Cyprus
Financial Conduct Authority (FCA) – United Kingdom
Commodity Futures Trading Commission (CFTC) – USA
Australian Securities and Investments Commission (ASIC) – Australia
Financial Services Commission (FSC) – Mauritius
International Financial Services Commission (IFSC) – Belize
There are also regulators operating in Malta and the Isle of Man. In addition, licenses approved by Russia are also high quality and respected.
Now that you have an understanding of binary options and how binary options brokers operate, you can begin to explore trading techniques and then consider opening your account at the following trustworthy and secure binary options trading platforms. We wish you the best in your trading success!