Be an Expert Binary Options Trader in Your Own Style

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Contents

Be an Expert in Binary Options in Your Own Style – Binoption

Binary Options may seem effortless for an expert binary options trader. They are those who are aware of what they are doing. Binary Options is no different to other forms of trading.

Success in trading doesn’t happen randomly. You need to follow a systematic routine of well-thought-out actions that will lead to profitable trading.

Becoming an expert in binary options is no ordinary task. It will take years of trading and perfecting your trading system to make consistent profits.

An expert binary options trader has the right trading mindset, proper risk management, and a solid strategy. By solid strategy, we mean knowing exactly when to enter and exit a trade, the exact time frame, trading the right assets, and performing accurate technical and fundamental analysis.

However, oftentimes traders keep losing even after ensuring the above prerequisites. What could possibly go wrong then?

It’s because traders go against their trading style in order to fit in with a strategy they are trying to follow. Novice and intermediate traders try to mimic top traders to get the same results as they do.

The problem is there is no guarantee that you will get the same result as them. If you are wondering why, it’s because their trading style doesn’t match with yours.

We’re not condemning you to follow top traders and their strategies. In fact, the very concept of social and copy trading is based on this premise.

What you need to do, is trade solely based on a trading style that suits with you. This will sustain in the long-term and bring you continuous profits.

In this article, we show you exactly how to just that: be an expert binary options trader in your own style.

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  • Binomo
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How to Become an Expert with Binary Options and Forex Trading

So, you’ve heard about the potentially highly lucrative business opportunity becoming a Forex, or binary options trader can offer you, and you’re curious about how you can get in on it. While becoming a skilled trader and successfully earning profits are possible, it takes quite a bit of time, diligence, practice, and effort to become a true expert trader and reap all the lucrative potential it has to offer. There are a few things you need to keep in mind and tools you should utilize to make you a better trader, and we’ll help walk you through them.

Set goals that are realistic

One of the very first steps you should take in becoming a Forex or binary options trader is to sit down and plan out what it is you hope to get out of it. You should make realistic goals with an attainable timeframe and do your best to stick to it. Make a list of your periodic goals (daily, weekly, etc. all the way up to yearly and even by decades if you’re planning to stick to it for a while). Your goals should include things like the annual salary you hope to make, how much money you will spend on each trade, how much time you’ll devote to perfecting your trading skills, etc. Be sure that your goals are realistically achievable, as it is crucial to your success.

Select your broker with care

As a Forex or binary options trader, your broker is the number one person in your career; you will be more dependent on them than anyone. It is through them that you make your trades; they will have some influence over which assets you trade as each broker has a different limited selection. When choosing a broker, you should be prepared to do quite a bit of research. You want to be sure that you can trust your broker, as the trading market is rampant with scammers. Reading reviews of all the brokerages in which you are interested is a good start, but it’s more reliable to read opinions on various forums, as they don’t run the risk of containing affiliate marketing. It’s a good, safe bet to choose a brokerage that’s regulated if you’re a beginner, but it’s still no guarantee. Tread lightly with brokers and always have your guard up. Don’t be swayed by tempting bonus offers or account managers, as they increase your risk of losing money. Most bonuses, you can’t even gain access to until you’ve completed a certain volume of trades, leaving you stuck with a broker that may not be right for you. These offers are designed to get you to sign on with the brokerage before having the chance to research them further and look into a potentially better offer.

Consider using a signaling service

Signaling services can help you grow accustomed to trading with a lower risk. They tend to tilt the odds in your favor, making it a little more worthwhile for beginners. Some signaling services you will have to pay a membership fee for, and others are free; explore your options and make your decision based on what fits best with your strategy and plan.

Consider the help of technical indicators

If you’re having a hard time becoming adjusted to predicting the future movements of assets’ prices, you can enlist the help of technical indicators or automatic traders to help bridge the gap in your learning curve, serving as a crutch for you until you get better at predicting price changes yourself. Keep in mind, though, that most of these services cost a pretty penny.

Practice makes perfect

Before you jump into the ring with the big boys, you should allow yourself to grow accustomed to the way trading works by practicing with demo accounts first. Many brokers offer these accounts so that you can get used to their system and their broker without risking your money. You can usually use these demo accounts for however long you need to until you’re ready to put some real money behind it. You won’t make any profits with it, but you won’t lose any money either; think of the demo accounts as training wheels for your trading career.

You can gather some useful advice from Binaryoptionsexpert.net. They have plenty of tips that will help strengthen your strategy.

Monitor your trades

By monitoring your success and failure, you can see what works and what doesn’t as far as the assets your choosing, the strategies your using, or the predictions you’re making. This allows you to learn from your mistakes or to identify your strengths so you can play to them. Stick with the strategies and assets that are working for you; if there’s a type of trade you’re extremely profitable with, keep using it. Monitoring your trades also means monitoring the assets that you are trading and the news surrounding them. If there’s a change in the climate of the market or with your asset, you want to be the first to know about it. This will help lower your risk of big losses.

Choose the right time period for you

When you start making trades, you’ll see just how many options there are for assets based on what sort of trades you want to make, how quickly you want to trade, and how much you’re willing to spend. Some trading styles will prove to be more beneficial to those looking to make short-term trades, while others work best for those making long-term trades. It’s crucial to your success that you identify where your strengths lie and how you can use them to your best advantage. If you notice your style works better for long-term trades (as in you make better predictions for the long-term, rather than short-term), then don’t waste your time and money with short-term trades.

Master one strategy

Most people have heard the phrase, “Jack of all trades, master of none” and it certainly applies when it comes to trading strategies. If you know just enough about multiple strategies to enact them, rather than be almost guaranteed success with them, you likely won’t make much of a profit as a trader. However, if you really work on one strategy until you’re a complete master of it, then you are more likely to maximize your profits. If you change your strategy too frequently, you’ll see your trading career suffer due to lack of skill with that particular strategy.

Getting started with binary options and Forex trading can seem beyond complicated and, it’s true, there’s quite the learning curve involved for beginners. However, it’s not impossible to become an expert trader and make a substantial profit with this career. It’s important to keep in mind that it will take you time to learn the ins and outs of trading and to turn a real profit; don’t expect it to happen instantly. But, if you do your research, practice with demo accounts, and put time and effort into building the best career you can as a trader, you really can have a highly lucrative career as a trader.

How to Succeed with Binary Options Trading 2020

Welcome to the largest expert guide to binary options and binary trading online. BinaryOptions.net has educated traders globally since 2020 and all our articles are written by professionals who make a living in the finance industry and online trading. We have close to a thousand articles and reviews to guide you to be a more profitable trader in 2020 no matter what your current experience level is. If you wish to discuss trading or brokers with other traders, we also have the world’s largest forum with over 20 000 members and lots of daily activity. Read on to get started trading today!

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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 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 60 seconds, making it possible to trade hundreds of times per day across any global market.

Before you place a trade you know exactly how much you stand to gain if your prediction is correct, usually 70-95% – if you invest $100 you will receive a credit of $170 – $195 on a successful trade. This makes risk management and trading decisions much more simple. The outcome is always a Yes or No answer – you either win it all or you lose it all – hence it being a “binary” option. The risk and reward is known in advance and this structured payoff is one of the attractions.

Exchange traded binaries are also now available, meaning traders are not trading against the broker.

To get started trading you first need a regulated broker account (or licensed). Pick one from the recommended brokers list, where only brokers that have shown themselves to be trustworthy are included. The top broker has been selected as the best choice for most traders.

If you are completely new to binary options you can open a demo account with most brokers, to try out their platform and see what it’s like to trade before you deposit real money.

Introduction Video – How to Trade Binary Options

These videos will introduce you to the concept of binary options and how trading works. If you want to know even more details, please read this whole page and follow the links to all the more in-depth articles. Binary trading does not have to be complicated, but as with any topic you can educate yourself to be an expert and perfect your skills.

Option Types

The most common type of binary option is the simple “Up/Down” trade. There are however, different types of option. The one common factor, is that the outcome will have a “binary” result (Yes or No). Here are some of the types available:

  • Up/Down or High/Low – The basic and most common binary option. Will a price finish higher or lower than the current price a the time of expiry.
  • 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 an expiry.
    Note with a touch option, that the trade can close before the expiry time – if the price level is touched before the option expires, then the “Touch” option will payout immediately, regardless of whether the price moves away from the touch level afterwards.
  • 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 (‘laddered’ progressively up or down).These can often be some way from the current strike price.As these options generally need a significant price move, payouts will often go beyond 100% – but both sides of the trade may not be available.

How to Trade – Step by Step Guide

Below is a step by step guide to placing a binary trade:

  1. Choose a broker – Use our broker reviews and comparison tools to find the best binary trading site for you.
  2. Select the asset or market to trade – Assets lists are huge, and cover Commodities, Stocks, Cryptocurrency, Forex or Indices. The price of oil, or the Apple stock price, for example.
  3. Select the expiry time – Options can expire anywhere between 30 seconds up to a year.
  4. Set the size of the trade – Remember 100% of the investment is at risk so consider the trade amount carefully.
  5. Click Call / Put or Buy / Sell – Will the asset value rise or fall? Some broker label buttons differently.
  6. Check and confirm the trade – Many brokers give traders a chance to ensure the details are correct before confirming the trade.

Choose a Broker

Options fraud has been a significant problem in the past. Fraudulent and unlicensed operators exploited binary options as a new exotic derivative. These firms are thankfully disappearing as regulators have finally begun to act, but traders still need to look for regulated brokers.

Note! Don’t EVER trade with a broker or use a service that’s on our blacklist and scams page, stick with the ones we recommend here on the site. Here are some shortcuts to pages that can help you determine which broker is right for you:

  • Compare all brokers – if you want to compare the features and offers of all recommended brokers.
  • Bonuses and Offers – if you want to make sure you get extra money to trade with, or other promotions and offers.
  • Low minimum deposit brokers – if you want to trade for real without having to deposit large sums of money.
  • Demo Accounts – if you want to try a trading platform “for real” without depositing money at all.
  • Halal Brokers – if you are one of the growing number of Muslim traders.

Asset Lists

The number and diversity of assets you can trade varies from broker to broker. Most brokers provide options on popular assets such as major forex pairs including the 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 though, but generally you can choose from about 25 to 100 popular stocks, such as Google and Apple. These lists are growing all the time as demand dictates.

The asset lists are always listed clearly on every trading platform, and most brokers make their full asset lists available on their website. This information is also available within our reviews, including currency pairs.

Expiry Times

The expiry time is the point at which a trade is closed and settled. The only exception is where a ‘Touch’ option has hit a preset level prior to expiry. The expiry for any given trade can range from 30 seconds, up to a year. While binaries initially started with very short expiries, demand has ensured there is now a broad range of expiry times available. Some brokers even give traders the flexibility to set their own specific expiry time.

Expiries are generally grouped into three categories:

  • Short Term / Turbo – These are normally classed as any expiry under 5 minutes
  • Normal – These would range from 5 minutes, up to ‘end of day’ expiries which expire when the local market for that asset closes.
  • Long term – Any expiry beyond the end of the day would be considered long term. The longest expiry might be 12 months.

Regulation

While slow to react to binary options initially, regulators around the world are now starting to regulate the industry and make their presence felt. The major regulators currently include:

  • Financial Conduct Authority (FCA) – UK regulator
  • Cyprus Securities and Exchange Commission (CySec) – Cyprus Regulator, often ‘passported’ throughout the EU, under MiFID
  • Commodity Futures Trading Commission (CFTC) – US regulator
  • Australian Securities and Investments Commission (ASIC)

There are also regulators operating in Malta and the Isle of Man. Many other authorities are now taking a keen a interest in binaries specifically, notably in Europe where domestic regulators are keen to bolster the CySec regulation.

Unregulated brokers still operate, and while some are trustworthy, a lack of regulation is a clear warning sign for potential new customers.

Recently, ESMA (European Securities and Markets Authority) moved to ban the sale and marketing of binary options in the EU. The ban however, only applies to brokers regulated in the EU. This leaves traders two choices to keep trading: Firstly, they can trade with an unregulated firm – this is extremely high risk and not advisable. Some unregulated firms are responsible and honest, but many are not.

The second choice is to use a firm regulated by bodies outside of the EU. ASIC in Australia are a strong regulator – but they will not be implementing a ban. This means ASIC regulated firms can still accept EU traders. See our broker lists for regulated or trusted brokers in your region.

There is also a third option. Traders who register as ‘professional’ are exempt from the new ban. The ban is only designed to protect ‘retail’ investors. A professional trader can continue trading at EU regulated brokers such as IQ Option. To be classed as professional, an account holder must meet two of these three criteria:

  1. Open 10 or more trades per quarter, of €150 or more.
  2. Have assets of €500,000 or more
  3. Have worked for two years in a financial firm and have experience of financial products.

Yes, trading binary options is legal in the US. The US binary options market is strictly regulated. These safeguards are in place to protect US residents, but trading is absolutely legal.

What is illegal, is for non-US based brokers (‘off shore’ brokers) to solicit US residents. It is this which has resulted in some binary options brokers receiving heavy fines, and the majority not accepting traders based in the USA. There are however, a number of options for US traders, where they can trade legally, at reputable brokers, fully regulated by the CFTC.

The US Binary options brokers list above, is tailored to display only brokers that accept US clients. Nadex and CBOE remain the only regulated exchanges however. The Nadex offering delivers binary options that mimic futures contracts more familiar to US pattern day traders.

Binary options trading in the USA

Most binary options brokers operate accounts in USD. This is seen as the ‘global currency’ within the binary options industry and therefore US clients are free to trade with funds in their local currency.

Binary options brokers will generally have their trading platform open when the market of the underlying asset is open. So if trading the NYSE, Nasdaq, DOW or S&P, the assets will be open to trade during the same hours as those markets are open. Any moves by the Federal reserve for example, will feed into binary markets immediately, just as you would expect.

Forex trading has no central market, and as such USD pairs can generally be traded around the clock for 5 days a week. Markets in Hong Kong, Europe and the US, mean that foreign currency can be traded 24 hours a day.

US Traders also have the option of using exchange traded binary options, or an over the counter (OTC) broker. So binary options trading in the US, generally delivers the same level of choice trading in Europe, but in a more closely regulated market.

Some of the links to third party websites included on our website are affiliate links. This means that we may receive commission or a fee if you click on a link that takes you through to a third party website or if you purchase a product from a third party website.

Strategies and Guides

We have a lot of detailed guides and strategy articles for both general education and specialized trading techniques. Below are a few to get you started if you want to learn the basic before you start trading. From Martingale to Rainbow, you can find plenty more on the strategy page.

Signals and Other Services

For further reading on signals and reviews of different services go to the signals page.

Beginners Guides

If you are totally new to the trading scene then watch this great video by Professor Shiller of Yale University who introduces the main ideas of options:

Education for beginners:

Types of Trades

How to Set Up a Trade

The ability to trade the different types of binary options can be achieved by understanding certain concepts such as strike price or price barrier, settlement, and expiration date. All trades have dates at which they expire.

When the trade expires, the behaviour of the price action according to the type selected will determine if it’s in profit (in the money) or in a loss position (out-of-the-money). In addition, the price targets are key levels that the trader sets as benchmarks to determine outcomes. We will see the application of price targets when we explain the different types.

There are three types of trades. Each of these has different variations. These are:

Let us take them one after the other.

High/Low

Also called the Up/Down binary trade, the essence is to predict if the market price of the asset will end up higher or lower than the strike price (the selected target price) before the expiration. If the trader expects the price to go up (the “Up” or “High” trade), he purchases a call option. If he expects the price to head downwards (“Low” or “Down”), he purchases a put option. Expiry times can be as low as 5 minutes.

Please note: some brokers classify Up/Down as a different types, where a trader purchases a call option if he expects the price to rise beyond the current price, or purchases a put option if he expects the price to fall below current prices. You may see this as a Rise/Fall type on some trading platforms.

In/Out

The In/Out type, also called the “tunnel trade” or the “boundary trade”, is used to trade price consolidations (“in”) and breakouts (“out”). How does it work? First, the trader sets two price targets to form a price range. He then purchases an option to predict if the price will stay within the price range/tunnel until expiration (In) or if the price will breakout of the price range in either direction (Out).

The best way to use the tunnel binaries is to use the pivot points of the asset. If you are familiar with pivot points in forex, then you should be able to trade this type.

Touch/No Touch

This type is predicated on the price action touching a price barrier or not. A “Touch” option is a type where the trader purchases a contract that will deliver profit if the market price of the asset purchased touches the set target price at least once before expiry. If the price action does not touch the price target (the strike price) before expiry, the trade will end up as a loss.

A “No Touch” is the exact opposite of the Touch. Here you are betting on the price action of the underlying asset not touching the strike price before the expiration.

There are variations of this type where we have the Double Touch and Double No Touch. Here the trader can set two price targets and purchase a contract that bets on the price touching both targets before expiration (Double Touch) or not touching both targets before expiration (Double No Touch). Normally you would only employ the Double Touch trade when there is intense market volatility and prices are expected to take out several price levels.

Some brokers offer all three types, while others offer two, and there are those that offer only one variety. In addition, some brokers also put restrictions on how expiration dates are set. In order to get the best of the different types, traders are advised to shop around for brokers who will give them maximum flexibility in terms of types and expiration times that can be set.

Mobile Apps

Trading via your mobile has been made very easy as all major brokers provide fully developed mobile trading apps. Most trading platforms have been designed with mobile device users in mind. So the mobile version will be very similar, if not the same, as the full web version on the traditional websites.

Brokers will cater for both iOS and Android devices, and produce versions for each. Downloads are quick, and traders can sign up via the mobile site as well. Our reviews contain more detail about each brokers mobile app, but most are fully aware that this is a growing area of trading. Traders want to react immediately to news events and market updates, so brokers provide the tools for clients to trade wherever they are.

Trading FAQ

What Does Binary Options Mean?

“Binary options” means, put very simply, a trade where the outcome is a ‘binary’ Yes/No answer. These options pay a fixed amount if they win (known as “in the money”), but the entire investment is lost, if the binary trade loses. So, in short, they are a form of fixed return financial options.

How Does a Stock Trade Work?

Steps to trade a stock via a binary option;

  1. Select the stock or equity.
  2. Identify the desired expiry time (The time the option will end).
  3. Enter the size of the trade or investment
  4. Decide if the value will rise or fall and place a put or call

The steps above will be the same at every single broker. More layers of complexity can be added, but when trading equities the simple Up/Down trade type remains the most popular.

Put and Call Options

Call and Put are simply the terms given to buying or selling an option. If a trader thinks the underlying price will go up in value, they can open a call. But where they expect the price to go down, they can place a put trade.

Different trading platforms label their trading buttons different, some even switch between Buy/Sell and Call/Put. Others drop the phrases put and call altogether. Almost every trading platform will make it absolutely clear which direction a trader is opening an option in.

Are Binary Options a Scam?

As a financial investment tool they in themselves not a scam, but there are brokers, trading robots and signal providers that are untrustworthy and dishonest.

The point is not to write off the concept of binary options, based solely on a handful of dishonest brokers. The image of these financial instruments has suffered as a result of these operators, but regulators are slowly starting to prosecute and fine the offenders and the industry is being cleaned up. Our forum is a great place to raise awareness of any wrongdoing.

These simple checks can help anyone avoid the scams:

  • Marketing promising huge returns. This is clear warning sign. Binaries are a high risk / high reward tool – they are not a “make money online” scheme and should not be sold as such. Operators making such claims are very likely to be untrustworthy.
  • Know the broker. Some operators will ‘funnel’ new customer to a broker they partner with, so the person has no idea who their account is with. A trader should know the broker they are going to trade with! These funnels often fall into the “get rich quick” marketing discussed earlier.
  • Cold Calls. Professional brokers will not make cold calls – they do not market themselves in that way. Cold calls will often be from unregulated brokers interested only in getting an initial deposit. Proceed extremely carefully if joining a company that got in contact this way. This would include email contact as well – any form of contact out of the blue.
  • Terms and Conditions. When taking a bonus or offer, read the full terms and conditions. Some will include locking in an initial deposit (in addition to the bonus funds) until a high volume of trades have been made. The first deposit is the trader’s cash – legitimate brokers would not claim it as theirs before any trading. Some brokers also offer the option of cancelling a bonus if it does not fit the needs of the trader.
  • Do not let anyone trade for you. Avoid allowing any “account manager” to trade for you. There is a clear conflict of interest, but these employees of the broker will encourage traders to make large deposits, and take greater risks . Traders should not let anyone trade on their behalf.

Which Are The Best Trading Strategies?

Binary trading strategies are unique to each trade. We have a strategy section, and there are ideas that traders can experiment with. Technical analysis is of use to some traders, combined with charts, indicators and price action research. Money management is essential to ensure risk management is applied to all trading. Different styles will suit different traders and strategies will also evolve and change.

There is no single “best” strategy. Traders need to ask questions of their investing aims and risk appetite and then learn what works for them.

Are Binary Options Gambling?

This will depend entirely on the habits of the trader. With no strategy or research, then any short term investment is going to win or lose based only on luck. Conversely, a trader making a well researched trade will ensure they have done all they can to avoid relying on good fortune.

Binary options can be used to gamble, but they can also be used to make trades based on value and expected profits. So the answer to the question will come down to the trader.

Advantages of Binary Trading

The main benefit of binaries is the clarity of risk and reward and the structure of the trade.

Minimal Financial Risk

If you have traded forex or its more volatile cousins, crude oil or spot metals such as gold or silver, you will have probably learnt one thing: these markets carry a lot of risk and it is very easy to be blown off the market. Things like leverage and margin, news events, slippages and price re-quotes, etc can all affect a trade negatively. The situation is different in binary options trading. There is no leverage to contend with, and phenomena such as slippage and price re-quotes have no effect on binary option trade outcomes. This reduces the risk in binary option trading to the barest minimum.

Flexibility

The binary options market allows traders to trade financial instruments spread across the currency and commodity markets as well as indices and bonds. This flexibility is unparalleled, and gives traders with the knowledge of how to trade these markets, a one-stop shop to trade all these instruments.

Simplicity

A binary trade outcome is based on just one parameter: direction. The trader is essentially betting on whether a financial asset will end up in a particular direction. In addition, the trader is at liberty to determine when the trade ends, by setting an expiry date. This gives a trade that initially started badly the opportunity to end well. This is not the case with other markets. For example, control of losses can only be achieved using a stop loss. Otherwise, a trader has to endure a drawdown if a trade takes an adverse turn in order to give it room to turn profitable. The simple point being made here is that in binary options, the trader has less to worry about than if he were to trade other markets.

Greater Control of Trades

Traders have better control of trades in binaries. For example, if a trader wants to buy a contract, he knows in advance, what he stands to gain and what he will lose if the trade is out-of-the-money. This is not the case with other markets. For example, when a trader sets a pending order in the forex market to trade a high-impact news event, there is no assurance that his trade will be filled at the entry price or that a losing trade will be closed out at the exit stop loss.

Higher Payouts

The payouts per trade are usually higher in binaries than with other forms of trading. Some brokers offer payouts of up to 80% on a trade. This is achievable without jeopardising the account. In other markets, such payouts can only occur if a trader disregards all rules of money management and exposes a large amount of trading capital to the market, hoping for one big payout (which never occurs in most cases).

Accessibility

In order to trade the highly volatile forex or commodities markets, a trader has to have a reasonable amount of money as trading capital. For instance, trading gold, a commodity with an intra-day volatility of up to 10,000 pips in times of high volatility, requires trading capital in tens of thousands of dollars. However, binary options has much lower entry requirements, as some brokers allow people to start trading with as low as $10.

Disadvantages of Binary Trading

Reduced Trading Odds for Sure-Banker Trades

The payouts for binary options trades are drastically reduced when the odds for that trade succeeding are very high. While it is true that some trades offer as much as 85% payouts per trade, such high payouts are possible only when a trade is made with the expiry date set at some distance away from the date of the trade. Of course in such situations, the trades are more unpredictable.

Lack of Good Trading Tools

Some brokers do not offer truly helpful trading tools such as charts and features for technical analysis to their clients. Experienced traders can get around this by sourcing for these tools elsewhere; inexperienced traders who are new to the market are not as fortunate. This is changing for the better though, as operators mature and become aware of the need for these tools to attract traders.

Limitations on Risk Management

Unlike in forex where traders can get accounts that allow them to trade mini- and micro-lots on small account sizes, many binary option brokers set a trading floor; minimum amounts which a trader can trade in the market. This makes it easier to lose too much capital when trading binaries. As an illustration, a forex broker may allow you to open an account with $200 and trade micro-lots, which allows a trader to expose only acceptable amounts of his capital to the market. However, you will be hard put finding many binary brokers that will allow you to trade below $50, even with a $200 account. In this situation, four losing trades will blow the account.

Cost of Losing Trades

Unlike in other markets where the risk/reward ratio can be controlled and set to give an edge to winning trades, the odds of binary options tilt the risk-reward ratio in favour of losing trades.

Trade Corrections

When trading a market like the forex or commodities market, it is possible to close a trade with minimal losses and open another profitable one, if a repeat analysis of the trade reveals the first trade to have been a mistake. Where binaries are traded on an exchange, this is mitigated however.

Spot Forex vs Binary Trading

These are two different alternatives, traded with two different psychologies, but both can make sense as investment tools. One is more TIME centric and the other is more PRICE centric. They both work in time/price but the focus you will find from one to the other is an interesting split. Spot forex traders might overlook time as a factor in their trading which is a very very big mistake. The successful binary trader has a more balanced view of time/price, which simply makes him a more well rounded trader. Binaries by their nature force one to exit a position within a given time frame win or lose which instills a greater focus on discipline and risk management. In forex trading this lack of discipline is the #1 cause for failure to most traders as they will simply hold losing positions for longer periods of time and cut winning positions in shorter periods of time. In binary options that is not possible as time expires your trade ends win or lose. Below are some examples of how this works.

Above is a trade made on the EUR/USD buying in an under 10 minute window of price and time. As a binary trader this focus will naturally make you better than the below example, where a spot forex trader who focuses on price while ignoring the time element ends up in trouble. This psychology of being able to focus on limits and the dual axis will aid you in becoming a better trader overall.

The very advantage of spot trading is its very same failure – the expansion of profits exponentially from 1 point in price. This is to say that if you enter a position that you believe will increase in value and the price does not increase yet accelerates to the downside, the normal tendency for most spot traders is to wait it out or worse add to the losing positions as they figure it will come back. The acceleration in time to the opposite desired direction causes most spot traders to be trapped in unfavourable positions, all because they do not plan time into their reasoning, and this leads to a complete lack of trading discipline.

The nature of binary options force one to have a more complete mindset of trading off both Y = Price Range and X = Time Range as limits are applied. They will simply make you a better overall trader from the start. Conversely on the flip side, they by their nature require a greater win rate as each bet means a 70-90% gain vs a 100% loss. So your win rate needs to be on average 54%-58% to break even. This imbalance causes many traders to overtrade or revenge trade which is just as bad as holding/adding to losing positions as a spot forex trader. To successfully trade you need to practice money management and emotional control.

In conclusion, when starting out as a trader, binaries might offer a better foundation to learn trading. The simple reasoning is that the focus on TIME/PRICE combined is like looking both ways when crossing the street. The average spot forex trader only looks at price, which means he is only looking in one direction before crossing the street. Learning to trade taking both time and price into consideration should aid in making one a much overall trader.

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.

Binary Brokers

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.

Option Types

There are a number of different option types to choose from. The most popular types are listed in the brief glossary below.

  • Up/Down (High/Low) – The most simple and prevalent binary option. Will the price be higher or lower than the current price when the expiry time comes?
  • In/Out (Range or Boundary) – A ‘high’ and ‘low’ figure will be set. You are then making a determination as to whether the price will finish within or outside of these boundaries.
  • Touch/No Touch – Levels will be set that are either higher or lower than the current price. You then enter a position as to whether the price will ‘touch’ these levels between the time of trade and expiry. Payout will come as soon as the touch takes place.
  • Ladder – These are similar to up/down trades. However, instead of using the current price, the ladder will have pre-determined levels that are staggered up or down. These normally demand a substantial price move. The flip side of this is returns will frequently exceed 100%. Although it is worth noting, both sides of a trade are not always available.

Binary options

Expiry Times

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.

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.

Advantages

There is a whole host of attractive benefits to trading with binary options. The greatest advantages have been outlined below.

  • Simplicity – Because you are making a determination on only one factor, direction, your bet is straightforward. The price can only go up or down. You also don’t need to concern yourself with when the trade will end, the expiry time takes care of that. Whereas in other markets, you may need a system to limit your losses, such as a stop-loss.
  • Fixed risk – Trade stocks, gold, and crude oil and you’ve got a vast number of factors to contend with, from slippage and margin to news events and price re-quotes. With binaries, your risk is kept to a minimum with far fewer parameters.
  • Trade control – Because you know what you may make or lose before you enter the trade, you have greater control from the start. Trade in stocks, for example, and you have no guarantee that your trade will make the entry price.
  • Profit potential – Compared to other trading, the returns in binaries are extremely attractive. Some brokerages promise payouts of up to 90% on a single trade. If you’re looking to make simple trades with large profit potential, binaries could well be worth a look in.
  • Choice – Rather than being constrained to a specific market, e.g. cryptocurrency or stocks, binary options gift traders the opportunity to trade instruments across virtually all markets, allowing you start currency, indices, and bonds trading if you so wish.
  • Accessibility –In the binary options game, it’s always the best trading hours somewhere on the globe. So, you can login at night, or on the weekends and join the groups of avid traders attempting to turn daily profits. Real-time charts are available for every market so if you’ve got the time you can invest 24 hours a day.

Risks

Whilst there are plenty of reasons to delve into trading on binary options, there remain several downsides worth highlighting:

  • Reduced trading odds – Whilst you can benefit from trades that offer in excess of 80% payouts, these are often when the expiry date is some time away from the trade date. If the odds of your binary trade succeeding are extremely high you may have to make do with reduced payout odds.
  • Limited trading tools – Whilst most brokerages offer advanced charting and analysis capabilities, trading tools for binary traders often fall short of the mark. Fortunately, there are other online sources for these graphs and tools, plus brokers are working swiftly to increase their offerings.
  • Price of losing – Your odds are tilted in favour of losing trades. Approximately for every 70% profit, the corresponding loss of the same trade would result in an 85% loss. This means you need a win percentage of at least 55% to break-even.
  • Risk management – Unlike other markets, brokers often set a trading floor, with minimum accounts a trader needs to enter the market. This means losing capital can happen with ease. Whilst a stocks broker may permit you to open an account with $250, trading micro-lots, most binary brokers won’t allow $50 trades. So, even with $250 in your account, just five trades that don’t go your way could see you sink into the red.

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.

Deposit

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.

Asset-Specific

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.

Regulation

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.

Platform

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.

Reliability

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.

Trading apps

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.

Extras

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.

Demo accounts

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.

Demo Video

Below is a video explaining how to trade binary options on the platform of a leading provider:

Strategies

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:

  • Support and resistance levels
  • Price action
  • Stochastic oscillators
  • MACD indicators
  • Trends
  • Babypips
  • Mirrors
  • Options close to expiry

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:

  • Yahoo Finance
  • CNBC
  • Business Insider
  • Bloomberg
  • Financial Times

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.

Martingale Strategy

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.

Percentage Strategy

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.

Straddle Strategy

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.

Timing

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.

Education

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.

  • Books & eBooks – There is a whole host of books and ebooks out there that can impart invaluable information on day trading binary options. You can benefit from the binary options trading knowledge of experts with decades of experience. The good thing about a book it is allows you to learn at a pace that suits you. One book that has made binary options trading easy is ‘Trading Binary For Dummies’, by Joe Duarte.
  • Video tutorials & seminars – Engaging and easy to follow. There are numerous online video tutorials out there that can walk you through making a trade. With seminars, you’ll also be able to have questions answered and the binary options trading basics explained, plus some brokers offer weekly seminars to keep you up to date with market developments.
  • PDFs & instruction guides – These will give you a clear breakdown of steps that you can follow and apply. The best part is you can find plenty online that are totally free and easy to download, whether you’re using Android, Windows, or iOS. The trading binary options ‘Abe Cofnas’ pdf is particularly popular.
  • Forums & chat rooms – This is the perfect place to brainstorm ideas with binary options gurus. You can benefit from recommendations and learn in real-time whilst investing in your binary options. You can also swap live chart screen grabs to get a feel for other binary methods and tactics.
  • Newsletters & blogs – These are brilliant for keeping up to date with upcoming developments that may affect your markets. Plus, you could hear about binary options competitions (yes, they really do exist).
  • Copy trading – This is when social trading networks/platforms are combined with binary trading tools. You can follow experienced traders, analyse their strategies, and then replicate their trades. Check out copy trading reviews before you sign up.

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.

Trading Journal

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.

Psychology

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.

Regional Differences

Regulation

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.

Taxes

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.

Further Reading

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.

10 Traits of a Successful Options Trader

Options are one of the most versatile instruments in the financial markets. Their flexibility allows the trader to leverage their position to boost returns. These products also allow the user to manage risk by using them for hedging or to make a profit from the upside, downside, and sideways movement in the market.

Despite its many benefits, options trading carries substantial risk of loss, and it is very speculative in nature. Not everyone can become a successful options trader. Like any other business, becoming a successful options trader requires a certain skill set, personality type, and attitude.

1. Be Able to Manage Risk

Options are high-risk instruments, and it is important for traders to recognize how much risk they have at any point in time. What is the maximum downside of the trade? What is the implicit or explicit position with respect to volatility? How much of my capital is allocated to the trade? These are some of the questions traders always have to keep in their minds.

Traders also need to take appropriate measures to control risk. In particular, if you are a short-term options trader, you will regularly come across loss-making trades. For example, if you hold a position overnight, your bet may go bad because of adverse news. You need to be able to minimize the risk of your positions at any time. Some traders do so by limiting their trade size and diversifying into many different trades so all their eggs aren’t in the same basket.

An options trader also has to be an excellent money manager. They need to use their capital wisely. For example, it wouldn’t be wise to block 90% of your capital in a single trade. Whatever strategy you adopt, risk management and money management cannot be ignored.

2. Be Good With Numbers

While trading in options, you are always dealing with numbers. What’s the implied volatility? Is the option in the money or out of the money? What’s the break-even of the trade? Options traders are always answering these questions. They also refer to option Greeks, such as the delta, gamma, vega, and theta of their options trades. For example, a trader would want to know if his trade is short gamma.

3. Have Discipline

To become successful, options traders must practice discipline. Doing extensive research, identifying opportunities, setting up the right trade, forming and sticking to a strategy, setting up goals, and forming an exit strategy are all part of the discipline. A simple example of deviating from the discipline is following the herd. Never trust an opinion without doing your own research. You can’t skip your homework and blame the herd for your losses. Instead, you must devise an independent trading strategy that works in order for it to be a successful options strategy.

While formal education in the form of higher degrees can be associated with elite traders, it is not necessarily the case for all. But you must be educated about the market. Successful traders take time to learn the basics and study the market—various scenarios, different trends—anything and everything about how the market works. They are not usually novices who have taken a three-hour trading seminar on “How to get rich quick trading,” but rather take the time to learn from the market.

4. Be Patient

Patience is one quality all options traders have. Patient investors are willing to wait for the market to provide the right opportunity, rather than trying to make a big win on every market movement. You will often see traders sitting idle and watching the market, waiting for the perfect time to enter or exit a trade. The same is not the case with amateur traders. They are impatient, unable to control their emotions, and they will be quick to enter and exit trades.

5. Develop a Trading Style

Each trader has a different personality and should adopt a trading style that suits his or her traits. Some traders may be good at day trading, where they buy and sell options several times during the day to make small profits. Some may be more comfortable with position trading, where they form trading strategies to take advantage of unique opportunities, such as time decay and volatility. And others may be more comfortable with swing trading, where traders make bets on price movement over periods lasting five to 30 days.

6. Interpret the News

It is crucial for traders to be able to interpret the news, separate hype from reality and make appropriate decisions based on this knowledge. You will find many traders eager to put their capital in an option with promising news, and the next day they will move on to the next big news. This distracts them from identifying bigger trends in the market. Most successful traders will be honest with themselves and make sound personal decisions, rather than just going by the top stories in the news.

7. Be an Active Learner

The Chicago Board of Trade (CBOT) reported 90% of options traders will realize losses. What separates successful traders from average ones is successful traders are able to learn from their losses and implement what they learn in their trading strategies. Elite traders practice…and practice some more until they learn the lessons behind the trade, understand the economics behind the market and see the market behavior as it is happening.

The financial markets are constantly changing and evolving; you need to have a clear understanding of what’s happening and how it all works. By becoming an active learner, you will not only become good at your current trading strategies, but you will also be able to identify new opportunities others might not see or may pass over.

8. Be Flexible

You cannot stake a claim on the market but must go with the market or leave it when it is not the type that suits you. You must accept losses occur and that it is inevitable that you will lose. Acceptance rather than fighting the market is paramount to understanding, clarity and finally winning.

9. Plan Your Trades

An options trader who plans is more likely to succeed than one who operates on instinct and feel. If you don’t have a plan, you will place random trades, and consequently, you’ll be directionless. On the other hand, if you have a plan, you are more likely to stick to it. You will be clear about what your goals are and how you plan to achieve them. You will also know how to cover your losses or when to book profits. You can see how the plan has worked (or not worked) for you. All these steps are essential to developing a strong trading strategy.

10. Maintain Records

Most successful options traders keep diligent records of their trades. Maintaining proper trade records is an essential habit to help you avoid making costly decisions. The history of your trade records also provides a wealth of information to help you improve your odds of success.

The Bottom Line

Top options traders get a thrill from scouting and watching their trades. Sure, it’s great to see a pick come out on top, but much like sports fans, options traders enjoy watching the whole game unfold, not just finding out the final score. These characteristics will not guarantee your success in the options trading world, but they will definitely increase your chances at it.

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  • Binomo
    Binomo

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