EURUSD Binary Options Trading for July 9, 2020

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Contents

Trading Ideas

Use this feed of free day trading ideas to inspire your next trade. We scan a long list of sources for daily trading ideas every minute 24/7 and list them here for easy overview. Check back often, as there can be up to 100 ideas published every day.

Latest Ideas from Around the Web

These are actionable trading ideas on April 3 2020 plus news and analysis that can inspire short-term trades.

The Most and Least Volatile Currency Pairs in 2020

You are probably familiar with the concept of “volatility”. If not, we recommend you to get more information on the subject before reading this article.

Here we will talk about the most volatile currency pairs in the Foreign Exchange (Forex) market in 2020.

We should note that by definition, volatility tends to change over time and is not a constant.

Volatility Is Relative

If you have ever traded in the Forex market or at least watched price movements from the sidelines, you might have noticed that the prices move non-linearly on the chart.

There are times when the currency price stands still or moves within a very narrow range. In this case, we talk about the low volatility in the market.

On the other hand, when key economic data are published or officials make a speech, the market price makes sharp and strong movements. So, here we can see an increase or even a spike of volatility.

To illustrate the non-constant nature of volatility let’s take a look at the Forex Volatility Calculator –http://investing.com/tools/forex-volatility-calculator.

All you need to do before you start using the tool is to enter the period in weeks, over which you want to measure the volatility.

Let’s take NZD/USD (New Zealand vs. US dollar) as an example. On the website, mentioned above, we select the four weeks to calculate the volatility. The results are displayed in three diagrams:

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These diagrams show the average daily volatility of the NZD/USD pair since July 1. They also show an average weekly, daily and hourly volatility of the pair.

Based on all three diagrams we can conclude that volatility tends to change during any period.

The hourly volatility diagram for NZD/USD, which peaks at 12 and 21 o’clock (GMT), is of particular interest. It fully coincides with the time of economic data releases for the USA and New Zealand. It also confirms the thesis on volatility increase upon major economic data releases mentioned at the beginning.

Volatility changes can be observed for all currency pairs. You can select any pair and see the statistics over different periods.

What Does Volatility Depend On?

What does the volatility of any currency pair depend on?

The main reason for the volatility is liquidity. A classic rule states that: the higher the liquidity is, the lower is the volatility, and vice versa.

Liquidity is the amount of supply and demand in the market. It means that the larger the supply and demand are, the harder it is to get the price moving.

According to that rule, we can conclude that exotic currency pairs are the most volatile ones in the Forex market because their liquidity is often lower than that of major pairs.

Volatility often occurs during major economic data releases as well, so it may be useful to download and install MT4 news indicator:

It can help to protect yourself against the unexpected market activity.

Let’s use statistics to verify the previous statements.

Table of The Most Volatile Currency Pairs

For our study let’s take seven major, cross, and exotic currency pairs, and draw up a comparative table based on the obtained data:

The Most Volatile Currency Pairs Table (data from 01-06-20)

The table shows that today the most volatile Forex pairs are exotic ones. Namely, USD/SEK, USD/TRY, and USD/BRL. All of them move on average for more than 400 points per day.

The volatility of the major currency pairs is much lower. Only GBP/USD moves for more than 100 points per day. AUD/USD turned out to be the least volatile currency pair.

As for the cross rates, GBP/NZD, GBP/AUD, GBP/CAD, and GBP/JPY are the pairs with the highest volatility. All of them move on average for more than 100 points per day.

CAD/CHF, EUR/CHF, AUD/CHF and CHF/JPY are the less volatility Forex pairs among the cross rates. The amplitude of their movements doesn’t exceed 60 points per day.

Resume

Based on these statements, the reader may conclude that trading the exotic currency pairs or cross rates promises large profits. However, it isn’t quite that simple.

Indeed, the range of exotic pairs’ movements is much broader than that of the major ones. However, such high volatility is a result of low liquidity, and trading the low liquidity currency pairs carries particular risks for a trader.

The fact is that various methods of technical analysis might not work in such situations. That is, if you decide to trade, say, USD/SEK or GBP/NZD, your analysis may not work as effectively as, for example when trading EUR/USD. Also, technical analysis patterns might generate false signals.

This is because the psychology of the market behavior in its most liquid form makes up the backbone of technical analysis. If the liquidity of a trading instrument is lower, the validity of technical analysis comes under question.

The second problem a trader can face when trading the volatile financial instruments is a wide spread (additional trading expenses).

Of course, we won’t discourage you to trade the low liquidity currency pairs. However, our task is to warn inexperienced traders and newbies that the risk of such trading is higher than that of trading the classic currency pairs.

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.

Trading EUR/USD

Why Trade this System?
One of the main reasons we chose the EURUSD as the underlying asset of choice to trade this system is because it is the currency pair that is traded the most in the forex market. This ensures that as a binary options instrument, it is available for trading all day long and will have good liquidity, enabling you to get good pricing. You will not have to buy costly bets that will have a greater risk than reward.

If you are starting out in binary options trading, this is a great way to start your trading career. This system can be used to trade the Rise/Fall variety of binary options. If your broker does not offer this trade type, you can opt for the High/Low variety or the Touch/No Touch binary option.

Setting Up the System:

Most binary options brokers do not provide charts for use in trading analysis, so you have to get the charts yourself. Since the underlying instrument is a forex instrument, you can easily get a chart by downloading an MT4 platform from any of the popular forex brokers like forex.com.

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The strategy in question is to be implemented on a 30-minute chart, and the strategy will make use of the following indicators:

1) MACD (12, 26, 9): This is a momentum indicator that shows the strength of the signal.

2) Parabolic SAR (default settings of 0.02, 0.2): This is a trend signal.

Here are the trade rules for this strategy.

BULLISH SENTIMENT: In order for the EURUSD to go bullish, we wait for the Parabolic SAR indicator to indicate a buy signal, which occurs when the stars of the Parabolic SAR indicator appear below the price action on the chart. We also wait for the MACD lines to cross from negative to positive.

BEARISH SENTIMENT: In order for the EURUSD to go bearish, we wait for the Parabolic SAR indicator to indicate a sell signal, which occurs when the stars of the Parabolic SAR indicator appear above the price action on the chart. We also wait for the MACD lines to cross from positive to negative.

Once you have got a confirmation of the signals, the next step is to choose the binary option trade of your choice. For this example, I will recommend choosing the Touch/No Touch option. This is easier to predict than a Rise/Fall or a range option, as all you need is a touch, (or no touch) to make money on this trade.

If you are bullish on the EURUSD, you can decide to purchase a Touch option contract, selecting a strike price to the upside. Make sure you identify the resistance points and keep your strike price below the resistance so you can be sure the price action will actually touch the price barrier you have set. You can then purchase a “No Touch” option contract, selecting a price barrier to the downside. In this instance, you can set your price barrier well below the nearest resistance so the price action has no chance whatsoever of touching your price barrier.

Repeat the same trade sequence in reverse fashion if your signal indicates a bearish outcome. Whichever trade you decide to take, you should at least have 4 different trade options to benefit from:

  • Touch – Price barrier between market price and nearest resistance.
  • No Touch – Price barrier below the nearest support.
  • Touch – Price barrier between market price and nearest support.
  • No Touch – Price barrier above nearest resistance.

How to Trade Forex Binary Options

Chetan Shekar
Contributor, Benzinga

For investors the financial market offers a wide variety of ways to grow your wealth. Foreign exchange, or forex, gives you direct access to trade with international currencies at the click of a button. And trading binary options on the forex market is one of the simplest methods of making money.

A binary option lets you predict the price movement of a currency pair over a set period of time. For example, if you are speculating that the European euro (EUR) will rise in value against the U.S. dollar (USD) in the next minute, you can invest in a call option for the EUR/USD currency pair. If you are right, your binary option contract will settle for $100 and you get your money back with an earned profit of $100, minus the price of the contract. And if the bid falls below your strike price, you will lose all of your invested money in 60 seconds.

Forex binary options are the epitome of the high risk-high returns proposition. It is an apt investment strategy for active traders who expect fast results in the forex market. Here’s what you need to get started.

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Step 1: Choose an Online Forex Broker

Before you begin, you need to have an account with a forex platform that allows binary options trading. You can compare different online forex brokers before signing up. Some things to consider in an online forex platform for binary options include minimum deposits, minimum trade value, payout percentage and the number of currency pairs available to trade.

Step 2: Pick a Currency Pair

Most online forex brokers will have a list of at least 80 currency pairs to pick and choose from. Common currency pairs that are traded in the forex market are EUR/USD, GBP/USD, USD/JPY, AUD/USD, USD/CHF, USD/CAD and NZD/USD. But, just because a currency pair is popular doesn’t make it profitable. Making informed investments based on research and statistical data helps you limit the risks involved in the binary options you buy.

Step 3: Pick a Binary Option

Online forex platforms let you pick the type of binary option you want to buy. Depending on your choice, the payout percentage on the binary options will vary accordingly. The most-traded binary options are listed below.

  • High or low: You can predict if the price will rise above or fall below the strike price of your currency pair. For instance, if the EUR/USD is valued at 1.1134, you can buy a high or a call option at 1.1139. Likewise, you can buy a low or a put option at 1.1131.
  • Range or boundary: You can predict if the price of the currency pair stays within the strike price or if it will exceed it. For instance, if the GBP/USD is valued at 1.2452 and you expect it to reach 1.240, you can buy a range option. Likewise, you can buy a boundary option if you expect it to reach 1.259.
  • One touch: You can predict the price a currency pair is likely to reach. For instance, if the AUD/USD is valued at 0.6147, you can buy a one-touch option at 0.6150.
  • No touch: You can predict the price a currency pair is not likely to reach. For instance, if the AUD/USD is valued at 0.6147, you can buy a no-touch option at 0.6140.
  • 60 seconds: You can predict the rise or fall of a currency pair value within 1 minute. For instance, if USD/CAD is valued at 1.3997 and you expect it to reach 1.3999 in the next 60 seconds, you can buy a call option.

Step 4: Set the Option for a Call or Put

Once you’ve decided on the type of forex binary option to trade, you can choose to buy a call or a put contract. If you expect the value of the currency pair to rise, buy a call option. And if you expect the value of the currency pair to fall, buy a put option. This does not apply for one touch and no touch binary options.

Step 5: Set an Expiry

You need to set a time duration for the forex binary option to trade. The expiry on a forex binary option contract can be anywhere between 30 seconds to 1 day or even 1 week. Many traders indulge in intraday binary options to make a quick buck. Be careful while following in their footsteps; you could burn your fingers on a binary option just as fast.

Step 6: Reap the Rewards

Unlike forex trading, binary option contracts are purchased for a fixed rate and a fixed reward. Both the buyer and the seller of the binary option contracts will have to put in their money beforehand. So, you can cash in on your earnings as soon the currency pair hits the strike price.

Foreign exchange trading does not have a physical marketplace. You have to open an account with an online forex broker to be able to trade in currency pairs. Since global economic and political news has a drastic impact on forex, you have to explore the full set of analytical tools that an online broker provides with a registered account.

Based on crucial factors such as pricing, trade fees, trade execution speed, ease of use and regulations, Benzinga recommends the following online brokers for trading forex binary options.

1. FOREX.com

FOREX.com is an industry-leading online broker for foreign exchange trading. It offers tight spreads on over 90 currency pairs. You can open an account on FOREX.com with a minimum deposit of $100 or 100 units of your preferred currency. With it, you can trade forex on desktop, internet browsers or on its mobile application. It has an impressive average execution speed of 0.05 seconds per trade.

FOREX.com provides powerful market analysis tools such as the economic calendar, advanced charting, pivot points and daily updates from current events and geopolitical news. It is regulated by the Cayman Islands Monetary Authority. For more information, you can read our full FOREX.com review.

Founded in 1974, IG is the preferred online forex broker for over 178,000 traders worldwide. You can open an account on IG with a $0 minimum deposit. You can also open a demo account to practice forex trading with limited risks. The demo account provides you with AUD $20,000 in virtual funds to help you try your hand at forex trading without any capital investment.

IG offers over 80 currency pairs to trade with. IG’s proprietary technology ProRealTime allows you to filter binary options by strike price and expiration date. It has a round-the-clock customer support facility to answer any queries you have. It is regulated by the Commodities Futures Trading Commission and is a member of the National Futures Association.

3. TD Ameritrade

TD Ameritrade is a commission-free online forex trading platform. You can open an account on TD Ameritrade with $0 minimum deposit. It offers over 70 currency pairs to trade with. The paperMoney tool helps you experiment with new forex trading strategies without risking your own money.

TD Ameritrade’s thinkorswim platform gives you access to professional-grade tech tools to heighten your forex trading experience. With this integrated platform, you gain access to global forex charting packages, currency trading maps and real-time breaking news from CNBC International. TD Ameritrade is regulated by FINRA.

Best Binary Options Brokers 2020:
  • Binarium
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  • Binomo
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