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5 Best Indicators for Trading Binary Options that you can’t afford to miss
When it comes to trading, there are numerous indicators of binary options available. With so many indicators available people often get confused about the best indicators for binary options. Many people don’t understand what an indicator is; mainly because of lack of information available it. With wrong information or awareness about indicators, it can often lead to making a wrong trading choice and indulging into Binary Options Scams.
This article will help you gain knowledge about indicators for binary options. Even though trading indicators are mainly built for Stock markets and Forex but still they can be used for binary options trading as well. At the end of this article, you will have a clear understanding of indicators for binary options and related Binary options FAQ.
What are Binary Options trading indicators?
Trading indicators for Binary options are mathematic values plotted in a chart. The value of prices can be of different levels. For example- Price can be 3 main levels namely opening price, closing price and High Low a.k.a. OHLC code. As you go through the article, various indicators are derived mainly from prices and there is no exceptional thing about indicators.
Use of binary option indicators
The investor must understand that market is never a straight line and is impacted by various ups and downs. The market follows the trend only 20% and keeps moving away from the market trend almost 80%. Hence, in such a market the best thing to do for safe investment is to follow different trends. However, the choice of a trend for studying the market is also important as based on these trends, the best market study can be made and investments can be done.
Technical indicators for binary options
The indicators are elements of technical analysis. These indicators work on an assumption that all information about the asset is related to price. Herein, past price movements are used as a basis to make future predictions with respect to the movement in the market.
Moving average convergence divergence
The difference between moving averages is plotted on the histogram, based on which forecast is made for price direction. It is best to use this indicator in a combination of other indicators. Like for example if you are able to see a buy signal on MACD and along with it a bullish crossover is seen, then it is probably the best time to purchase a call option.
It is considered as one of the excellent indicators of binary options trading, with the help of which overbought and oversold levels can be studied. A separate window is used for plotting and it is also plotted on different price calculations. During uptrends or oversold levels, it is preferable to buy a call option while in the case of a downward trend or overbought levels, purchasing a put option are feasible.
In most of the cases, it makes use of high or low and in some instances open and close prices. In this indicator, the binary options indicator is plotted on the chart and then overlaid on the price. One of the most famous examples of volatility indicator is Bollinger band. With this indicator, both support and resistance level can be calculated and used for trading in binary options.
It is a bit complicated trend indicators, majorly because it is plotted on cycles, peaks, retracement dips, rallies and also the troughs. Often, users confuse this indicator with oscillators and treat it as an overbought or oversold indicator. It is quite useful for identifying start or end of retracements.
While above indicators represent the in-depth picture of the market and how trading in binary options needs to be done in the market, there are also indicators which can be followed by beginners to enter the market and begin by making small investments in binary options.
Zig zag indicator
It is one of the simplest indicators and can be used as a meta trader platform. The zig zag lines on the chart represents, ups and downs in the market which can be used by investors for investing or trading in binary options. It is quite easy to understand, which is why it is termed as an indicator for beginners.
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Daily pivots indicators
It is a simple indicator which shows daily pivot levels in the market. With this indicator, S & R levels can be studied which are useful for making a correct investment in the market
Binary Options Day Trading in Russia 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 in Russia 2020.
Binary Brokers in Russia
What Are Binary Options?
Firstly, let’s have a look at how it all works. Put simply, binary options are a derivative that can be traded on any instrument or market. They appeal because they are straightforward. You know precisely how much you could win, or lose before you make the trade. No complex maths and calculator is required. This is why they are also known as ‘all or nothing’ trades.
If you anticipate news announcements, quarterly reviews, or global trends, then you may be able to make an accurate determination as to whether the price is going to increase or decline at a certain point in the future, turning a profit.
There is a whole host of derivatives to choose between. You can trade binary options on commodity value, such as aluminium and crude oil. You can opt for a stock price, such as Amazon and Facebook. There are foreign exchange rate options, including all the major and minor pairs. Even cryptocurrencies such as Bitcoin, Ethereum, and Litecoin are on the menu.
A Brief History
If you want to start trading binary options full-time, a detailed understanding of their origins will help. Binary or ‘digital’ options have been around for decades. Originally though, it was only large institutions and the fabulously wealthy that had access. However, 2008 saw the US Securities and Exchange Commission open the floodgates by allowing binary options to be traded through an exchange.
The internet and technology have since given the whole world access to these ‘digital’ options. As it stands, with low barriers to entry for savvy day traders and a simple to understand preposition, the demand for these digital trades will only increase.
There are a number of different option types to choose from. The most popular types are listed in the brief glossary below.
- 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.
Another important component of binary options is expiry times. This is when the trade will end and the point that determines whether you have won or lost. These times can range from 30 seconds and 1 minute (turbos) to a full day (end of day), and even up to a whole year.
As an intraday trader though, you will be more concerned with trading 5 and 30-minute binary options. Opt for binaries with 1 minute expiry times though and you have the ability to make a high number of trades in a single day.
Is Trading Binary Options Legal?
Despite the somewhat negative reputation, the reality is binary options are legal. The majority of companies operate fairly. Opinions have been split because there are some out there that operate scams.
Regulation in certain regions has meant binaries have been withdrawn from the retail market. In the EU for example. But professional traders can still use them. In regions such as India and Australia, binary are legal – but traders should make sure they use a reputable broker, and read our section below on avoiding scams.
Scams & Frauds
The binary reputation has suffered from dishonest marketing and cybercrime. Too many unregulated brokers promise quick cash, whilst operating frauds. Regulators are on the case and this concern should soon be alleviated.
Binaries themselves are perfectly legitimate, but steer clear of ‘instant money’ promises, brokers that cold call, and celebrity endorsements, plus any claims that you can ‘start trading binary options for free’.
So it isn’t a question good or bad, it’s simply a question of being alert to the dangers and knowing what to look out for. If you’re unsure about a broker, ask the question in a live trading room to check they’re properly regulated.
Binary Options Vs CFD Trading
Although in some ways similar, there remain some crucial differences between binary options and CFDs. With CFDs, you have potentially unlimited risk. If the price of the asset moves significantly, the value of the trade can grow very large, very quickly – for better or worse.
Whereas binary options work slightly differently. Whilst you are still investing without owning the asset in question, the gain and loss rate is fixed. With a call option, it doesn’t matter if the price rockets, you retain the same percentage as if it rose by just a couple of pips.
Likewise, if the price sinks to zero, you’ll only lose what you put in. So, to define the difference – with binary options you get fixed risk.
Having said that, just as if it was binary options versus forex trading, you are restrained in your profit potential.
Why Trade Binary Options?
If you want to profit trading binary options, you need to first understand both their pros and cons. You need to make sure binary options will suit your trading style, risk tolerance, and capital requirements.
There is a whole host of attractive benefits to trading with binary options. The greatest advantages have been outlined below.
- 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.
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.
One point worth investigating is rules around minimum deposits. Whilst some brokers will offer binary options trading with no minimum deposit, many will expect a deposit of close to $50, and some $100. A broker offering low minimum deposits is ideal if you’re strapped for cash. Trading binary with JC and GCI are good choices if you’re looking for low deposits.
Some brokers will specialise in certain assets. If you’re set on crude oil, it may be worth finding a broker that’s geared towards those binaries. You may benefit from relevant news feeds and the most prudent option choices available. Trading binary stocks with 212, for example, is ideal for those interested in stocks.
With scams out there it’s important you check your broker is properly regulated by the relevant financial body, e.g. FCA, CySec, CFTC. Trading with 247 Binary Options, IQ option, and Binary.com are all safe bets.
Binary options platforms are your gateway to the market and where you’ll spend many hours a day. There are now many online trading platforms, so, make sure it’s easy to use and offers all the charts, patterns and tools you need to make smart and accurate trade decisions. For example, will you be trading binary options with candlesticks or more obscure charts?
Both Keystone and Nadex offer strong binary options trading platforms, as does MT4. Before you buy, conduct a thorough trading platform comparison and check reviews.
Any problem could cost you time, and as an intraday trader, time can cost you serious cash. So, check the broker offers reliable support. Some brokers will offer 24/7 customer support through calls, live chat, and in a number of languages. Binary options trading with Etrade and 24 Option are smart moves if you want top quality support.
A growing number of people use mobile devices and tablets to enhance their trading experience. However, software for trading binary options varies hugely. So, it’s worth checking whether your broker offers cross-platform capabilities. Also, check the charting tools you need will work on your iOS or Android device. Binary options trading with IQ Option, for example, offers fantastic trading apps.
Many brokers will sweeten the deal with some useful add-ons. Some may offer free trading plans, courses, and lessons. So, find out first if they offer free courses online to enhance your trading performance. Some brokers will also offer free binary trading trials so you can try before you buy.
You could also benefit from trading bonuses, tips, the best strategy and trading signals reviews, plus free, practice demo accounts. Not to mention some brokers allow for binary options trading using Paypal. However, don’t be put off by no binary options trading deposit bonus, these can be a sign of potential scams.
For newbies, getting to grips with a demo account first is a sensible idea. Funded with simulated money, you can try numerous assets and options. It’s the perfect place to make mistakes and learn before you put real capital on the line. In addition, you’ll find most free binary options demo accounts require no deposit, so you can start practicing whilst you save that initial capital.
There is no universal best broker, it truly depends on your individual needs. Some brokers offer minimum trades of just a couple of pounds, whilst others require hundreds or even thousands. The solution – do your homework first.
For more guidance on making the right choice, see our brokers page.
Step 2 – Choose An Instrument/Market
You can trade binaries in pretty much everything, including stocks, forex, indices, and commodities. You can bet on anything from the price of natural gas, to the stock price of Google. Opt for an asset you have a good understanding of, that offers promising returns.
Step 3 – Decide On An Expiry Time
As a short-term trader, you’ll probably be more interested in 30 seconds, 1 minute and end of day expiry times. You need to balance binary options trading volume with price movement. Whilst the more trades you make means greater profit potential, it’s better to make fewer and more accurate trades. Also, find a time that compliments your trading style.
Step 4 – Decide On Size
In the binary options game, size does matter. The greater your investment the greater the possible profit. On the flip side, remember the entirety of your investment is on the line. You need an effective money management system that will enable you to make sufficient trades whilst still protecting you from blowing all your capital.
Step 5 – Choose An Option
You will have any number of the options outlined above to choose from. Think carefully about how confident you are in your determination. Consider factors that will jeopardise your investment, and select an option that gives you the best chance of succeeding. Don’t automatically select a ladder trade because you want huge returns, consider which options are the relatively safe bets.
Once you’ve made that decision, check and confirm your trade. Then you can sit back and wait for the trade payout.
Below is a video explaining how to trade binary options on the platform of a leading provider:
Binary trading strategies will differ from trade to trade. What may work for a ladder option in forex, may prove useless in a range option on gold. Having said that, there are two reasons you must have a strategy.
Firstly, a strategy prevents emotions interfering in trade decisions. Fear, greed, and ambition can all lead to errors. A strategy allows you to focus on the maths and data.
Secondly, a strategy allows you to repeat profitable trade decisions. Once you’ve found out how and why that binary option worked, you can replicate it to create consistent profits.
Building A Strategy
There are two crucial elements to your binary options trading method, creating a signal, and deciding how much to trade. The second is essentially money management. How do you go about determining these two steps then?
Step 1 – Creating A Signal
The signal will tell you in which direction the price is going to go, allowing you to make a prediction ahead of time. The two main ways to create signals are to use technical analysis, and the news.
Charts, Patterns & Indicators
If you can identify patterns in your charts, you may be able to predict future price movements. They rest on the idea that ‘history repeats itself’. You can start trading binary options using Heiken-ashi, other candlesticks, and line charts. Armed with charts and patterns, successful traders will build a strategy around their findings.
You can then build indicators into your strategy, telling you when to make a binary option, and which binary option you should go for. These technical tools can prove invaluable, so make sure your broker offers the features available to conduct thorough market analysis.
One of the great things about trading binary is you can use any number of your normal indicators, patterns, and tools to help predict future binary options movements. So, you can start trading with/using:
- Support and resistance levels
- Price action
- Stochastic oscillators
- MACD indicators
- 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
- Business Insider
- 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.
Binary options using the martingale trading strategy aim to recover losses as quickly as possible. To do this you’d trade larger amounts of money in the trades following a loss. So, you’d set an amount that you trade each time, say $250. However, if you lose on that $250, you’d bet $500 on the next trade. If the trade wins, you’ll already be back in the black, rather than being stuck around the break-even mark.
The problem with this strategy is that if you go on a losing streak you can lose a serious amount of capital in a short space of time. So, only use this strategy if you’ve got a relatively accurate means of making trade decisions. If you’re still in the trial and error stage, consider a different approach.
A percentage based system is popular amongst both binary options traders and other traders. The idea is you specify a percentage you’re willing to risk. Between 1-2% is common. So, if you’ve got $10,000 in your account, and your risk value was 2%, you could trade $200 on a single trade.
If you have a greater risk tolerance and consistent results you may want to increase that risk margin to 5%. The benefit of this system is that you should never lose more than you can afford. This makes it an ideal approach to take if you’re new to trading on binary options.
This example is best employed during periods of high volatility and just before the break of important news announcements. This technique can be utilised by traders of all experience levels. It gives you the capability to avoid the call and put option selection, and instead allows putting both on a specified instrument.
You aim to utilise put when the value of the instrument has risen, yet you think that it’s going to decrease soon. Once the descent has begun, place a call option on it, anticipating it to bounce back swiftly. You can also do it in the reverse direction. Simply place a call on the assets prices low and put on the rising asset value.
This significantly increases the chance of at least one of the trade options producing a profitable result. If you’re in a volatile market, this simple system could you see turn handsome profits. This works well as a binary options trading 60 seconds strategy, and will also cover expiry times of up to one day.
Bots & Algorithmic Trading
Once you have honed a strategy that turns you consistent profits, you may want to consider using an automated system to apply it. These robots usually rely on signals and algorithms that can be pre-programmed.
The bots then do all the leg work, trading options on your behalf. The plus side is they can make far more trades than you can do manually, increasing your potential profit margin. They can also trade across different assets and markets.
It’s worth investigating your brokers offering when it comes to auto trading and checking for robot reviews. Many allow you to build a program with relative ease. You can use your own entry points that rely on Bollinger bands, RSI/MFI patterns, and moving averages.
However, even when you’ve got your system up and running, you can’t go into trading binary options on autopilot, you need to stay tuned in. If any mistakes take place, you need to be there to remedy the problem. Technical crashes and unpredictable market changes can all cause issues, so stay vigilant.
Many binary option strategies pdfs fail to sufficiently consider time variables. Certain strategies will perform better with specific time options. You may want to look specifically for a 5-minute binary options strategy. Alternatively, trading 15-minute binary options may better suit your needs. So, whichever strategy above you opt for, ensure you take time into account.
Summing Up Strategy
Trading binary options with success rests on finding a strategy that compliments your trading style. So, consider the instrument you’re going to be trading. Then, employ an effective money management system and use charts and patterns to create telling indicators. Also, utilise news announcements to your advantage.
If you’re trying a new fence, gap, hedging, or any other binary strategy for the first time, why not try it on a trading practice account first? This will allow you to address any issues before you invest your own money.
For more detailed guidance, see our strategies page.
Binary options trading 101; immerse yourself in educational resources. As Benjamin Franklin asserted, ‘an investment in knowledge pays the best interest’. The top traders never stop learning. The markets change and you need to change along with them.
To do that, utilise some of the resources detailed below.
- 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.
There currently exists no binary options university. So, explanations as to why that option didn’t work can be hard to come by. Keeping a journal with all your binary option trading results in could solve that issue. A detailed record of each trade, date, and price will help you hone your strategy and increase future profits.
Whether you keep it an excel document or you use tailor-made software, it could well help you avoid future dangers. As an added bonus, it can make filling in tax returns at the end of the year considerably easier. A journal is one of the best-kept secrets in binary options, so now you know, use one.
Trading binary options successfully isn’t just about having the right strategy. If you can’t control your emotions you will make costly mistakes. As Robert Arnott stated, ‘what is comfortable is rarely profitable’. When the pressure kicks in, fear and greed can distract you from the numbers.
You need to accept that losses are part of trading and stick to your strategy anyway. If it’s based on accurate maths and careful technical analysis then you have to keep your faith. As soon as you start acting inconsistently your profits will suffer.
As the popularity of binary options grows across the world, regulatory bodies are rushing to instill order. That means where you trade and the markets you break into can all be governed by different rules and limitations.
If you’re day trading binary options in the UK, for example, you will require a license from the UK gambling commission. If you opt for a broker regulated by the Financial Conduct Authority (FCA), you’ll be guaranteed an extra level of protection. Beware some brokerages register with the FCA, but this is not the same as regulation.
Brexit has brought with it complications to trading regulations. The MiFID II guidelines were set to be implemented across Europe enforcing rules around binaries, however, the UK may not now implement the guidelines. This means the UK is no longer under pressure from Europe to reclassify binaries as financial instruments.
Binary options trading for US citizens is limited by a choice of just two brokers. Nadex and CBOE are the only two licensed options. Fortunately, they are both huge firms offering competitive prices and a range of different assets to trade binaries on.
Rest Of World
In Australia, the Australian Securities and Investments Commission (ASIC) runs the show. If you’re interested in brokers based in Cyprus and Israel, then check they are regulated by CySec. In Dubai and the rest of the UAE, binary options are regulated by the Dubai International Financial Centre (DIFC).
You can also start day trading binary options in Canada, India, Pakistan, South Africa, Malaysia, Kenya, New Zealand, Nigeria, Vietnam, Indonesia, and the Philippines. Each has their own regulatory bodies and different requirements.
So, if you want protection, ensure you do your research before you sign up for a binary broker on the other side of the world.
Another important regional distinction comes in the form of taxes. Some countries consider binary options as a form of gambling, such as the UK. This comes with notable benefits. The HMRC will not charge you any taxes on profits made through binary options. However, in the future binaries may fall under the umbrella of financial derivatives and incur tax obligations.
Having said that, if day trading binaries are your only form of income and you consider yourself a full-time trader, then you may be liable to pay income tax. Whilst you are probably still exempt, it is worth seeking clarification.
Outside the UK, tax regulation differs hugely. Binary options in Japan and Germany come with vastly different tax obligations, for example. So, before you start trading seek advice to ascertain whether you’ll be exempt from tax. If not, will you pay income tax, capital gains tax, business tax, and/or any other form of tax?
For more detailed information, see our taxes page.
Can Trading Binary Options Make You Rich?
Although exciting and dynamic, to make a living trading binary options you’ll need to use this page and other sources as guides. Can trading binary options make you rich then? Done correctly, yes it can. There is no question of binary options potential profitably, this is evidenced by numerous millionaires. To get there though, you’ll need the right broker, an effective strategy, and you’ll need to invest in your trading education, by utilising the resources outlined above.
Are binary options legal?
Yes, but regional regulation varies.
In India and Australia for example, binary options are legal.
In the US, binaries are available via Nadex, and perfectly legal.
In the EU, binaries have been withdrawn for retail investors, but it is still possible to trade binary options legally, by professional traders. Certain criteria need to be met in order to be classed as ‘professional’.
Can you trade at weekends?
Yes. There are two ways to trade at weekends. Firstly, forex markets are still open in some parts of the world during the “weekend” in other parts. Binaries can be traded on forex during these times.
There are also ‘synthetic’ markets with some brokers (such as binary.com) but traders should note there is no underlying market with these options. They are ‘virtual’ markets created solely to cater for traders looking to trade anything at all. They are not for sophisticated traders.
Are binary options banned in Europe?
Binary options have been withdrawn for retail traders by the European regulator, ESMA. Brokers not regulated in Europe may still offer binaries to EU clients.
It is also possible for EU traders to nominate themselves as professional traders. This waives their rights to regulatory protection, and means binaries are free to be used again.
Some synthetic markets can also be traded by EU traders, and while the product works exactly as a binary options, they are referred to slightly differently.
Do binary options work on MT4 or MT5?
There are no binary options brokers offering Metatrader integration. It is however, possible to perform technical analysis in MT4 and place trades on a separate trading platform.
Can you use binary options on cryptocurrency?
Yes. The leading binary options brokers will all offer binaries on Cryptocurrencies including Bitcoin, Ethereum and Litecoin. As a derivative, traders will not “own” any cryptocurrency, they will purely be speculating on the price. This does mean however, there is no need for a Crypto wallet or crypto account.
Binary Options Guide: The Truth About Binary Options
Trading binary options can seem deceptively simple, but leaning too far into that notion can blind people to some of the risks that often accompany this type of trading.
Before I go any further, I want to make it clear I’m not a binary options trader. I trade penny stocks and teach day trading. I’d love to see you join the Trading Challenge — it’s the result of over two decades of trading and a decade of teaching. It’s awesome.
If you’re interested in taking the binary options path, it’s critically important to understand exactly what you’re getting into and set appropriate expectations. And you should get a mentor who trades binary options. Seriously. Preparation is key.
Again, I don’t trade binaries. For the most part I think they’re scams. Can you trade them successfully? There are successful traders in every niche. But most traders lose. That’s the reality of the industry.
It doesn’t matter if you’re trading forex, penny stocks, options, big caps, or … binary options. Most traders lose and most trading teachers don’t want you to know about it. So I’m going to tell you about binary options in this post. But I don’t trade them and I don’t recommend it.
Will trading binary options enable you to buy a villa in the South of France next year? Probably not. Will they allow you to quit your full-time job and finally start on that novel you’ve always wanted to write? Don’t count on it.
Here, we’ll take a look at what binary options trading is all about and you can decide whether it’s right for you. As you read, keep in mind that binary options are getting outlawed in more and more countries. Companies are getting shut down. Or they’re based overseas in places where you can’t sue them. More on that later.
Table of Contents
What Are Binary Options?
Before we dive into specific binary options trading strategies, let’s review exactly what binary options are. According to Investopedia’s definition:
A binary option, or asset-or-nothing option, is a type of option in which the payoff is structured to be either a fixed amount of compensation if the option expires in the money, or nothing at all if the option expires out of the money. The success of a binary option is thus based on a yes or no proposition, hence “binary”. A binary option automatically exercises, meaning the option holder does not have the choice to buy or sell the underlying asset.
At the core, binary options are based on a yes or no proposition. You must decide whether you believe an underlying asset will be above or below a specific price at a specific time.
Binary trades are ruled by expiry times. These time constraints indicate how long you have to make your predictions regarding whether you believe an underlying asset will be above or below a specific price at a specific time. Once the expiration limit occurs, your predictions determine whether you gained or lost money.
Expiration times vary from binary option to binary option. Some of these minimums are known as short expires, which means the expiration date is actually within mere minutes of the buy-in.
There are medium and long expiries, as well. For medium expiries, the deadline could be anywhere from two to five hours. Long expiries typically last between two and 24 hours. Many experts believe that longer expiration times can help make predictions easier.
What Are the Underlying Assets of Binary Options?
In order to participate in binary options trading, you must first have ownership of an asset that can be optioned for a fixed amount. The types of assets common in binary options include stocks, indices, commodities, and currencies. Many binary traders chooses to trade with stocks, as this option can allow them to get high returns within a short span of time.
Along with indices and commodities, currencies are another popular binary option vehicle. Since currencies are liquid and often subject to dynamic price fluctuation, many traders choose to analyze their binary options across the complex — and often shifting — global currency market.
A quick aside since we’re talking about forex. Be aware that the forex market is among the most difficult to trade. Why?
Because it’s the biggest and most liquid market in the world. You’re up against the smartest, richest, and often most experienced traders in the world. Personally, I don’t want to compete against that. Plus, the forex markets move so fast on news you don’t have access to, that there’s no edge whatsoever.
And now, a new asset has emerged: cryptocurrency. I don’t trade crypto, either. I’ve traded the random crypto-based stock. But this is a whole niche unto itself and I’m happy with penny stocks. Crypto has its own version of binary options — which is why I’ve included it here.
Led by Bitcoin, this new, digital currency class is intriguing investors around the world who see the digitization of finances as the way of the future.
According to Options Advice, there are two prominent ways you can capitalize on Bitcoin binary options. The first strategy is by trading on what you think the imminent fluctuation of Bitcoin might be, and the second is trading regular options with Bitcoins as your currency.
If you’re interested in taking the cryptocurrency binary options route, I strongly suggest familiarizing yourself as much as possible with the trends dictating the ebbs and flows of the altcoin market.
An entire niche financial industry has been built up around educating consumers and future investors of digital coins and tokens. From resources like Cryptoslate to ICO listing sites like Coinschedule, there are many resources available to help you make the most strategic crypto trading moves possible.
There are also a lot of scams. And strange happenings. Like when a crypto exchange CEO died with the ONLY key to $137 million in crypto. Ouch. More than 100,000 cryptocurrency holders learned a very hard lesson. Back to binary options …
What is a Call and What is a Put?
Two of the most common terms you’ll hear throughout the binary options world are call and put. These two labels represent the market positions of binary options.
You typically choose to call if it looks like the value will rise within the confines of the expiry time.
Options also have a strike price, which is the price at which the security would be bought or sold.
If you choose to call, you’re signifying your confidence that a stock will rise within the time limitations. If the stock valuation moves upward at all, you’ll receive both your initial investment as well as the return.
On the opposite end of the spectrum, a put signifies your confidence that the valuation of a stock will drop within a certain time limitation. So if you predict that a stock valuation will decline before the expiration date, and the stock does dwindle, you will have succeeded at that trade and will receive your initial investment — as well as the trade — back.
What Are Other Types of Binary Options?
Beyond call and put options, there are other distinguishing factors that separate binary options from one another.
This guide from Binary Tribune delves more specifically into binary options types based on the number of interactions a trader must initiate with the trade. The levels include one-touch, no-touch, double one-touch, double no-touch, and paired options.
Let’s take a look one-touch and no-touch options …
Essentially, a one-touch binary option indicates that in order for you to receive a payout, a trigger (or predefined barrier) must be reached. Traders often choose one-touch if they feel confident that a stock will move in a certain direction at a minimum amount.
The option only has to meet the predefined trigger level once (hence the “one-touch” term). However, as indicated by Binary Tribune, this strategy is often accompanied by some risk.
Beyond simply calling or putting, you also must feel confident that a certain valuation threshold will be crossed. However, with greater risk often comes greater reward.
In contrast, a no-touch binary option essentially depends on a trigger level not being reached.
Rather than hedging your bets that the valuation of a stock will rise above or dip below a specified amount, you’re betting that the trade will not dip above or below an amount.
Because you’re making the trade with the intention that a threshold will not be crossed in either direction, it’s referred to as “no-touch.” Like their one-touch counterparts, these trades come with greater reward — and risk — potential.
I liken one-touch and no-touch calls and puts to something like an electronic stop-loss. The problem is, you don’t have control. You’d better be damned sure you’re right. Which is impossible.
What Are the Pros and Cons of Binary Options?
Now that you understand binary options basics and the different factors between them, you might be wondering whether this type of trading aligns with your goals. Let’s weigh the pros and cons.
We’ll start with the benefits …
Low Barrier to Entry. You don’t need a masters in economics to engage in this kind of trading. For this reason, many first-timers enter the trading arena through buying and selling binary options. Comparatively, binary trading is relatively simple. When compared directly to other types of trading, including quantitative or arbitrage, trading binary options is straightforward.
Fast Returns. Many traders are eager to see fast results and liquidate within a specific time frame. Those who play the long game (investors) are typically most concerned with growing their money steadily over long periods of time. Many opt to invest in index funds, IRAs, or bonds. Trading binary options is fast paced.
Thing is … you can get all the speed you need trading penny stocks. So, while binary options might be a fast game, the reward might not be worth the risk.
High Rewards. Binary options trading is touted by those who promote it as high reward. It’s possible to receive up to a 70% return on their investments if your binary trades reach your expiration dates in the money. This high average return is what makes this type of trading vehicle attractive to many novice and expert traders.
As explained by Investopedia, the risk on binary options is capped off, so while the rewards could yield high returns, you can’t lose more than the cost of a trade.
Low Cost. If you’re just getting started with trading, there’s a good chance you don’t have excess capital lying around to snatch up shares of the fastest-rising stocks on the market. Binary trades offer an alternative to other types of investments that require high-capital buy-ins.
In theory, you can experiment with a binary trade for any amount you’d like, whether it’s $5 or $50. Starting small and working your way up to bigger trade amounts incrementally is a great way to learn the lay of the land.
As you familiarize yourself with expirations, strike prices and — if you’re interested in one- and no-touch options — triggers, it’s best to gamble with an expendable amount that won’t derail your entire financial status. Notice I used the word gamble — just sayin’.
Accessibility. Binary trading platforms make it easy to trade on any day and at any time. When it comes to binary options, traders aren’t necessarily beholden to standard market times and broker availability.
Now, let’s explore some of the disadvantages of binary trading …
Scams. Conduct any Google search on binary trades and one of the first things you’ll likely notice are the abundance of hits warning against binary scams and shady binary brokers.
Remember when I said I’d get back to the part about shady companies? Here goes …
… and I say this to protect and warn you.
Like I said, these companies are often based overseas. Places like Cyprus. (I have nothing against Cyprus. It’s a beautiful country with amazing people.) Anyway, these companies are based in places where you can’t sue them if they screw you.
Then you sign away pretty much your entire life in the forms they make you fill out. Your odds of winning are so low the brokers who do it are pretty much laughing at you. They’re laughing that so many people fall for this crap. It’s like going to the casino.
So, if you come across a binary broker that sounds too good to be true, it’s because he or she most likely is. And if you come across a binary broker who doesn’t let you liquidate your investment, run in the other direction.
Short term. Binary trades have expiration dates that are often fairly short windows of time. Given this, it’s impossible to use binary options as mechanisms for long-term investments. Which, of course, I don’t mind because I day-trade and teach day-trading. But if you’re looking for buy-and-hold investing, binary options aren’t the right solution.
Can You Really Make Money with Binary Options?
Short answer: It’s possible, but you MUST know what you’re doing. Like I keep saying. Most traders lose. Doesn’t matter the niche. I would never trade binary options. Ever. Your choice, I’m just tryin’ to keep it real.
If you’re serious about binary trading, start small. By making small trades and working your way up, you give yourself breathing room to assess market trends and develop the necessary skills.
As is the case with many types of trading, history is sometimes the best predictor of the future. Many successful binary options traders experience trading wins and financial growth because they’ve spent time studying and familiarizing themselves with market movements.
Wait. Does this sound familiar? Yep. You guessed it: you can’t cheat your way to success. Doesn’t matter the niche. I don’t trade binary options. I don’t recommend you trade them. But if you decide it’s for you then prepare yourself. Study your ass off.
Learning common candlestick patterns can make it easy to spot recurring trading patterns. If you want to understand candlestick patterns — and you do if you are serious about trading — I recommend you get a copy of the classic “Japanese Candlestick Charting Techniques” by Steve Nison. Doesn’t matter which niche you trade, this book should be on your bookshelf.
Of course, trading patterns are never 100 percent accurate, so don’t fool yourself into thinking of them as absolute stock predictions. However, the more you can learn about patterns and begin to recognize them yourself, the more likely you’ll be comfortable making your own options decisions.
Is it Safe and/or Legal to Trade Binary Options?
Naturally, binary options contain risk. And by now you know my take. I pretty much think they’re scams. But there are differing opinions and some even consider them safe trading routes. I’m not gonna tell you not to trade them. I recommend you don’t. I’ll be interested to hear back from you. When you’re ready to trade the way I teach … apply for the Trading Challenge.
While it’s legal to trade binary options within the United States, they’re only available to trade on Commodity Futures Trading Commission (CFTC) regulated exchanges within the country.
Binary options traded outside the U.S. are structured differently to those traded here. You can learn more in this article on Investopedia: What You Need To Know About Binary Options Outside the U.S.
The Bottom Line
The good: Some traders like binary options because they are traded at fixed costs. You know where you stand.
The bad: Binary investments are too much like flipping a coin, there are too many scams, and your odds of winning are so low you might as well go to the casino.
The bottom line: Educate yourself like crazy. Avoid sketchy brokers. Start small and work your way up. Remain vigilant. Stick with these rules, and someday you might reach your trading goals. Will you do it with binary options? I doubt it. But you might prove me wrong.
Want to Try Binary Options Trading?
At this point, I hope I’ve shed enough light on binary options trading that you don’t do it. But … you might be thinking about giving binary options trading a shot. If you do, study your butt off. Get a mentor. Don’t screw around. The best of the best in every niche work with a mentor.
Trading — any type of trading — can quickly become complicated. Like any other sector of trading, it’s important to seek out an education before you attempt to invest in this way. I can’t help you trade binary options. But I can help you learn to trade penny stocks …
Is the Trading Challenge for You?
As a teacher I want to help my students forge long-term, sustainable careers as traders. The Trading Challenge can help you reach your goals through risk-averse, conservative trading.
Plus, my best students — those who have become millionaires themselves — join me in coaching you.
What do you get?
- Wednesday morning live trading webinar. I show you live trades so you can see how it’s done. And it’s not only wins. These are true live trades. Sometimes I lose. But you’ll see how fast I cut losses and why I get out so fast when things turn against me.
- Wednesday evening live lesson and Q&A. No matter where I am in the world. This is killer stuff.
- Thursday live trading & review with Mark Croock. @thehonestcroock is at it every Thursday. You don’t want to miss this. Mark is one of my best students/teachers. He’s constantly in the challenge chat room alerting students.
- Annual Penny Stocking Silver Membership. You need this. Thousands of hours of video lessons and archived webinars. Immerse yourself. This is how to get good fast.
- PLUS: Two monthly bonus webinars by my top student Tim Grittani. It won’t take long to understand how Tim went from $1,500 to where he is now when you see how meticulous he is about his trades. Learn from a master.
WAIT! There’s more …
I always wanted to write that. Anyway, there is more, but you have to apply for the Trading Challenge to get it. Simple.
Will you be my next success story?
As you’ve now learned, if you study hard, start small, keep your scam radar on high alert, and stay educated, then becoming a successful trader is possible. But it’s not easy. So don’t even think about doing it if you’re not willing to work hard.
As for binary options …
Look, whatever you decide, it’s about how much time and effort you put into learning. I don’t think binary options are a good way to go. Plain and simple. But there are success stories.
If you’d rather learn what I teach, then apply for the Trading Challenge. But no lazy losers allowed. Seriously. Only join the Trading Challenge if you’re willing to work hard.
Are you a trader? Do you trade binary options? Comment below and let your fellow traders know how it works for you. Even if you are brand new, I love to hear from readers. Comment below!
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