Expert’s Tips for Trading the FTSE 100 using Binary Options

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5 simple Binary Options Tips & Tricks

What is the key to success with Binary Options? – On this page, I will show you the best and simplest Tips & Tricks for trading Binary Options. That is a piece of advice for beginners or advanced traders. With more than 5 years of experience in trading, I know what I am talking about. It is always the same mistakes why traders lose their money to the markets.

It is important to go through all the steps and techniques on this website because only one mistake can cost you a lot of money:

1. Know the risk of trading (Risk management)

If you start trading you have to risk money on the stock exchange in order to make a profit. Most of the time this fact is misunderstood and traders care less about the risk. Binary Options are very risky to trade because you can lose the invested amount of money. That means you have to have a higher hit rate than 50% to make a profit over a long time horizon.

Sometimes there are loss stikes for beginners or advanced traders. It always can happen to you because the market is different and flexible in his price movements. Sometimes you lose more than 10 trades in a row. That’s why you need sensible money management.

Sensible money management means long-term success.

Money Management:

It is important to use your funds wisely. That means that you should protect your account against loss strikes. Most traders risk too much money of their account balance and then they wonder why they start trading irrational and with emotions. It is harder to lose 100% of the account balance than 10%. Sensible money management means that you only risk 1% of the account balance per trade.

Example: You got an account with the balance of 10.000$. Risk of 1% is 100$ investment in each trade. That allows you to lose more than 10 trades in a row and so it is easier to accept the loss.

Also, you should always use the same amount of money for your invest (percent of account balance). Professional traders know this fact and they are growing their accounts continuously and not in huge steps.

2. Start investing with a small amount of money

Nowadays you can start trading with a small amount of money like 10$. In my opinion, you should start with a small deposit like 50$ or less. After you feel comfortable and do a profit with the small account balance you can invest more money. It is important to stack up risk if you trade well and profitable. You never should do it the way around. That can be very bad for your hard earned money.

  • How much money do you want to fund into your account?

That is another question for traders. As mentioned before I always start with a very small amount in a new trading account. After I gained some profit I feel comfortable and able to invest more funds into my account.

3. Choose a regulated Binary Options Broker

Another tip to improve your results is to choose a regulated Binary Options Broker. It is much safer for your funds. This is the shocking truth! Unregulated brokers sometimes scam their clients. That is what should be avoided by this tip. I personally cannot trust an unregulated company that´s why I created the comparison below. In the table, you will find regulated brokers for trading Binary Options. The funds are safe with them and you will get your payout directly.

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  • Binomo
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Best Platform
Highest Yield
Best Support

Broker: Review: Regulation: Yield: Advantages: Open Account:
1. IQ Option (5 / 5)
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2. Olymp Trade (4.8 / 5)
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Good Platform
Account Types
Good Education

4. Develop a strategy and trading rules

Trading without a plan is not a good idea. Every professional trader got his own strategy. From my experience, it is not a good idea to copy a strategy for 100% too. First of all, you should practice trading in the demo account for getting new experience in the markets. In addition, you can learn strategies and get higher knowledge through the education center of the broker or the internet.

On my site “Binary Options Strategy” you can learn about my best method to trade the markets. It is important to get a trading routine by strict rules. It should be lite a system which is working correctly. In conclusion, there are a lot of good working strategies on the internet but most traders do not follow the rules exactly. It is very hard to trade the exact rules for a human.

Create a checklist for your trading routine, I will give you an example:

  • Check out the market news
  • Which time is it?
  • Which markets are open?
  • Where was the open of the markets?
  • Are there any support and resistance prices in the market today?

Development of a trading strategy

Personally, I got strict rules for entering the market. My “false breakout strategy” allows me to trade only on certain levels in the market. I am searching for highs and lows and wait for the break. That’s all that I am doing. Very simple and clean. But it is hard to follow the rules every time because the market always moves and maybe gives you other opportunities to trade. I try to ignore the other opportunities for better results of my strategy.

5. Do not do overtrade

This is the last tip for trading successful Binary Options. Overtrading is one of the most common mistakes of beginners. Especially for a short-term day trader, it is difficult to do not overtrade. That means to trade a high volume in a lot of different trades. In my opinion, you should make a rule that you do not trade more than a certain amount in one hour. The problem is the concentration of human consciousness.

In addition, it is important to take breaks from trading to get a recap and relax for some time. Short-term trading is one of the hardest methods to trade the markets. The price always moves very fast from the one end of the chart to the other end. I recommend to trade a maximum of 1 hour and then do a break for 10 minutes. Do not become addicted to the markets. Often it will blow up your account if you do not trade rationally.

  • Just spend one hour by trading the markets
  • Do a break after it
  • Start again for one hour
  • There should be a daily time limit and trade limit

How to win Binary Options every time?

Did you ever ask this question to yourself? From my experience, it is impossible to win every trade. The best traders got a hit rate of more than 70%. They also got lose trades or strikes. It is all about the probability to win in the markets. The probability cannot be 100% because there are other humans who react to the markets. You can not make a forecast for 100% about to a human reaction.

Another possibility to get knowledge about the hit rate of your strategy is to do research and analyze bar by bar the last price movements. Do it by yourself and you will find out that there is not the same price movement occurring every time. In addition, you should never trust somebody who says that he always win Binary Options.

In conclusion, the key to success is practicing trading and get more knowledge about the markets. The best way to practice is a free demo account with virtual money. It is simulating the real money trading and you trade without any risk. After you learned a proven strategy the way is open to earn a lot of money.

What are the best trades for beginners?

Binary Options is a flexible financial product. You can customize the trade like you want before you click the call or put button. But what are the best options for beginners?

From my experience, I recommend for beginners to do not do short-term trading like 30 or 60-second trades. It is a way too fast for beginners. All in all, it is easier to use higher timeframe because you got more time to react to the markets. Beginners are too slow for watching 30 or 60-second charts. Furthermore, beginners should trade the most traded assets by their broker because they give them the highest profit of 80-95%.

  • Avoid 30 – 60-second trades
  • Trade the most traded assets by your broker

Beginners should avoid short-term trading

Review of the Binary Options Tips and Tricks

On this website, I showed you different techniques to improve your trading results with Binary Options. You will get more profitable trades if you follow my tips and tricks. In conclusion, there are a lot of different mistakes traders make. Often they do not know what they are doing and then they wonder why they lose a huge amount of money.

As mentioned before knowledge is the key to success. That’s why I created this page for you.

  • Risk Management
  • Start with a small amount
  • Regulated Broker
  • Strategy and rules
  • Overtrading

The tips complete each other. Every bad trader starts with wrong risk management. Stop increase the risk if you are losing. Professional traders increase the risk if they are winning. It makes no sense to risk more money in a losing strike. It will make the losing strike even bigger. On the other side, you should increase the risk in a winning strike. Start with a small amount of money for your first trades. If you do it well and feel comfortable with the platform, you can increase the risk. You will gain more and more self-confidence after you won some trades in a row. That allows you to trade better and accurately.

The most beginners ask: which is the best Broker for Binary Options? – I recommend using a regulated broker like IQ Option, Olymp Trade or Expert Option. Check out the upper table and create a free demo account or read the big reviews of the brokers on my website. It is important for me to use a regulated broker because I cannot trust unregulated one. I want to be safe by investing money and not get scammed.

The last 2 tips are supporting each other. By using a professional strategy you will not overtrade in the markets. Strict rules and knowledge is the key to success with Binary Options. I hope you enjoyed this page and you will make less losing trades.

Trading the FTSE 100

July 1, 2020 7:25 pm

The FTSE 100 is an index that represents the overall performance one-hundred different companies that are traded inside the London Stock Exchange. In order to profit from trading with the FTSE in binary options format, traders must understand the primary reasons that drive market movements. Below is a fundamental strategy that can be used to trade this index within any platform.

The FTSE 100 in similar to all indices in that favorable market data typically leads to an increase in stock purchases, which in turn leads to an increase in the value of an index. Alternately, weak market data can lead to selling and a decrease in the value of the index. The key to successfully trading any of the indices to to know exactly which data reports to be monitoring and when this information is set to be released.

With the FTSE 100 data coming from any of the major U.K. banks should be of particular interest. Changes in interest rates can have quite the impact on the overall value of this index. As of now, primary interest rates are quite low, but increases are on the horizon as economic conditions continue to improve with time. Traders would be wise to closely monitor all forthcoming interest rate decisions.

Data coming from U.S. markets can impact the FTSE 100, but it is actually the European Union that is the top trading partner to the United Kingdom. When the Eurozone is experiencing either favorable or unfavorable conditions, it’s relatively safe to assume that the FTSE is going to be experiencing much of the same. Pay close attention to inflation data, manufacturing data, GDP, and housing data. All of these reports can create optimal binary options profit opportunities.

The most effective strategy when trading with all indices is to be prepared to enter into trade just after important data is released. There is typically a lull in the market just after the data is released, but once it has been processed by investors, changes can occur quickly. Extremely positive or negative sentiment can cause price trends, which happen to be the easiest type of price action to profit from.

The FTSE 100 is typically less volatile than the United States or Asia markets. However, this can actually make movement forecasts a bit more difficult to produce. The good news is that most platforms now provide instruments that can be paired with specific market conditions. When the FTSE is range-bound, Boundary or Range trades can be used to cash in on the reduced level of price action.

When monitoring Eurozone conditions and keeping track of economic releases, trading with the FTSE 100 index should not be difficult. Every asset is going to have specific data that can point directly to profit opportunities and this index is certainly no exception. On a final note, do take the time to see how the British Pound is performing prior to trading. Currencies do have an underlying link to indices and therefore should be considered with trading binary options with individual markets.

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Arbitrage Strategies With Binary Options

Arbitrage is the simultaneous buying and selling of the same security in two different markets with an aim to profit from the price differential. Owing to their unique payoff structure, binary options have gained huge popularity among the traders. We look at the arbitrage opportunities in binary options trading.

A Quick Intro To Arbitrage

Suppose a stock is listed on both the NYSE and NASDAQ stock exchanges. A trader observes that the current price of the stock on the NYSE is $10.1 and that on the NASDAQ it is $10.2. She purchases 10,000 of the lower-priced shares (on the NYSE), costing $101,000 and simultaneously sells the same quantity of 10,000 higher-priced shares, costing $102,000. She manages to pocket the difference (102,000-101,000 = $1000) as profit (assuming there is no brokerage commission).

Effectively, arbitrage is risk-free profit. At the end of the two transactions (if executed successfully), the trader is not holding any stock position (so she is risk-free), yet she has made a profit.

Options Arbitrage

Options trading involves high variations in prices, which offers good arbitrage opportunities. While stocks may need two different markets (exchanges) for arbitrage, option combinations allow arbitrage opportunities on the same exchange. For example, combining a long put and a long futures position results in the creation of a synthetic call, which can be arbitraged against a real call option on the same exchange. Effectively, assets with similar payoffs are arbitraged against each other.

Additionally, other variations in arbitrage exist. A long position in a stock can be arbitraged against a short position in stock futures. Arbitrage opportunities can also be explored between correlated commodities and currencies (examples follow).

Binary Options

While the plain vanilla call and put options offer a linear payoff, binary options are a special category of options that offer “all-or-nothing” or “fixed price” payoffs.

Here is the graphical representation of the difference in payoffs between the two:

The linear (and varying) payoff from plain vanilla options allows for combinations of different options, futures, and stock positions to be arbitraged against each other (and a trader can benefit from the price differentials). The fixed payoff of binary options limits the combination possibilities.

The key idea of arbitrage is simultaneously buying and selling assets of similar profile (synthetic or real) to profit from the price difference. One of the biggest challenge with binary options is that there are hardly any assets that have a similar payoff profile. Trying combinations involving different assets to replicate the binary option payoff function is a cumbersome task. It involves taking multiple positions—something that is very difficult for timely trade execution and costs high brokerage commissions.

Arbitrage Opportunities in Binary Options Trading:

Within the above-mentioned constraints, the arbitrage opportunities in binary option trading are limited. Finding similar assets to simultaneously arbitrage against is difficult. The best available option is to go for time-based arbitrage. It involves identifying a market discrepancy, taking a position accordingly, and then booking the profits after some time when that discrepancy gets eliminated or the price target/stop-losses are hit.

NADEX is the popular exchange for trading binary options. Keep in mind that other markets for stocks, indices, futures, options, or commodities have different (and limited) trading hours. Multiple assets (stocks, futures, options) trade at different times of the day depending upon the exchange-enabled trading hours. Developments that happen when a market is closed may lead to rapid moves in prices when the market opens.

For example, there may be a news item that affects the FTSE 100 stock index and comes out when the London Stock Exchange (LSE) is closed. The exact impact of such news on the FTSE 100 index will be visible only when the LSE opens and the FTSE starts updating. Until then, speculations will be high about the perceived impact of the news on the FTSE’s value.

This index is the benchmark for trading binary options on NADEX. Since binary options trading is available for extended hours, a lot of volatility and price moves as a result of the news may be visible in FTSE binary options.

Suppose the LSE is currently closed and there are no updates to the FTSE index (last closing value was 7000). Assume last price for binary option “FTSE > 7100” was $30. As a result of the developing news, the FTSE is expected to rise once the market opens (say five hours from now), and this binary option value will start to rise (and fluctuate) from the current price of $30 to $50, $60, $70 and so on. Since there is no certainty about what will be the exact FTSE value when it will open for trading, the binary option prices will fluctuate up and down. During this time, experienced traders can bet their money on FTSE binary options for time-based arbitrage.

Once the market opens, the actual change in the FTSE Index values and FTSE futures prices will be visible. That will lead to FTSE 100 binary options prices to move towards accurately reflecting FTSE 100 values. By that time, experienced traders could have spotted overbought and oversold conditions in the binary options market and made profits (possibly couple of times).

Other binary option arbitrage opportunities come from correlated assets, such as the impact of commodity price changes that lead to currency price changes. Usually, gold and oil have an inverse correlation with the US dollar (i.e., if gold or oil prices rise, then USD currency weakens and vice versa). Experienced traders can look for arbitrage opportunities in associated forex binary options in such scenarios.

For example, a trader observes that gold prices are rising. He can short sell US dollar by selling the USD/JPY pair or by buying EUR/USD pair. Similarly, an increase in oil prices can lead to an expected increase in the price of EUR/USD. A binary options trader can take appropriate positions to benefit from these changes in asset prices.

Arbitrage in other binary options, such as “non-farm payroll binary options”, is difficult because such an underlying is not correlated to anything. One can still attempt time-based arbitrage, but this would be solely on speculation (e.g. take a position as the expiry approaches and attempt to benefit from volatility).

Binary Options: Better for Arbitrage?

High volatility is a friend of arbitrageurs. Binary options offer “all-or-nothing” or “fixed price” profit ($100) and loss ($0). Like plain vanilla options, there is no variability (or linearity) in returns and risks. Buying a binary option at $40 will result in either a $60 profit (final payoff – buy price = $100 – $40 = $60) or a $40 loss. Any impact of news/earnings/other market developments will lead the price to fluctuate (from $40 to $50, $80, $10, $15, and so on).

Arbitrageurs usually don’t wait for binary options to expire. They book the partial profits or cut their losses before. Since binary options have fixed price flat payoffs, any change in the underlying value can have a big impact on returns.

For example, if the FTSE closed at 7000, and the binary option FTSE>7100 was trading at $30, and then positive news about the FTSE comes out. The FTSE reaches 7095 and is hovering around that level in a 10-point range (7095-7105). The binary option price will show huge variations, as just a one-point difference in the FTSE can make or break the win-loss payout for a trader. If the FTSE ends at 7099, the buyer losses the premium he paid ($30). If the FTSE ends at 7100, he receives a profit of ($100-$30 = $70). This -$30 to +$70 is a huge variation based on a one point limit of the underlying (7099 to 7100), and that leads to very high volatility for binary option valuations, creating huge price swings for active binary option traders to capitalize upon.

The Bottom Line

Standard arbitrage (simultaneous buying and selling of similar security across two markets) may not be available to binary options traders due to a lack of similar assets trading across multiple markets. Arbitrage opportunities in binary options are to be picked from those available during off-market hours in associated markets or correlated assets. The unique “all-or-nothing” payoff structure of binary options allow for time-based arbitrage opportunities. High variations enable high profit potentials, but also bring in large potential for losses. Due to its high-risk, high-return nature, binary options trading is advisable for experienced traders only.

Binary Options Trading Guide

Binary options represent an ever-popular trading instrument among a great number of retail traders in the market today. Binary options, as the name suggests, offers the buyer to outcomes in relation to the price action of an underlying asset – a payout on direction and movement over a given time frame. A binary option can be used to predict whether price (of an underlying asset) will rise or a fall beyond a certain point know as a strike price. While mainstream investors actually buy or sell the asset and follow its value until they decide to close out (sell or buy), binary options traders trade a contract on the market with a fixed potential payout and fixed risk which is the price of the option. This means that the profit and loss in trading the asset is determined purely on the changing value of the price of the particular asset. Binary options traders who predict the asset’s performance over a given time period (without actually acquiring the asset) only need to achieve price at or beyond a certain level (up or down).

  • Bet on a price of an asset going up or down, or staying in a range
  • Risk only a fixed amount
  • As with the risks, gains are limited as well with binary options trading

Therefore, investors who trade the underlying asset will profit from price movement in their favour, with gains unlimited while their risk is defined by their stop loss limits placed in the market. As the word binary itself denotes, there are only two outcomes to the trade. If the price moves the way of the option holder, a set payout is received, if not, then the option expires worthless and the buyer receives nothing and loses the premium paid (cost) of the option.

Strike Price, Payout Offer, and Expiry Time

There are several key components to a binary option trade: strike price, expiry period and payout offer. The expiry period is the length of time the contract is set to last for. Expiry is the period from the point you buy the option to the point it closes, and it can be as short as a minute and as long as a month or, in some cases as long as a year. Expiration times for binary options are usually shorter than with traditional options and many traders opt for trades in short-term periods, often buying options in several instances.

The strike price is the price you intend the asset to move above or below (for directional binary options) during the expiry period and determines whether you receive payout otr not. The payout offer is the return the broker offers you if your trade is successful. Offers will differ from broker to broker as their individual probability calculators will be individually set and determined. Some brokers may also offer return percentages the event of a losing trade, but is likely to be offset by the return on a ‘winning’ trade.

  • Expiry period: the length of time for which you are predicting a movement
  • Strike price: the level that price will have to move above or below to achieve payout
  • Payout offer: the amount you stand to profit if you make the correct prediction

The strike price is the price you entered the trade at, meaning that’s actually the target which determines whether your trade is a winner – depending on your decision and if the value of the asset falls below or rises above it. The payout offer is the return the broker promises if your trade is successful. Offers largely differ from broker to broker and some companies offer return percentages in case of losing too, but this always affects returns in case of a win too.

Binary Options Trading: Call or Put

When choosing a directional binary option, there are (naturally) two options available: a Call or a Put. A Call is an option with a strike above which you predict or expect the asset price to move above, and if this closes above the strike at expiry (European style option) then payout is made as agreed at the outset. A Put is the direct opposite, in that the buyer chooses a strike below which he believes the asset price will move. A close below this strike price will then achieve payout.

At this point, readers should note that if the predicted move is correct, the payout is no more or less than that agreed at the outset. Should a trader choose to trade the spot market, if price moves significantly beyond his determined level ( reflected in the strike price), then he or she can achieve a greater reward based on the risk set by the disciplined use of a stop loss limit.

Types of Binary Options – Assets

There are a number of different asset classes offered by various brokers around the world on which one can trade binary options. Most companies offer these options on stock market indices, individual stocks, commodities and of course, currencies. Indices (or a stock index) are representations of the component assets and show the performance of an asset class as a whole . These are popular bases for binary trading. The most commonly traded are S&P 500, Dow Jones, NASDAQ, DAX, FTSE 100, Hang Seng and Nikkei. The most commonly traded commodities include gold, silver, oil, and copper.

Individual stocks are also available to trade through binary options, and offer the trader a chance to focus on specific sectors in the indices. The largest companies available to stock options traders are companies like Microsoft, Google, Coca Cola, Toyota, and Vodafone, to just name a few. Finally, currencies are common and very popular asset for binary options trading where brokers offer the major and a few exotic currency pairs, including US Dollar, Euro, UK Pound Sterling, Yen, and more.

Choosing Your Binary Options Broker

Choosing your broker is a very important part of your binary options trading system . You have to consider different factors when considering a broker and research the best companies that can offer you everything you need.

Finding reliable and reputable broker is paramount for your trading success

Look for brokers who are regulated

Find a broker who has a wide range of asset classes to cover.

Brokers who offer a wealth of educational material and good customer support

It is advisable to look for a broker that offers a Demo Account to help you familiarise yourself with the market and trading instruments.

Binary options are financial instruments which carry risk and as such they have to be regulated, and a reputable will be covered by this supervision. This should be an key consideration to any, and especially new binary options traders, when choosing a broker. Other aspects to keep in mind are assets in offer, broker bonuses, account types, fees, educational materials, and of course customer care. on

Regulation

As said, one of the main aspects in choosing a broker is the regulation. Having a regulatory body cover a broker of your choice provides more security and protocol which will protect the trader. In 2020, there were some significant changes to the global understanding of binary options as it was classified as a financial instrument. This brought binary options brokers in Cyprus directly under regulation of the Cyprus Securities and Exchange Commission (CySEC) . Thus, CySEC has become the first EU regulatory body for binary options trading and its license is accepted by all EU countries, though CySEC regulated brokers do not offer trading to US clients. Other prominent binary options regulatory authorities include Financial Conduct Authority (FCA) in the UK, Australian Securities and Investments Commission (ASIC) , Investment Industry Regulatory Organization of Canada , and Commodity Futures Trading Commission (CFTC) in the US.

Platforms and Features of Binary Options Trading

A suitable and user friendly trading platform to execute your trades is important to traders for obvious reasons. There are several criteria you have to consider when choosing the software, including the interface, instruments, safety of your data, and technical support. You should look for a simple and solid interface with a straightforward design and all features should be easily accessible. Safety and data encryption are an absolute necessity as well as conformity to all regulations and no room for manipulation. You should also look for a platform offering good and timely technical support, as it is important for a trader to be able to quickly and appropriately address any potential issues.

The better binary options platforms will offer a simplified system which suitable for both beginners and experienced traders. Ultimately, your broker will offer all the necessary features as well as the full range of binary options types. We recommend the list comprises of:

Account Types and Deposit Bonuses

Most brokers will offer different account types with different features based on the deposits a client makes. With account types varying from broker to broker, you will need to meet certain deposit requirements to qualify for different account types: Different accounts also come with specific features and bonuses that accompany them.

  • Do your research on account types offered by different brokers
  • Look for a broker that offers a Demo Account to get you going
  • Find good deposit bonuses, but make sure to read the fine print

It’s very important to research the account types and the actual offer which can usually be found on the broker website. Best brokers will provide educational materials as well as demo accounts with all types of accounts, where some of them will even offer free and no deposit demo accounts for you to check out the platform and the trading experience they provide. Deposit bonuses are often related to the deposit amount and the account types, where brokers allow up to 100% deposit bonuses. It’s always important to consider all details of the bonuses as these are often tying and have requirements for releasing and withdrawing the money.

High / Low (or Call / Put)

High/Low is a basic instrument, where based on the current value, the user decides whether the market will go higher or lower above or below the current or pre-set (strike) price.

Touch / No Touch

This is instrument is based on a target price, where the buyer decides whether price will reach the target (price) or trigger within the expiry period.

Boundary Options (also Double One / No Touch)

Boundary options or a Double One or No Touch option is based on two barrier limits or triggers forming a range or boundary, where the trader decides whether the market value will remain inside or outside of he range within the expiry period (American style) or after at expiry (European style).

Most brokers will offer different account types with different features based on the deposit a client makes. With account types varying from broker to broker, you will need to meet certain deposit requirements to qualify for the various account types: Different accounts also come with specific features and bonuses that accompany them.

  • Do your research on account types offered by the different brokers
  • If you find a good deposit bonus scheme, make sure to read the fine print

It is vitally important to research the account types and the details of the offer which is found on the broker website. The best of brokers will provide educational material as well as demo accounts with a variety of binary options, and will offer the opportunity to try their trading platform (with a demo account) without the need to deposit funds. Deposit bonuses are often related to the deposit amount and the account types, where brokers can offer up to 100% deposit bonuses. Once again, read the small print – you should always consider the details of the bonus as they may tie you in to certain requirements for releasing and withdrawing the money.

Educational Materials for Binary Options Trading

Educational material on trading binary options can be considered as an important part of the overall customer care and this shows the broker is allowing the client every opportunity to improve their trading style, understanding and ultimately chances of success. Most brokers offer free material, as well as extensive training programs, webinars, and account managers, with either standard and/or ‘VIP’ accounts. It is important to note that you become a part of a trading community with any broker and that you can get high-quality advice from other traders just by building connections.

Customer Support

Most regulated brokers offer good quality customer support, with well trained staff offering a competent and timely service 24/5 (24/7 in some cases). The best binary options brokers offer support via e-mail, live chat, and telephone, often with toll-free lines. Check the customer support quality and timeliness before choosing and registering with a broker.

Choosing When to Trade

Once you have decided on a binary options trading broker, having opened an account with funds deposited, you will want to know everything you possibly can about the market you are trading in. As well as knowledge on binary (options) trading, you will want as much information on the assets (and related industry) you are trading on. Try to get as many news and information channels as possible, covering all stories that can affect the value of the markets you are trading in.

At times, you may find that trading in options is not the best way to react to news and data, and this is an important part of know when to trade options and when to choose the underlying market directly. As attractive as options can be, straight forward spot trading will often give you the best opportunity when reacting to news and events in a dynamic market.

  • Always try to pick up on as much information as possible from various sources
  • Keep an eye out for breaking news that could influence particular assets
  • Be prepared to react quickly

Many brokers will offer their own or imported news feeds which are, of course, highly useful, but we would recommend having your own news channels selection also.

Understanding the Risks of Binary Options Trading

One of the main reasons binary trading became so popular is due to the fact that you don’t need to buy or sell the underlying assets, and the risks as well as the potential payouts are defined at the outset. That said, the rigid risk to reward profile can be restrictive. Trading the underlying assets with disciplined stop losses can afford you the same measured risk, but with the added incentive that profits will be unlimited should the market move in your desired direction. As safe as they may be, there are well principled ways to achieve the same results, if not better in the direct (underlying markets.

  • Binary options trading does not come without its risks.
  • Sometimes there are better opportunities trading the underlying asset.
  • Always monitor your trades – measure their performance against an equivalent spot position in the underlying asset
  • Pick the assets you know best and stick to them

Binary options clearly give the trader – especially beginners – a pre-set layout of the risk (cost of the option – known as a premium) and the potential payout. This gives the trader the comfort and security of knowing the limits of what they can lose – and also the maximum amount they can gain. However, there are risks to be aware of. Due to the limited payout, inexperienced traders may get in the habit of trading too often – a common mistake and this can spiral out of control. As stated, the risk you take on binary options is capped, but so are your gains. Once the asset price goes past your strike, you get the same payout offer no matter how far it moves in your favor. This can lead to traders choosing to take on many options as the price moves higher or lower. In this instance, we can see that taking a position in the underlying spot position can yield greater returns, as the price can continue to move in your favour from your initial trade – with stop in place of course. Choose when to trade – it is important.

The Bottom Line

Binary options have been highly popular financial instruments, where based on a ‘yes or no’ option you get a fixed payout offer and have both risk and potential reward limited. This attracted many new traders to venture into binary options trading, without directly purchasing or selling the assets and taking on the associated risks. However, as we have defined above, there are risks to trading binary options as there are in any financial instrument. It may be simple to decide on the asset you want to trade, pick a direction, set a certain expiry time, and set out the amount you want to risk, but this can also be achieved when trading the underlying spot position . The underlying assets for trading include commodities, indices, stocks, and currencies, though only a certain number will be available to trade ‘under’ binary options . Winning returns can be as much as 70% to 85% for some option contracts from prominent brokers, but these kinds of returns can also be earned in the direct markets – again, using discipline and rigid stops (to limit risk). Brokers may also offer a lose payout with some of these earning you up to 15%, though as mentioned earlier, this tends to affect the payout amount if the option ‘wins’. Although the binary options seem very simple and easy to conduct, it is important to do your research to see if these instruments fit in with your strategy. To be profitable you will need a reliable strategy, and also to learn how to trade with discipline, whatever instrument you choose to use.

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