Trading Binary Options – When, How, What

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Contents

Binary Options: Concepts and Trading

Binary options – a popular financial tool for profit. Types of binary options, strategies and indicators for BO. How to choose the right time for the expiration of a binary option and not make the most common mistakes.

The attention of traders trading in the Forex market or on stock exchanges, recently began to attract binary options. If with traditional option contracts Since everything is pretty clear, the prefix “binary” is not completely clear to everyone. Let’s try to understand this tool and get a basic idea of ​​it.

“Binary” – what is it?

So, binary options is an option that has only two options for profitability: either a fixed percentage of profit or a loss. It is this dualism that is characterized by the name “binary”, i.e. consisting of two elements. Various instruments can act as a trading asset for a binary option: currencies, stocks, raw materials and others. The execution time of such a contract varies from a minute to several months, profitability reaches 70-95 %%. If in a nutshell to describe the principle of operation of any type of binary options, then the expression “deal-bet” is best.

Types of Binary Options

Trading binary options operates with five main types:

View 1. Binary option “Cash or nothing” / “All or nothing”

This type of binary options is the most popular among traders. At the time of purchase, he has a certain percentage of profit and price. This amount is the volume of the transaction, and it is to her that the trader risks it. Prior to the purchase of “Сash or nothing” binar, it is required to make a prediction in advance whether the selected asset will rise or fall, a Put / Put or Call / Call option is purchased (see the previous article), respectively.

If in the end, at the time of execution, the trader is right, then he receives a predetermined amount of profit, usually 70-85 %% plus the initial cost of the contract. If the forecast did not materialize, then he loses the invested amount in full. Sometimes companies make a refund when they lose in the amount of 10-15%, but this cannot be considered the rule, rather, it is just a bonus to cheer up.

View 2. Binary option “Asset or nothing” / “Asset or nothing”

The binary option “Asset or nothing” is practically no different from the above “All or nothing”. It can also be bought and sold by setting a certain level, above or below which there will be a price at the time of execution, also receive declared profits or lose the value of the contract. The difference is only in determining the profit, which is expressed in the value of the selected asset.

Which binary options are better?

Choosing binary options for trading

In fact, because profit calculation is automatic, many traders do not even see the difference between the binary options Cash or nothing and Asset or nothing.

View 3. Binary options “One touch” / “One touch”

One touch in execution and trading strategies differs significantly from the previous ones. Having all the same value and profitability, the contract also implies the existence of a certain level of asset price. Knowing him, the trader must predict whether the price reaches this mark in the allotted time period. At the same time, it does not matter at what price the contract closes, the main thing is that the asset touches a fixed level.

View 4. Binary options “No touch” / “Inviolable”

The opposite in name and meaning for the “One touch” binary option is “No touch”. The only difference is the trader’s forecast of whether the price reaches the level specified in the contract. If he believes that he will not achieve, then you should buy the “No touch” option. If at the time of closing the asset did not touch the level, the trader receives the agreed profit. Otherwise, he loses the value of the contract.

View 5. Binary options “Double one touch” and “Double no touch” / “Double one touch” and “Double touch”

These are the most complex, and therefore the least popular types of binary options. In fact, this is a modification of the “One touch” and “No touch” options – the strategy and execution are identical. However, in order to achieve profit, two fixed levels are set, to reach or not to touch which the asset must until the expiration of the exercise time of the option.

Based on your own preferences, offers from binary options brokers., as well as market conditions, it is more profitable to trade different types of binary options. Nevertheless, most traders prefer “Cash or nothing” as the most affordable and easy to understand.

Best Binary Options Brokers 2020:
  • Binarium
    Binarium

    The Best Binary Options Broker 2020!
    Perfect For Beginners!
    Free Demo Account!
    Free Trading Education!
    Sign-up Bonus!

  • Binomo
    Binomo

    Trustful Broker!

Strategies and indicators for binary options trading

Binary Options Trading Strategies, if you do not go into details, are based on determining the estimated direction of movement of the asset in the terms specified by the contract, as well as the likely time to reach the specified price level. So, to get a fixed profit, you will need to indicate either the level below or above which the price will be after the time you specified, or indicate the mark near which the value of the asset will be in the near future. Your forecast options and trading strategies are closely related to the types of binary options.

Trading robots for binary options

All the pros and cons of using forex experts in binary options trading

In order to correctly predict the direction of the asset price movement and buy a binary option, most traders use forex indicators.

In fact, no special indicators for binary options not being developed. For the most part, traders use signal and arrow Forex indicators, which are adapted for trading binary options. Popular are both built-in terminal and user indicators that allow for a qualitative analysis of the asset – the direction and strength of the trend, possible pivot points, etc.

In addition, in trading binary options, trading robots have been successfully used.

How to trade binary options?

Trading binary options and trading in the Forex currency market are based on the same principles:

  • market price moves the same way;
  • with binary options the same rules of fundamental and technical analysis work;
  • money management rules are also relevant for binary options trading – it is important to determine acceptable risks and manage your capital;
  • trading strategies and forex indicators successfully work on binary options.

However, there are a number of differences that stem from the nature of binary options:

  • Unlike classical trading, Sell transactions and Buy purchases do not open. When trading binary options, only Call options (price growth is forecasted) and Put options (price reduction is forecasted) are purchased;
  • The “lifetime” of a transaction when trading binary options does not depend on the price reaching stop-loss or take-profit levels, as in Forex trading. In BO trading, a fixed option expiration time is determined, at the end of which the transaction is closed with a profit or loss;
  • accordingly, take profit and stop loss orders are not used in strategies for binary options trading.
More on binary options trading

Binary options trading – an intelligent casino for gambling traders

The minimum contract is usually $ 100. At the same time, profit reaches an average of 80%. This, of course, is not comparable with a loss in the event of an erroneous forecast, but the trader can accurately calculate the level of his losses and not exceed them if he does not want to. In addition, some brokers provide the ability to trade binary options without investments.

Quite convenient and easy to use are platforms provided by companies. Most often it is a web platform that has the required set of tools and simple forecast indicators. To some extent, this simplifies the work and it may seem that there is no need to analyze something deeply, trading binary options. In fact, this is not so. Any profitable trading requires knowledge of fundamental and technical analysis, as well as its application. Otherwise, such work turns into a casino, which is unacceptable. Therefore, for a competent approach to trading and evaluating an asset, we recommend that you analyze on your usual platform, transferring transactions to the terminal of the options broker. So, to work with binary options on currency pairs, you can use the full set of available tools of the cTrader or MetaTrader platforms, including indicators, created specifically for these contracts.

Most traders are of the opinion that trading binary options somewhat simpler than classic forex trading. Nevertheless, in trading binary options there are a number of difficulties that are associated with the choice of the expiration dates for the option, because the mistake made during the selection often leads to losses even with the analysis and correctly planned work of the trader.

Dependence of the expiration period of a binary option on the trading style

  • With long-term binary options trading (from a month or more), the process of determining the expiration date does not represent any difficulty. It is determined based on the timing of events expected in the future. It could be an expiration date. foreign exchange intervention, change in monetary policy by the Central Bank and more.
  • In medium-term trading (from a week to a month), emphasis should not be placed on fundamental economic events, but on the results of technical analysis. In this case, the best choice would be a period of two or three weeks, that is, the average life of a medium-term transaction.
  • In short-term trading (up to 1 week) it would be logical to determine the expiration period within a few days. There is one significant point – it is recommended that binary options trading be completed before Friday evening, as over the weekend some events can occur that seriously affect the market picture.
  • For intraday binary options trading, the best choice for the expiration date is the end of the trading day, since all fundamental factors have already been won back today, the market is entering a stagnation phase. When trading faster options, the guideline for the expiration dates should be the end of the trading hour.

The choice of the period for trading binary options

So what period should a novice trader choose for profitable binary options trading? Taking into account the fact that short-term options trading, as a rule, is accompanied by a lack of significant trading information, as well as a significant share of excitement, binary options are the best choice, the expiration period of which is no earlier than the end of the trading day.

To achieve more profitable and stable results when trading binary options, it makes sense for a novice trader to try medium-term and long-term trading. The use of super-short terms in binary options trading is not recommended for beginner traders, as they can lead to the formation of a gaming attitude and financial losses. The use of tick options by beginners will generally look like a game in a casino.

Dependence of signal processing time on trading tactics

Along with all of the above, it can be noted that traders often calculate how many bars an open transaction will start to work out, which also allows you to choose the expiration dates of the option. Roughly speaking, for this you need to figure out how many bars will be needed to implement the plan, multiply it by the one used timeframe and then buy the option for the resulting time.

It should be remembered that a certain trading tactic provides for different times necessary for working out a trading signal:

  • The fastest for working out a trading signal is trading by candlestick patterns – 2-3 candles.
  • Trading on the rebound from the level also implies a quick expiration time – 3-4 candles.
  • Trading binary options using breakdown certain levels require a little more time to work out the signal – up to 10 candles.
  • The longest period is trend trading, since you have to take into account a possible correction. In this case, the expiration period of the options should be chosen within 20-30 candles.
  • When trading using fundamental factors, the range of options expiration periods is very wide. For example, when trading on news, it can be several minutes, when trading on goals that the Central Bank has determined – up to a year.

The most common binary options trading errors

Any financial trading needs to be learned, one way or another, working out its strategy. We will consider the main errors and mistakes of novice traders who trade binary options. It is possible that if you take our advice more carefully, they will help you avoid some bad deals.

1. Trading binary options does not require knowledge

We have already touched upon the consideration of this error at the beginning of the article, but it will not be superfluous to repeat it. Many newcomers to trading, when dealing with binary options, find that they do not need any special knowledge in working with them – I figured out where the price would go, clicked on the button and wait. I would like to note that even the simplest initial knowledge about pricing the asset for which the option is presented will significantly reduce your losses. Not to mention the fact that, ideally, for trading binaries for currency pairs, it’s worthwhile to have a proven strategy and trading experience on Forex. One way or another, any forecasting skills should increase the profitability of your investment, reducing losses.

Bonuses for trading binary options

Binary Options: 9 bonuses to your trading account

2. Binary options – it’s almost a casino

Many players come to binary options trading like in a casino, focusing on the fact that the instrument is actually a “bet” transaction. We will not say that this is completely wrong – there is still a degree of similarity, however, some practice and knowledge in the field of analysis of exchange instruments, and luck rates turn into a well-thought-out strategy that increases the probability of winning from 50/50 to a more attractive number .

If you came into binary options trading for adrenaline and fun, then understanding the process will not reduce your pleasant emotions, but only increase it, because you will start opening deals wisely. Do you agree? Then read the first paragraph again.

3. Short-term binary options are more profitable

Yes, of course, to buy an option contract of 60 seconds and earn 75% of profit in a minute is very tempting. However, it is important to understand that making money on such short (minute, hour) intervals is not so easy, because the noise in the market can turn a profitable contract into a minus in one second. Trends over long periods are much more predictable, and therefore it is better to start with them, not to chase quick and risky profits and learn to see the market.

4. Quick transition to high rates

Quick and easy profits often give rise to euphoria among beginners of binary options trading. Having made 2-3-5-10 profitable trades in small amounts, the trader begins to think: “Why am I trifling if I can buy a contract more expensive and get more money?”. Remember, 11 trades can become unprofitable. Of course, we do not claim that this must happen, but you need to increase the contract value gradually, using about 2-5% of your total deposit. Only in this case, the profit will settle in your pockets stably.

5. Trading only one type of binary options

There are quite a lot of binary options, each of them can be used in different market situations, so you should not focus on one thing when you can use all the features of the market and binary options. It is not necessary to actively get involved in different options, but we recommend you try different options and choose the most suitable for yourself.

In general, binary options trading is characterized as more simple and understandable for beginners trading, including because it does not support the principles of margin requirements and does not require knowledge of money management. Any interested speculator can already evaluate his strength on a demo account with numerous brokers that provide this service.

Other binary options articles

FORTRADER magazine experts

FORTRADER Magazine is a large team of experts in trading in financial markets. Traders, managers, investors, programmers, testers, technical administrators – we all work for you every day for many years. Sometimes we write articles together, then the whole journal becomes the author.

How to trade binary options successfully – Basics

Notice to EU traders:

The European regulator ESMA made a prohibition of binary and digital options to retail traders from The European Economic Area starting from the 02.07.2020. In case you still want to trade binary options, you need to acquire the status of a professional trader on which this regulation does not apply. I recommend you have a look at the article – How to get the PRO status to continue trading Binary options

Binary options are not promoted or sold to retail EEA traders. If you are not a professional client, please leave this page.

Where to next? (If you do not meet the requirements)

  • FX Options – Attractive alternative to binary options?
  • Read our in-depth guide for cryptocurrency beginners
  • Read how to trade forex and other CFD instruments

Traders outside The European Economic Area are not anyhow affected by this new European rule and can trade binary options (if the binary broker operates in a given jurisdiction).

What are binary options?

Binary options are a type of online trading, where you as a trader predict thru web or mobile platform, whether the price of a certain underlying asset will go up or down. Under the term – underlying assets we have in mind stocks of major companies like Google, Microsoft, FB…, currency pairs, indices and commodities (silver, oil, gold…).

If your prediction is correct you earn a fixed amount that you know before placing the investment. In most cases, returns from binary trades range from 170% to 192% per trade. So if you invest $50 you get an additional $35 – $46 to your initial investment. To create one trade you can invest as small as $1.

Beware, though at first glance it may look simple, binary options trading is not as easy as some portals may and do say. It is possible to make a lot of money, but it’s also possible to lose a lot. An investor who does not have any previous experience with the market and does not plan to acquire it can expect a great loss. To succeed in binary trading it is essential not to be naive and not to fall for scams that promise “bulletproof systems that will make money in your sleep” which are hiding behind every corner.

Read and study with TradingBeasts.com:

  1. The Ultimate binary options guide– and other articles in our Academy
  2. What reliable binary brokerswe have tested and we use for our trades.
  3. How to create a demo accountfor trading with virtual money.

How to successfully trade binary options

In our first step, we choose an asset we want to trade. In our example, we chose the currency pair EUR/USD with an 89% return from a successful trade. The choice of an asset is up to you. There are hundreds of underlying assets which we can trade, each asset has different profitability.

In the second step, we decide, when our trade should end and evaluate. So, if we want our trade to end in 30 minutes, we select an expiration time of 30 minutes.

Subsequently, we choose how much we want to invest in this particular trade. When we trade binary options we can invest as little as $1.

Now, we have moved to the most important part of trading at which we have to decide, whether the price of our option will go Up, or Down. When you trade classic binary options, only one of these three situations can occur. Either your trade will be successful and you receive a predetermined profit, which in our case would be $50 + $44.5 = $94.5. Or the trade will end up unprofitable and you lose the invested amount (the biggest amount you can lose equals to the investment you made). The third situation occurs very rarely and we can meet with it when the price doesn’t change at all (the price of the option when we entered the trade is the same as in the moment when the option expired). In this type of situation, most brokers give the investment back to the trader.

As you’ve probably noticed we get from correct prediction only 89% extra money from the invested amount. So, you might ask “How could possibly binary options be such a good extra income?”, when you don’t even earn 100% from what you have invested. The main reason behind this is because you can use binary strategies, which can significantly help you to create a majority of successful trades. Please bear mind that even with strategies no one can accurately predict the market and make all trades winners. Without binary strategies trading would be just a hazardous game that has nothing in common with meaningful and responsible investing.

What my profit will be like?

It depends entirely on you. With the right binary strategy, you can boost your capital by a few dozens of percent in a week. Equally, with a bad strategy or without a strategy you can just as quickly lose it. The basis is to be as patient as possible and to hold to your selected strategy, which you know that works (for example from a demo account). Binary options trading is about a long-term profit and not about making one (or even a row of) successful or unsuccessful trades.

Is binary trading risky?

Any kind of trading or investing is risky and you have to count with that. If you enter the world of trading you should invest only such amounts that you can afford to lose. Some fraudulent servers (or even scams) may encourage you to borrow money from your friends or family members, if necessary because it is a guaranteed thing that your investment will return.

But we are a serious portal and we most certainly do not advocate such claims. Although binary options have a great advantage that the risk is eliminated only to your investment into the trade, we, binary traders still operate on a financial market. And there are no guarantees. The market is merciful only to those who are prepared and know the risks. For instance, traders who do not apply any trading strategy can most likely expect to lose their capital.

Advantages of binary options

A great advantage of binary options is that if the price changes only by a single pip in your direction, you receive a full profit from the trade. Let’s look at an example. You entered a trade at a moment when the oil price was set up to a value of 1.5797 and you have selected the expiration time of 30 minutes and upwards direction. A 30-minute trade ended at the price 1.5798, thus it changed only by a single pip you will still secure for your correct prediction full profit from the trade. It is because in binary trading doesn’t matter, how much the price changes, but if it changes in the direction you chose.

Is it possible to try out binary trading? (Risk-free) Demo account

For traders who do not have a lot of experience with trading (or none), the demo account is a perfect opportunity to try everything out without giving at stake your own money. The demo version works on entirely the same principle as a real account, the only thing which is different is that you are trading with imaginary chips. That means that you can not make any profit from trading on a demo account, but you also can’t lose anything (apart from imaginary funds).

Most brokers offer practice account right after you load your real account with at least the minimum deposit. However, if your trading on a demo account doesn’t reach your expectations you can at any time withdraw the money you have deposited into your real account (if you trade with a licensed and a trusted broker). But we also know about brokers who do not require even initial deposit you can use the demo version freely with no obstacles. For more information read our separate article: free demo account for binary options

Where do we trade binary options?

The term „broker“ was already mentioned in the article. But do you know, who this broker really is? A binary broker is a company that arranges the transaction between a buyer and a seller. It is basically a place where demand meets supply. Here, you can trade. Every broker has its own web platform, so no downloading is required.

There are dozens of brokers or even hundreds of them. If you are looking for a reliable and trustworthy broker who cares about their traders you need to look for certain aspects. One of them is a broker’s credibility, which can be gained by a reputation among traders and by licenses. A license is obtained by a broker in exchange for a large fee to the regulatory authorities. These authorities are responsible for constant supervision over the broker and over all their actions.

Apart from credibility, we should focus on payouts, a minimum deposit, and a minimum investment. We should also find out whether our broker provides a demo account if we plan on using it. Traders who do not speak English can also appreciate a trading platform and customer support in their native language. On our website, you may find many broker reviews. Currently, as the best option is from our point of view IQ Option, a well established binary broker with superior payouts and a free demo account.

Broker Regulated by Regulatory agencies ensure that brokers/exchanges operate in a transparent and honest way. They protect the best interestest of clients and also feature an investor compensation scheme which protects trader’s deposits up to a certain limit. Some of the major regulators in the industry include the CySEC in Cyprus, the FCA in the UK and the ASIC in Australia. Min. deposit Max. Payouts Funds which are credited to your account in case of a correct prediction Special features A list of features that provide a given broker/exchange with a competitive edge. Ad Disclosure This Comparison / Page contains links to 3rd party websites of our top partners from whom we may receive compensation at no additional cost to you.
CySEC $10 95%
  • Superior Payouts
  • FREE Unlimited Demo
VisitRead a review
ASIC $50 90%
  • €50 Cash-Back Bonus
  • Accepts only Australian traders
Visit
CFTC $250 80%
  • Accepts US Traders

Visit

General warning: When trading with real money, your capital is at risk.
Binary options are not promoted or sold to retail EEA traders. If you are not a professional client, please leave this page.
To see whether you can be classified as a Pro trader read this page

All recommended brokers went thru our testing process. In a 3 month time period, we act as a regular trader and we actively create trades as any other trader would. If we find out any problem with the broker, we mark him as „not recommended“ or even as a „scam“. The fact that a broker makes it to the selection of recommended brokers does not necessarily mean that it will stay there forever. In case that the broker is not capable of maintaining high-quality services as on the beginning, we reduce the rating of the broker on the website or we even completely remove it from the list of our recommended brokers.

How to determine, whether the price will go Up or Down? – Binary strategies

Some newbies try to do this by guessing and they usually determine the future price direction just according to the chart which is provided to them by the broker. I would not be afraid to state that such trades are completely random and made without using any strategy. But that is not the way we trade at TradingBeasts.com, we know that in order to become a successful trader who makes a long-term profit you most certainly need binary strategies.

Binary Options Trading Strategies and Techniques that actually work

Without any trading strategy, every binary trader has got half a chance to create a successful trade, because when trading classic binary options we have to only predict whether the price of an option will go up or down. That is, however, with 75-85% returns from a successful trade simply not enough and trading without using any binary strategy can never be profitable (or at least not in the long run). A binary strategy can significantly help us to increase our win. ratio and put the odds in our favour.

Following a strategy also allows you to constantly improve your results because all the trades you create have a meaning and they were built on the basis of a specific pattern. Which means you can repeat them, results which can be achieved again usually mean success. We have 2 types of strategies which we sometimes also call analysis. The first one is called technical analysis, the second one fundamental analysis. Some strategies might combine both of these analysis types.

Technical analysis

Technical analysis or the analysis of graphs engages in forecasting prices according to a repetitive pattern (formula). In order to find these patterns, we use different kinds of indicators and oscillators (such as the stochastic indicator, MACD, RSI and many more).

Some brokers offer on their trading platforms a system that can be used for complete technical analysis (One of such companies is e.g. IQ Option that has in-house built charting system). In case you seek a free service which focuses just on technical analysis, we would like to recommend you investors’ most popular analysis platform – MetaTrader 4. Here is an example of the MT4 with a 5-minute chart.

Fundamental analysis

The second type of analysis is fundamental analysis. This method focuses exclusively on economic statistics and economic changes which will most likely affect the value of assets. When we look at some large scale examples, then we most certainly have to mention the global crisis in 2008, in which investors had a great chance to invest on the drop of public securities of major companies, banks and investment funds etc.

On a smaller scale, hundreds of economic news are daily published (eg. unemployment and interest rates, inflation etc.). All of these and many more announcements are recorded in the economic calendar. These calendars include information about the impact of the news, time of their release, and the forecasted direction in which the price will most likely move. There are hundreds of economic calendars which are available on the Internet. One is even offered by IQ Option in their academy, the calendar is located in the top menu under the “for traders” section.

With what capital should I trade binary options?

The first two strategy types mentioned above are designed to predict the price, the following strategy is, however, a question of correct money management. When you fully adherence your money management strategy you will be able to get the absolute maximum from your capital, so don’t take this type of strategy lightly. Generally speaking, it is not recommended to invest in one trade more than 4% of your total capital.

Money management is very often overlooked, however, its importance is exactly the same as using any other strategy that will help you predict the price, sometimes even bigger. Take an example, your broker requires the minimum investment of $ 10 so you could open a trade. At the same time, the minimum deposit at such broker is $100. That means if you deposit only the minimum required amount, you risk in the very first trade 10% of your entire account funds; that is an enormous part of your whole trading wealth.

So theoretically speaking, you have money to open only 10 trades. Of course, all of those trades would have to end up out-of-the-money and that is highly unlikely. Nevertheless, if even just a few of them turn out to be unsuccessful (especially the first ones), you would get yourself into a big psychological pressure. Subsequently, you begin to doubt every trade and you will most likely slip from your trading strategy, which might result in further losses.

Testing binary strategies

Trading with real funds without a tested binary strategy entails high risk. For this very reason, it is of crucial importance that every trader is properly prepared before entering the real market. The most popular and effective way how one can prepare for real trading is using a free demo account for binary options. This practice account works exactly the same as the real one, with one huge difference, that you are trading with imaginary funds. Once you open a demo account try to strictly follow your strategy as you would with real funds.

The second option, how you can test binary strategies is to open, for example, MetaTrader 4 and at the time when you would normally open a trade, you make a note either to Excel or on a paper. Then you wait if the price of the asset moves in the direction you forecasted and you write down the result of each and every one of your trades. This way you will try to “create” as many trades as possible and then you calculate the overall success of your strategy.

How to Understand Binary Options

Updated: September 6, 2020

This article was co-authored by Michael R. Lewis. Michael R. Lewis is a retired corporate executive, entrepreneur, and investment advisor in Texas. He has over 40 years of experience in business and finance, including as a Vice President for Blue Cross Blue Shield of Texas. He has a BBA in Industrial Management from the University of Texas at Austin.

There are 7 references cited in this article, which can be found at the bottom of the page.

A binary option, sometimes called a digital option, is a type of option in which the trader takes a yes or no position on the price of a stock or other asset, such as ETFs or currencies, and the resulting payoff is all or nothing. Because of this characteristic, binary options can be easier to understand and trade than traditional options.

Can A Beginner Make Money With Binary Options?

But wait! First we have to see if binary option trading is legal in your country.

Binary Options Trading in your Country

Depending on your country, here are the brokers available to you in April, 2020:

Country Binary Options Available? Broker Info Best Broker
NO Trade stocks, indices, currencies. eToro (visit site)
YES Regulated US Binary Broker Nadex (visit site)
YES Regulated AU Binary Broker HighLow (visit site)
NO Trade stocks, indices, currencies. n/a
Mostly YES Binary Broker for non-EU/US/AU/CA traders IQ Option (visit site)

*Other countries: Binary options is still available to most non-EU/US/AU/CA traders however there may be some exceptions.

  • EU Traders are banned from binary options trading. The best alternative is eToro.
  • US Traders should go to our US Welcome Brokers page.
  • Australian Traders have a great choice available: Highlow.
  • All other traders (if you are not from the US, EU and AU) can sign up with IQ Option.

Beginners think that all a trader needs to do is go on one hot streak!

New traders often say to themselves: “just ten wins in a row and all of a sudden I will be a new trading mogul”. People looking for quick money think, that they can quit while they are ahead on a hot streak and go home richer than they could possibly imagine.

The truth is that you need a strategy and discipline to make successful trades on the long term. You should start by picking a legit broker first.

If you are just starting out with trading, then this is the perfect guide for you to start making money with binary options trading.

Here is our #1 Rated Broker

IQ Option – Best Trading Platform

IQ Option is a trading platfrom that is regulated by CYSEC. It is the best trading binary options broker on our website. It’s a perfect pick for new traders.

  • Trusted CYSEC Regulated Broker
  • Minimum Deposit: $10 (Lowest In The Industry)
  • Free Demo Account

How To Get Started With Binary Options Trading

Unfortunately binary options trading was banned in most countries but there are many more assets that you can trade: stocks, commodities, bitcoin, indices and more. There are many safe and regulated brokers.

You can start with a trading signals provider, especially if you are a beginner. FX Atom Pro looks really promissing.

  1. Step1: Sign up with 24Option
  2. Step2: Make a first deposit
  3. Step3: Start trading using trading signals

Alternatively you can choose a reliable broker like IQ Option that offers free demo accounts.
IQ Option is the most trusted trading platform at the moment. They are regulated by CYSEC and they have a stellar reputation in the industry. The minimum deposit is only $10 which is perfect for beginners.

Forex Trading – The Best Alternative To Binary Trading

Binary options trading may be too risky for you. Or maybe you heard too many horror stories about binary trading? We recommend you to try out Forex trading instead.

Forex brokers offer CFD and even Cryptocurrency trading. Most Forex brokers are regulated and have been around for many years. Here is the best Forex brokers:

Rank Broker Min. Deposit Regulated Features Review
$100 YES + CRYPTO TRADING TRADE NOW
$200 YES + ASIC LICENSE TRADE NOW
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Common Mistakes of Beginners- And How To Fix Them

When a beginner goes in unprepared trading binary options, the broker will feast on them. New traders often make mistakes such as taking way to big a position for one trade, taking a bad loss, and then staying way to small the next 5 times.

They may even experience winning easily on small trades, but they never make back the big loss. New traders take way too many trades, let emotions control their trading, and don’t have the self control to stay out of low percentage trades that they know have small chance of making them money.

After knowing all the pitfalls, why would a new trader ever decide to open a binary options account and become a trader? Well, they do it because they have the power to win systematically if they have some intelligence and a plan on their side.

A new trader needs to understand the most common pitfalls, otherwise they may not even know that they are making a mistake while they do it! With that in mind, here are the most common mistakes new traders make, with what they should do instead.

  1. Not taking every trade with a purpose. Beginners often find themselves taking trades based on a feeling, or out of boredom. This is a surefire way to make a broker rich. Never enter into a trade without a defined thesis as to why you are doing it. Think the trade over rationally before entering. Is your thesis really valid? Is it strong? What do you estimate the probability of winning given your experience? Are you hoping for the best outcome or considering the most likely outcome? Make every trade count.
  2. Letting emotion influence – when a trade is entered into, or how big the size of the trade becomes. Never let emotion influence your trading. Good or bad it will never help you. Trading is for cool rational thought, striving to systematically take profits.
  3. Taking way too big sized trades: Understand that you are going to have losses along the way. Even the best professionals do. Never let one trade significantly affect your account balance in a way that would affect your future trading. A good rule of thumb is never to take on a trade bigger than 1/15 of your total account value. With binary options I would recommend 1/20.
  4. Not learning from mistakes and repeating them over and over: Keep a trading journal as we have recommended before. Jot down a quick sentence or two whenever you learn something new. Do whatever you need to do to prevent yourself from repeating mistakes.
  5. Becoming frustrated and quitting right before you get good: The difference between making a lot of money systematically and losing money can be very narrow. Don’t let frustration keep you from realizing your ultimate goal. Understand that there will be lumps along the way, but there will also be victories, and the lumps make the victories feel so much sweeter.

How Beginners Can Make Money

Even with so many ways to mess up, beginners to binary option trading can make money if they work hard and follow a system. The key to binary options trading is to control risk. As a result, a trader can never lose too much money on any particular trade. Hypothetically, a trader has a 50% chance of being correct on any trade whether they buy a call or a put option. To make money, a trader only needs to be correct on about 60% of trades of the trades that they take. This means that of the trades that a beginner with absolutely no edge (an edge is something giving a trader a better than random chance to make money) would take, they need to figure out how to turn about 20% of them into winning trades.

Binary Options – How Much Can You Make?: This is not a simple question. There are certainly traders who make a living with binary options. You could make thousands of dollars every month. However the best is if you start with lower expectations. Making hundreds of dollars steadily is a good way to start.

Here are possible ways that any beginner can easily do this:

  1. Use a signalling service. While most are not are not going to give a trader a significantly better than random chance of making money, they still should tilt the odds into the trader’s favor. This is all any trader can ask for. There are paid services out there such as elite trader, but even a free service from a site like barchart can give you the edge you need.
  2. Learn to use technical indicators. Technical trading involves using strictly price action (price charts) to predict future movements. There are a lot of indicators out there, but some of the most common ones involve using moving averages. Examples of popular indicators are MACD, relative strength index, and bollinger bands. If you can find an indicator that works well for the security you are trading you can gain the edge you need in order to turn some of your would be losing trades into winners.
  3. Trade stocks before trading binary options. Stock trading is less volatile for a trader’s account than binary option trading as long as the trader does not use leverage and sticks to securities priced over $5. If you can figure out how to be correct on more than 50% of your stock trades, you can take what you learn and apply it to binary options to multiply your earnings power.
  4. Track your performance in each binary option security. Most people will be better at trading some stocks or commodities or currency pair than they are at others. The simplified reason for this is that each particular symbol will move differently than the others because each one has its own characteristics and traders involved in moving the price. If you find a handful of option trades that you are consistently profitable in, stick with what works and increase your size. You don’t need to waste your time and money on unprofitable trading.
  5. Buy the right option length for your trading style. Some trading styles will work better over very short term trades, and some will work better over trades held for a long time. Know your style and the appropriate length option you should buy. A value investor for instance would not be sensitive to price changes over a 1 minute option, but may be correct on a super high percentage of trades over a 6 month period.

Binary Option Trading Is Not Easy For Beginners

The problem with this dream is, how often does this really happen? Let’s just say a lot of brokers would never be in business if it happened very often that beginners made money.

Above all, beginners have dreams of being smarter, better, and luckier than everyone else who has every done something, but the harsh reality is that trading in any form is not easy.

Especially when it comes to making money from trading, it takes hard work, dedication, and a commitment to learning. And when I say learning I don’t mean just reading a couple articles, I mean actually learning from your wins, from your losses, from hard earned experience. As a result never take a trade and learn nothing from it, especially as a new trader.

What Our Readers Asked

The short answer is yes, you can make a lot of money trading binary options. However it will be very hard to do so if your initial deposit is low. Always keep in mind that binary options is risky and you could also lose money.

A binary options broker makes money when you lose your trade. This is the main reason why there are not fees when trading.

Yes, many traders have success with binary options trading. You can even follow some of these traders. In order to do so, pick a broker that offers social trading. This way you can pick your favorite trader and copy their actions.

Do We Recommend New Traders Even Try Binary Options?

Of course! Every successful trader was new at some point. Just because a lot of traders go into trading without educating themselves or having realistic expectations doesn’t mean you will as a new trader. In fact, since you are reading this article you almost decidedly will not. At How We Trade our job is to prepare new traders for success. So move forward knowing you have a strong ally in us!

Interested in opening an account? Check out our homepage for the best trading platforms, along with our top rated binary options brokers.

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