Learning
Welcome to our Binary Trending blog, your ultimate destination for all things binary options! Whether you’re a seasoned trader or just starting out in the world of binary options, our blog is here to provide you with valuable insights, expert analysis, and practical tips to help you navigate the exciting world of binary trading.
Binary Option is a dynamic and fast-paced trading method that offers traders the opportunity to profit from the price movements of various assets, such as stocks, commodities, currencies, and indices. It involves making predictions about whether the price of an asset will rise or fall within a specified time frame.
In our blog, we strive to demystify the complexities of binary options and provide clear and concise explanations of key concepts. Whether you want to understand the fundamentals of binary options, explore advanced trading strategies, or learn about risk management techniques, our blog covers it all.
We pride ourselves on offering accurate and up-to-date market analysis, keeping you informed about the latest trends, events, and news that can impact your trading decisions. Our team of experts closely monitors the financial markets, providing you with insightful commentary and actionable insights to help you make informed trading choices.
But our blog is more than just educational content. It’s a vibrant community where traders can come together to share ideas, discuss strategies, and support each other on their trading journeys. We believe that collaboration and knowledge-sharing are key to success in binary options, and our blog serves as a platform for traders to connect and grow together.
Whether you’re looking to enhance your trading skills, stay informed about market trends, or connect with like-minded individuals, our blog is here to serve you. We are committed to providing valuable resources, practical guidance, and a supportive community to help you achieve your trading goals.
So, dive into our blog, explore the wealth of information at your fingertips, and embark on a journey to unlock the potential of binary options. Join our community of traders and let’s navigate the markets together, one trend at a time.
What Is A Binary Options?
A binary Options is a fast and extremely simple financial instrument which allows investors to speculate on whether the price of an asset will go up or down in the near future, for example the stock price of Google, the price of Bitcoin, the USD/GBP exchange rate, or the price of gold.
The time span can be as little as 60 seconds, making it possible to trade hundreds of times per day across any global market.
Before you place a trade, you know exactly how much you stand to gain if your prediction is correct, usually 70-95% – if you invest $100 you will receive a credit of $170 – $195 on a successful trade.
This makes risk management and trading decisions much simpler. You also know exactly how much you will lose on a single trade.
The outcome is always a Yes or No answer – you either win it all or you lose it all – hence it being a “binary” option. The risk and reward are known in advance and this structured payoff is one of the attractions.
Exchange traded binaries are also now available, meaning traders are not trading against the broker.
To get started trading you first need a regulated broker account (or licensed). Pick one from the recommended brokers list, where only brokers that have shown themselves to be trustworthy are included. The top broker has been selected as the best choice for most traders.
If you are completely new to binary options you can open a demo account with most brokers, to try out their platform and see what it’s like to trade before you deposit real money.
Introduction Video – How to Trade Binary Options
These videos will introduce you to the concept of binary options and how trading works. If you want to know even more detail, please read this whole page and follow the links to all the more in-depth articles.
Binary trading does not have to be complicated, but as with any topic you can educate yourself to be an expert and perfect your skills.
Binary Option Types
The most common type of binary option is the simple “Up/Down” trade. There are, however, different types of option. The one common factor is that the outcome will have a “binary” result (Yes or No). Here are some of the types available:
- Up/Down or High/Low – The basic and most common binary options. Will a price finish higher or lower than the current price at the time of expiry.
- In/Out, Range or Boundary – This option sets a “high” figure and “low” figure. Traders predict whether the price will finish within, or outside, of these levels (or ‘boundaries’).
- Touch/No Touch – These have set levels, higher or lower than the current price. The trader has to predict whether the actual price will ‘touch’ those levels at any point between the time of the trade an expiry Note with a touch option, that the trade can close before the expiry time – if the price level is touched before the trade expires, then the “Touch” options will payout immediately, regardless of whether the price moves away from the touch level afterwards.
- Ladder – These options behave like a normal Up/Down trade, but rather than using the current strike price, the ladder will have preset price levels (‘laddered’ progressively up or down). These can often be some way from the current strike price. As these options generally need a significant price move, payouts will often go beyond 100% – but both sides of the trade may not be available.
How to Trade Binary Options – Step by Step Guide
Below is a step by step guide to placing a binary trade:
- Choose a broker – Use our broker reviews and comparison tools to find the best binary trading site for you.
- Select the asset or market to trade – Assets lists are huge, and cover Commodities, Stocks, Cryptocurrency, Forex or Indices. The price of oil, or the Apple stock price, for example.
- Select the expiry time – Options can expire anywhere between 30 seconds up to a year.
- Set the size of the trade – Remember 100% of the investment is at risk so consider the trade amount carefully.
- Click Call / Put or Buy / Sell – Will the asset value rise or fall? Some broker label buttons differently.
- Check and confirm the trade – Many brokers give traders a chance to ensure the details are correct before confirming the trade.
Choose A Broker
Trading fraud has been a significant problem in the past. Fraudulent and unlicensed operators exploited binary options as a new exotic derivative.
These firms are thankfully disappearing as regulators have finally begun to act, but traders still need to look for regulated brokers.
Note! Trade with a broker or use a service that’s on our stick with the ones we recommend here on the site. Here are some shortcuts to pages that can help you determine which broker is right for you:
- Compare all brokers – if you want to compare the features and offers of all recommended brokers.
- Bonuses and Offers – if you want to make sure you get extra money to trade with, or other promotions and offers.
- Low minimum deposit brokers – if you want to trade for real without having to deposit large sums of money.
- Demo Accounts – if you want to try a trading platform “for real” without depositing money at all.
- Halal Brokers – if you are one of the growing numbers of Muslim traders.
Asset Lists
The number and diversity of assets you can trade varies from broker to broker. Most brokers provide options on popular assets such as major forex pairs including the EUR/USD, USD/JPY and GBP/USD, as well as major stock indices such as the FTSE, S&P 500 or Dow Jones Industrial. Commodities including gold, silver, oil are also generally offered.
Individual stocks and equities are also tradable through many binary brokers. Not every stock will be available through, but generally you can choose from about 25 to 100 popular stocks, such as Google and Apple.
These lists are growing all the time as demand dictates.
The asset lists are always listed clearly on every trading platform, and most brokers make their full asset lists available on their website.
This information is also available within our reviews, including currency pairs.
Trading cryptocurrency via binary trades is also booming. The volatile nature of cryptos makes them a popular binary asset. Bitcoin and Ethereum remain the most traded, but you can find brokers that list 50 or more alt coins.
Expiry Times
The expiry time is the point at which a trade is closed and settled. The only exception is where a ‘Touch’ options has hit a preset level prior to expiry. The expiry for any given trade can range from 30 seconds, up to a year.
While binaries initially started with very short expiries, demand has ensured there is now a broad range of expiry times available. Some brokers even give traders the flexibility to set their own specific expiry time.
Expiries are generally grouped into three categories:
- Short Term / Turbo – These are normally classed as any expiry under 5 minutes.
- Normal – These would range from 5 minutes, up to ‘end of day’ expiries which expire when the local market for that asset closes.
- Long term – Any expiry beyond the end of the day would be considered long term. The longest expiry might be 12 months.
Regulation
While slow to react to binary options initially, regulators around the world are now starting to regulate the industry and make their presence felt. The major regulators currently include:
- Financial Conduct Authority (FCA) – UK regulator
- Cyprus Securities and Exchange Commission (CySec) – Cyprus Regulator, often ‘passported’ throughout the EU, under MiFID
- Commodity Futures Trading Commission (CFTC) – US regulator
- Australian Securities and Investments Commission (ASIC)
- Financial Industry Regulatory Authority (FINRA)
There are also regulators operating in Malta, Japan and the Isle of Man. Many other authorities are now taking a keen an interest in binaries specifically, notably in Europe where domestic regulators are keen to bolster the CySec regulation.
Unregulated brokers still operate, and while some are trustworthy, a lack of regulation is a clear warning sign for potential new customers.
ESMA
Recently, ESMA (European Securities and Markets Authority) moved to ban the sale and marketing of binary options in the EU. The ban, however, only applies to brokers regulated in the EU.
This leaves traders two choices to keep trading: Firstly, they can trade with an unregulated firm – this is extremely high risk and not advisable. Some unregulated firms are responsible and honest, but many are not.
The second choice is to use a firm regulated by bodies outside of the EU. ASIC in Australia are a strong regulator – but they will not be implementing a ban. This means ASIC regulated firms can still accept EU traders. See our broker lists for regulated or trusted brokers in your region.
There is also a third option. Traders who register as ‘professional’ are exempt from the new ban. The ban is only designed to protect ‘retail’ investors.
A professional trader can continue trading at EU regulated brokers. To be classed as professional, an account holder must meet two of these three criteria:
- Open 10 or more trades per quarter, of €150 or more.
- Have assets of €500,000 or more
- Have worked for two years in a financial firm and have experience of financial products.
Strategies and Guides
We have a lot of detailed guides and strategy articles for both general education and specialized trading techniques. Below are a few to get you started if you want to learn the basic before you start trading. From Martingale to Rainbow.
Which Are the Best Binary Trading Strategies?
Binary trading strategies are unique to each trade. We have a binary option strategy section, and there are ideas that traders can experiment with. Technical analysis is of use to some traders, combined with charts, indicators and price action research.
Money management is essential to ensure risk management is applied to all trading. Different styles will suit different traders and strategies will also evolve and change.
There is no single “best” strategy. Traders need to ask questions of their investing aims and risk appetite and then learn what works for them.
How to set up a Trade
The ability to trade the different types of binary options can be achieved by understanding certain concepts such as strike price or price barrier, settlement, and expiration date. All trades have dates at which they expire.
When the trade expires, the behavior of the price action according to the type selected will determine if it’s in profit (in the money) or in a loss position (out-of-the-money).
In addition, the price targets are key levels that the trader sets as benchmarks to determine outcomes. We will see the application of price targets when we explain the different types.
There are three types of trades. Each of these has different variations. These are:
- High/Low
- In/Out
- Touch/No Touch
Let us take them one after the other.
High/Low
Also called the Up/Down binary trade, the essence is to predict if the market price of the asset will end up higher or lower than the strike price (the selected target price) before the expiration. If the trader expects the price to go up (the “Up” or “High” trade), he purchases a call option. If he expects the price to head downwards (“Low” or “Down”), he purchases a put option. Expiry times can be as low as 5 minutes.
Please note: some brokers classify Up/Down as a different type, where a trader purchases a call option if he expects the price to rise beyond the current price or purchases a put option if he expects the price to fall below current prices. You may see this as a Rise/Fall type on some trading platforms.
In/Out
The In/Out type, also called the “tunnel trade” or the “boundary trade”, is used to trade price consolidations (“in”) and breakouts (“out”). How does it work? First, the trader sets two price targets to form a price range. He then purchases an option to predict if the price will stay within the price range/tunnel until expiration (In) or if the price will break out of the price range in either direction (Out).
The best way to use the tunnel binaries is to use the pivot points of the asset. If you are familiar with pivot points in forex, then you should be able to trade this type.
Touch/No Touch
This type is predicated on the price action touching a price barrier or not. A “Touch” option is a type where the trader purchases a contract that will deliver profit if the market price of the asset purchased touches the set target price at least once before expiry.
If the price action does not touch the price target (the strike price) before expiry, the trade will end up as a loss.
A “No Touch” is the exact opposite of the Touch. Here you are betting on the price action of the underlying asset not touching the strike price before the expiration.
There are variations of this type where we have the Double Touch and Double No Touch. Here the trader can set two price targets and purchase a contract that bets on the price touching both targets before expiration (Double Touch) or not touching both targets before expiration (Double No Touch).
Normally you would only employ the Double Touch trade when there is intense market volatility and prices are expected to take out several price levels.
Some brokers offer all three types, while others offer two, and there are those that offer only one variety. In addition, some brokers also put restrictions on how expiration dates are set.
In order to get the best of the different types, traders are advised to shop around for brokers who will give them maximum flexibility in terms of types and expiration times that can be set.
Mobile Apps
Trading via your mobile has been made very easy as all major brokers provide fully developed mobile trading apps. Most trading platforms have been designed with mobile device users in mind.
So, the mobile version will be very similar, if not the same, as the full web version on the traditional websites.
Brokers will cater for both iOS and Android devices and produce versions for each. Downloads are quick, and traders can sign up via the mobile site as well.
Our reviews contain more detail about each brokers mobile app, but most are fully aware that this is a growing area of trading.
Traders want to react immediately to news events and market updates, so brokers provide the tools for clients to trade wherever they are.