What Are Binary Options .pdf
Original filename: What Are Binary Options.pdf
This PDF 1.5 document has been generated by Microsoft® Office Word 2007, and has been sent on pdf-archive.com on 13/07/2013 at 09:02, from IP address 66.169.x.x.
The current document download page has been viewed 700 times.
File size: 441 KB (21 pages).
Privacy: public file
Download original PDF file
What Are Binary Options?
BY LEARNSTOCKS ON APRIL 16, 2013 IN BINARY OPTIONS
Binary option refers to an option contract in which the payoff is either some fixed amount of certain
asset or nothing at all. There are two types of binary options; cash or nothing binary option, and asset or
nothing binary option.
In a cash or nothing binary option, if the contract expires in-the-money, then the owner receives some
fixed amount of cash. An asset or nothing option, meanwhile, pays the value of the underlying security.
Since these options have two possible outcomes, they are referred to as binary options. Binary options
are sometimes also referred to as all or nothing options, digital options and fixed return options.
The potential return for the buyer of a binary option is certain and known before the contract is bought.
The underlying asset in a binary option can be any financial product. Just like vanilla options, binary
options have call and put options. Binary options are European style i.e. they can only be exercised at
Binary Call Options
The buyer of a binary call option is basically betting that price of the underlying asset will move above
the strike price before the specified time. In this way, a binary call option is similar to a vanilla call
option. However, the similarity ends here. While in a vanilla call option, the payoff can be unlimited if
the price of the underlying asset moves above the strike price, in a binary call option the payoff is fixed if
the price of the underlying asset moves above the strike price. If a binary call option expires out-ofmoney i.e. if the price of the underlying asset does not move above the strike price, the buyer of the
option contract loses his entire investment.
Binary Put Options
Binary put options are bought when the price of an underlying security is expected to fall below the
strike price. Just like a normal vanilla put option, a trader buys a binary put option if he is bearish on the
underlying asset. Just like a binary call option, a binary put option also pays a fixed return if the option is
in-the-money at the time of expiration.
Where are Binary Options Traded?
Initially, binary options were traded only on the OTC market. However, in 2008, the Securities and
Exchange Commission (SEC) approved trading of binary options on exchanges. Shortly after SEC’s
approval, binary options were listed on the American Stock Exchange (AMEX), and the Chicago Board of
AMEX offered binary options on some stocks and ETFs, while the CBOE offered binary options on the
Volatility Index, known as VIX, and the S&P 500 Index.
Although binary options have moved from OTC market to exchanges, they are still thinly traded because
of their complex nature.
Binary options trading on the AMEX are referred to as Fixed Return Options (FROs).
How a Binary Option Trade Work?
Let us look at an example of how a binary option trade actually works.
Suppose Bank of America Corp. (NYSE: BAC) shares are trading at $12 on Monday and a trader expects
the stock to close at or above $12.50 at the end of the week, he will buy binary call options. Let’s say he
buys, 10 binary call options at $100 each. Assuming that the payout is 70%, if the price of Bank of
America shares rise above that level by expiration, then the option contract is in-the-money and the
buyer of the contract will receive $1000 X 0.70 = $700 for the 10 option contracts. The initial investment
was $1000 and the trader made a net profit of $700 on the trade.
Now let’s look at binary options from a put buyer’s perspective. Suppose a trader is bearish on Citigroup
Inc. (NYSE: C) shares, which are trading at $40 at the moment, and expects the price to fall to or below
$39 before the end of the week, he will buy binary put options. Let’s say the trader buys 10 binary put
options for a total investment of $1,000, expiring at the end of the week. The payout is 80%. At the end
of the week, Citigroup price falls to $38.50, then the option is in the money. The buyer of the binary put
option will make a net profit of $800. ($1000 X 0.80).
Binary Options Vs Traditional Options
While there is significant trading in traditional or vanilla options, binary options are thinly traded even
though they offer some advantages to a trader. One of the first advantages of binary options is that they
may expire at any time interval unlike vanilla options, which expire at monthly or quarterly intervals.
The payoff in a vanilla option varies by how much the value of the underlying asset changes from
opening to closing. On the other hand, the payoff for binary options is fixed. A trader buying binary
options knows beforehand how much money he will make or lose.
Binary option trades can be classified into three main types; High/Low, In/Out, and Touch/No Touch.
A High/Low trade, also called Up/Down trade, basically refers to a type of trade in which the buyer of
the option is predicting whether the market price of the underlying asset will end above or below the
strike price before the expiration of the contract. High or Up trade is when the trader buys a binary call
option and Low or Down trade is when the trader buys a binary put option.
The other trade type is In/Out trade, also known as tunnel trade, or the boundary trade. This type is
used to trade price consolidations and breakouts. In this type of trade, a trader sets two price targets,
forming a range. Once this is done, he will buy an option to predict if the price of the underlying asset
will stay within the specified price range or the tunnel until expiration or if the price will breakout.
For additional information and and an unbelievable opportunity Click Here
The final type of binary option trade is Touch/No Touch. In this type of trade, a trader is predicting
whether the price of the underlying asset will touch a price barrier or not. A Touch trade refers to a
trade in which a trader buys a contract that will make profit if the market price of the underlying asset
touches the set target price at least once before the expiration of the contract. If the predicted price
movement does not happen before the expiration of the contract then the trader will lose his
investment. In a No Touch trade, the trader is predicting that the price of the underlying asset will not
touch the stNow that we have understood the basics of a binary option, we will focus on how to trade
them. Binary options offer substantial returns to traders and therefore they have become increasingly
When trading binary options, a trader is basically predicting the price of an underlying asset. If the
prediction is right, then the trader can make a significant profit in a short time and if it is wrong, he risks
losing his entire investment. Although the risk in trading binary options is quite high, the potential
reward is also quite high.
One reason why binary options are attractive to retail investors is because one can start trading them
even with limited capital. For example, opening a trading account for stocks may require a trader to
start with a minimum balance of $10,000, a binary option trading account can be opened for as little as
$100. This makes trading in binary options particularly attractive to retail investors. Binary options are
not bought on margin.
Initiating a binary option trade is very simple. A trader has to simply select whether he wants to buy a
binary call option or a binary put option. Next he has to choose input an investment value. Finally, he
has to choose an expiry date for the contract before executing the trade. The strike price for the option
contract is established when the contract is bought.
Most brokers providing training videos on how to trade binary options on their website for free. Brokers
also offer traders other resources when they start trading to learn in-depth about binary options.
One needs to understand chart patterns when trading binary options. This is because, a trader is betting
on short-term price movements in the underlying asset.
It is also important to choose the best trading time. Trading in binary option will be best when there is
significant activity in the market. Although currencies and commodities trade throughout the day,
trading activity tends to be thin towards the end of the day. When trading in currencies and
commodities, it is best to trade when the different trading zones overlap as market activity is the highest
during this time.
For stocks, it is best to trade in the first few hours after market open as this is the time when trading
activity is most intense.
Trading Binary Options
Stock binary options are one of the most popular binary options. When trading stock binary options, it is
important that you are aware of the factors that cause movement in stock prices.
Stock price can move for a number of reasons. One of them is earnings reports. When a company
releases its quarterly earnings reports, there can be significant price movement. If the earnings are
below expectations there is generally a sharp decline in the price of the stock and vice versa. The crucial
thing is to be aware of the earnings release dates as stocks can be extremely volatile shortly after
releasing quarterly results. Stocks can also move on announcement of a merger or acquisition.
Always keep an eye on the news related to the underlying stock. For example, if you trading binary
options on Google, it is important that you are aware of Google’s earnings release dates, market
sentiment, and chart patterns.
Let us look at an example of how you can trade stock binary options after a major news announcement.
Suppose, Google is trading at $700 ahead of its earnings release. Now expectations are for the company
to report earnings of $6.60 per share, but Google’s earnings fall well short of expectations. Given the
earnings miss, it is likely that Google shares will fall sharply as traders will start offloading their positions.
If you are a binary option trader, then buy binary put options as the price of Google shares are expected
to slide. Suppose you buy a put option expiring in 1 hour at $700 strike price i.e. you are betting that
Google shares will fall below $700 before the expiration of the contract. Now if the predicted price
movement takes place then your option is in the money. Because most binary options are European
style, you will have to wait until the expiration of the contract to book your profit.
Risk management is one of the most important aspects of trading in any financial products. Same goes
for binary options. It is advisable that you trade no more than 5% of the account size. Suppose you have
a $2000 deposit in your trading account then it is advisable to not expose more than $100 to the
rike price before the expiration of the contract.
Choosing a Broker for Trading Binary Options
The next important thing when trading binary options is to choose the right option broker. There are
many scam binary options trading site on the Internet and it is important to separate the genuine ones
from the fakes.
So How Do You Select a Binary Option Broker?
When choosing a binary option broker, a trader needs to look at several things. First and foremost is the
issue of regulation. It is very important to find out that the binary option broker you are trading with is
regulated as this will ensure the safety of your funds.
Once, you are satisfied about the regulatory issue then the next thing to look for is customer service.
Genuine binary option brokers have a dedicated customer service department. The customer services
department should be able to provide timely solutions to traders’ problems. Several option brokers
offer live chat services and this can be very useful.
The next thing to look for is the range of trade types. The best option brokers offer all three trade types
i.e. High/Low, In/Out, and Touch/No Touch. However, some binary option brokers offer two trade types,
while some offer just one. Always choose an option broker that offers full range of trade types or at
least two trade types. Also, make sure that the option broker is not placing any kind of limitations on
trading, which can make generating a profit difficult.
The next thing to look for when choosing an option broker is the trading software. Always choose option
brokers that offer trading software, which are user friendly. If the trading platform you are using is
difficult to understand and you are having problems navigating around, then it will difficult for you to
trade. Generally complex trading platforms lead to failed trades. Therefore always avoid them and use
trading platforms that are user friendly and easy to navigate. These days, brokers are also offering
mobile versions of their trading platform, given that more and more people are now using smartphones
and tablets. Mobile version of trading platforms means that you can trade from anywhere and at any
Perhaps the most important thing after regulation is payouts. Payouts for binary options can be
different. Some option brokers offer payout of as much as 80% per trade. Always choose an option
broker that offers the best payouts and are regulated.
Cedar Finance is one of the most highly regard option brokers. Traders can open an account on Cedar
Finance for as little as $200. Account can be opened in either the U.S. dollar, the euro or the British
The broker offers a diverse selection of assets. Some of the assets include Euro/US dollar,
Euro/Japanese, gold, oil, NASDAQ, S&P Future.
Payouts can be as high as 81% on Cedar Finance.
When an investor buys a call option, he is expecting the price of the underlying asset to go above the
strike price before the contract expires. If the price of the asset moves above the strike price before the
expiration of the contract, then the owner of the contract can buy the underlying asset at the strike
price and sell it in the open market at a higher price. The profit would be the difference between the
market price and the strike price less the option premium.
For additional information and and an unbelievable opportunity Click Here
A put option on the other hand refers to a option contract in which the owner has the right but not the
obligation to sell the underlying asset at the strike price on or before the specified time period.
The buyer of the put option contract pays a premium to the writer of the option. The buyer of the put
option expects the price of the underlying asset to fall below the strike price before the contract expires.
His motive could be to profit or just hedge his position.
Where are Options Traded?
Options can be traded either through an exchange or over the counter (OTC). Generally, stock options
are traded on an exchange. Options traded on a exchange are settled through a clearing house and
therefore there is no counterparty risk.
Options can be classified on the basis of the dates on which the option may be exercised. Majority of the
option contracts are either European or American style options. Generally, these options are referred to
as “vanilla options.”
A European option may be exercised only at the expiration date of the option. For example, if you buy a
European call option on a stock X, strike price $20 and expiration data May 20, 2013. Now even if the
price of stock X exceeds $20 before the expiration of the contract, the owner of the contract cannot
exercise the option before May 20, 2013.
On the other hand, in an American option, the owner can exercise his right to buy or sell the underlying
asset at any time before the expiration date. Therefore in the above example, if the price of stock X
exceeds the strike price on May 10, 2013 i.e. 10 days before the expiration of the contract, the owner of
the option contract can still exercise the contract.
Majority of the options contract traded are either European or American.
However, there are also other option styles. These options are generally referred to as “exotic options.”
Exotic options are different from vanilla options in terms of the underlying asset or the payoff
calculation. Generally, exotic options are traded on the OTC market unlike vanilla options, which are
mostly traded on an exchange.
The different types of exotic options include Barrier Options, Compound Option, Binary Option,
Bermudan Option and Rainbow Option among others.
Your First Stock Purchase
While all of the brokerage have a somewhat unique way of letting you research stocks and enter orders
to buy and sell a stock, they are quite similar. Most brokerages will offers you rather in-depth tools to
research and find your first investment.
Once you have located a worthy stock to purchase, you can look up its quote. There are quite a few
things that can appear on a full stock quote. However, the basics are: Symbol Last Price, Bid and Ask.
For example: MSFT (Microsoft Corp.), $26.56, Bid: $26.55, Ask: $26.56. So, all you need to know to begin
is for most companies that are traded by a lot of traders throughout the day (which are most of them)
the bid and ask spread is very small. In our MSFT example it is 1 cent (26.55-26.56). When this is the case
and you aren’t buying 1 million dollars worth of the stock, you probably would never need to pay
attention to the bid or the ask. Therefore, for the simplicity of first stock trade, let’s look at only the Last
Price (which is usually somewhere between the bid and ask).
At this point you would decide how much money you wish to invest. Let us say, you want to invest about
$2700 in MSFT, at it’s current market price you would be able to purchase about 100 shares
For additional information and and an unbelievable opportunity Click Here
A trader gets up in the morning, has breakfast, washes up, gets dressed, and goes to his
computer. He scopes markets’ situations and is ready to invest; he starts earning thanks to
his strategy. This, at least, is the ideal picture. Let’s examine an identical situation, where
we’ll only modify the latter parameter: “he starts earning.” Let’s say our trader’s session
doesn’t begin so splendidly. Let’s say he loses some. Let’s say his first investment goes
badly, and so does his second investment. The first thought that runs through our trader’s
mind is, “My strategy is no good.” Such thinking is incorrect. If a strategy has previously
given us great results, it will still be a good strategy, even when we lose. If our investments
are not performing well, it means that we are doing something wrong. What could that be?
Usually, we’re applying a wrong psychological approach towards the strategy. The first thing
that happens to a trader when his investments are going badly is that he wants to put a
remedy to that right away; he wants to re-validate himself and re-gain his losses, and
therefore he attempts to modify one of the key parameters in his proven strategy money
management. He begins to invest amounts of money that were not originally part of his
strategy’s plans. This is a mistake.
This is where psychology becomes our most effective weapon. Self-control is vital. We need to
approach the issue objectively, with no panic. We need to be ready and willing to say,
“That’s enough for today.” This kind of self-control is vital to any successful traders. A good
strategy does not necessarily guarantee success; it’s a method which we have found can
give us gainful profit in time. This means that losses are part of the game and our best
weapon to face them is our psychological approach. When trading binary options trading
especially is involved, one must be cold, detached; during a trading session, however long it
may be, we mustn’t be overwhelmed either by gains or losses. Only when we decide to put
an end to the session we can allow ourselves to analyze our trading day. If you can’t
approach trading with such an attitude, then maybe it’s not the best choice for you.
It is more likely that you’ll be in control of yourself if you make sure to reserve only extra
amounts of money to trading never invest sums that are essential to your everyday life. If
you invest a sum of money that might be useful for primary expenses, you are already
How To Sort Through Fundamental Analysis
The process of beneficial technical analysis is something which is often discussed by binary options
experts, especially those who assist beginner traders. The fact of the matter is that fundamental
analysis is just as important, yet way less complicated. As simple as it is, there can be issues with
this form of analysis. For example, paying attention to rumors and speculation. These “insider tips”
can be tempting, but the best advice is to only take action based upon fact. Here’s why…
Experienced traders routinely advise new traders about the hazards of accumulating too little data
and that failure to have plenty of information to draw from could result in poor investment decisions.
Additionally, different information could be needed for each binary options strategy you use.
Fundamental analysis should be a part of every strategy, at least in some form. It’s extremely
important that this information comes from a source which is known for providing factual and up-todate information.
Aside from the fact that numerous factors can have an influence on asset prices, technical and
fundamental analysis remain the two most widely recognized forms. There may be times when one
of the two is more important than the other, but rarely will you find instances when only one form is
needed. When this does occur, it is often fundamental analysis which takes precedence. This is
because market sentiment can be extremely strong at times.
Details surrounding market sentiment can be derived from various areas such as press stories,
public announcements, media reports related to recent events, stock related stories, and more. Any
of these could be positive or negative in nature. This truly makes no difference to the binary options
trader. What does make a difference is possessing the ability to use these reports to determine
exactly how they will impact an asset price in the near future.
Individuals who trade based strongly on market sentiment must always rely on their own
interpretation of information. Clearly, there is no one to challenge ideas or thoughts related to the
use of media reports for binary options trading. Whenever the examination of such information is
subjective rather than objective, problems can arise. This is why it is so important to consider only
the facts and then use the facts to gauge future asset price movement.
Everyone who trades binary options needs to use their own reasoning skills to determine upcoming
price movement. The competent trader will gather all of the data and at that point formulate
forecasts. There really is not room for guesswork. It’s going to be a complete observation of genuine
details which facilitates the prediction process and helps to boost profits. Anything less than this
immediately increases the risk level of each trade.
Since fundamental analysis is so very subjective, it could take some practice to master tuning out
errant speculation. There are plenty of individuals who offer to provide you with binary options
information for a price. This may or may not be a good thing. If you really feel that you’d like to
benefit from this type of information, consider using binary options signals. When signals come from
a reputable source, they can be an excellent profit producer.
Irrespective of your skill level, do take the time to find a few reliable information sources. You’ll need
to start with solid facts if you’re going to be able to correctly predict future price movement. Unless
you are using binary options signals, do your best to ignore any “tips” which come from unreliable
sources. Consider only the facts and your fundamental analysis should always be beneficial.
Investment Selection Advice For New Traders
One of the first things that new traders notice about binary options platforms is the listing of available
upcoming investment opportunities. Every platform is going to present this list in their own manner.
Some brokers will go one step further in showing you not only how many people have selected a
specific investment opportunity, but also how many have opted for put or call positions. Investment
selection is an important step and you’ll need to know how to make the right choice.
Since money is on the mind of all traders, let’s first take a look at how you can quickly learn how
risky a trade is. To make this determination, simply look at the payout percentage. Let’s say that
your broker offers payouts ranging from 65% up to 85%. If the trade offers to pay on the lower end of
this, you can assume that the broker feels that you have a strong chance of coming out on the
winning end of the investment. Exactly the opposite is the case when payouts on the higher end are
offered. With high yield trades (offering payouts up to 500%) you can automatically assume that a
high level of risk is in place.
Next up, let’s consider platform suggested investments. These can be presented in two forms by
your binary options broker. They can either be pre-established trades, complete with all of the
parameters in place (you just make the selections), or popular trades. These are essentially the
same but contain extra info such as the number of individuals who have chosen to invest and what
position they’ve selected.
You’re never obligated to select any of these opportunities, but at times doing so is going to be a
good idea. If you are able to see the statistics in related to position selection and note that a mass
number of traders are opting for the same position, take the time to learn more about why this is and
whether or not you should be opting in as well. There will be times when these set ups offer you
some easy binary options trading profits.
There are going to times in which you simply want to set up your own trade. You might have very
specific ideas in mind about what you feel is going to be a profitable trade, or may need to create a
trade which matches with the information you’ve received in a binary options signal. Nearly all
platforms are going to allow you to do this. Some brokers include this functionality inside the basic
platform, while others provide a special area and “Option Builder” functionality.
No one is going to tell you exactly which trades are going to be a good or bad investment. This is
something that you’ll need to decide on your own based upon your investment techniques, opinions,
and analysis. The selection will also need to factor in just how much risk you’re willing to accept.
That said, binary options brokers are doing their part to ensure that the investment selection process
is easy for traders and includes many ways for you to achieve success.
Monthly Investment Success Evaluations and
Binary options traders are encouraged to measure their trading success on a monthly basis in order
to determine whether or not any modifications need to be made. A genuine assessment cannot
occur if you have not been tracking your progress, so we hope you have monitored trade results for
the duration of the month. If not, not is an excellent time to start. There are just three general
monetary possibilities. You have either generated a profit, broken even, or lost funds. All of these
results are going to let you know whether or not changes are in order.
If you’ve generated some profit, job well done! This signifies that you are trading wisely and properly
utilizing fundamental and technical analysis information. Strategies and binary options trading
signals might have additionally assisted you in earning money. The main consideration if your month
was profitable would simply be which actions to take to ensure that the next month is even more
profitable. Should your profits have been minimal, then you know that some improvements can be
made. Reflect upon the binary options trading methods which permitted you to make money and
think about how these methods may be employed to boost earnings even more.
For many, merely breaking even may be frustrating. Even though there wasn’t any financial loss,
indeed there is a time invested whenever trading binary options. The good thing is that you did not
lose any money, and breaking even usually indicates that you’re on the right track. A few simple
adjustments in methods and/or the analysis may lead to the following month finishing with earnings
in your account. Reflect upon your strategies and methods to identify any area in which
modifications need to be made. It might be the ideal time to test out different strategies or branch out
by using different underlying assets or trading instruments.
Noting a financial loss at months end is obviously the worst potential outcome. No trader ever want
to be on the losing end, even if the loss is minimal. If you lost money, adjustments are needed. Give
particular attention to trading instruments, expiration times, assets, and any strategies which were
part of every losing trade. By doing this, any distinct patterns should start to become clear. By
making not of these patterns, adjustments are going to be easy. Loss is definitely frustrating, but it
shouldn’t indicate that it’s time to stop trading binary options. A component of the attractiveness of
this form of trading is the fact that a few adjustments can change everything.
Some ask themselves whether or not evaluation wouldn’t be more effective if done weekly instead of
monthly. This is in actuality not enough time to allow for recognizing distinct patterns. The only
exclusion would be if you’re experiencing non-stop loss. Should this be the situation, cease trading
for a day or so and attempt to get to the root of the problem. Binary options trading can certainly be
addicting. Nevertheless, traders have to have enough self-control to allow for wise decisions.
Binary Options Trading Actions To Avoid
There is a great deal of advice and information made readily available to binary options traders. A lot
of the information to be found online today offers instruction and explains to the trader which steps
need to be taken in an effort to earn substantial profits. While this type of information is fantastic, it is
just as important to be aware of which actions to avoid when trading. It just may be this form of
information which helps prevent expensive mistakes.
We should initially take into consideration the trader who would like to execute binary option trades
based entirely on his or her gut instinct. This equates to making investments dependent on almost
nothing more than an emotion or speculation. While intuition could be considered, it should by no
means be the sole consideration in entering a prediction. Research and analysis will need to be the
main factors in the decision process. Skilled binary options traders are prone to making this mistake,
as a increased level of expertise could cause a sense of relaxation in forecasting asset price
Irrespective of expertise level, traders should never devote all of their account funds on a single
trade except in cases where they can afford to accept such a large potential loss. Even when a
binary options trade prediction seems to be a “sure thing” there will constantly be risk required.
Beginning traders could be guilty of this oversight, as some time may be required before solid money
management skills are mastered. This prevalent mistake can effortlessly be averted by distributing
funds amongst various trades. By distributing funds more evenly, the trader could offset loss, break
even, or grow his or her profits.
Another prevalent mistake which is often made by beginning binary options traders occurs within the
broker selection approach. No broker ought to be selected dependent on only a single element. For
instance, a substantial bonus amount could quickly influence a novice trader. In actuality, these
bonus funds will be of little benefit should the broker not provide a strong trading platform,
outstanding customer service, and dependable payments. Even more serious, the bonus funds
would equal absolutely nothing if the broker is running a scam. By exploring all factors, the binary
options trader may guarantee that they have chosen the best broker.
Dismissing marketplace news and current events can also be an error. Even if several hours are
invested studying underlying asset statistics, one single event could quickly alter the outcome of a
trade. This event may possibly related to governments, weather, financial press releases, or
anything at all which modifies investor opinion and market sentiment. It is vital to note that no event
must be significant to be able to have an impact on the price of an asset. Neglecting binary options
marketplace news could end up being costly to the trader. With a wide variety of news resources
available on the internet, there is absolutely no reason to ever make this error.
The straightforwardness of binary options trading truly does not provide much room for serious
mistakes. Even so, mistakes do remain a possibility. These errors can happen not only to new
traders, but additionally to those who have reached intermediate and highly advanced skill levels as
well. By understanding which actions to avoid when trading binary options, the suitable actions will
instantly become much more clear. Knowledge is truly the key to making money by means of binary
Digital Options Trading: Moving From Beginner To
Those who repeatedly take part in binary options trading will attain progressively higher skill levels
as time goes on, just as with any other pursuit that is carried out over a period of time. It will become
beneficial to be able to discern at what point improvement has been made in order to know the
optimum time to move on to try out more advanced strategies. Remaining stuck in one place should
not ever be an possibility, since there will invariably be further chances near at hand for earnings
from binary options.
What will be of the most value during the initial phases of trading, will be acquiring a thorough
understanding of the basics. The basics are going to be the framework upon which all future binary
options trading will be built on. Over the course of at least the first month of trading. This is the time
to watch out for letting yourself get overloaded with reading too much trading information that is
more advanced than your current level of understanding. While in this critical time period, one ought
to only be concerned with the basics such as exactly how to trade, how to conduct analysis, asset
selection, expiry time selection, how to track outcomes, and how to make use of basic binary options
New traders are usually very anxious to begin trading. And indeed, those first few trades that end up
in earnings are, needless to say, very thrilling. Nevertheless, inexperienced traders are cautioned to
not become so caught up in the excitement that money management is neglected. A number of
fruitful binary options trades cannot be considered an indication that subsequent future trades are
guaranteed to end in the money. It will be necessary to try to stay level headed within those first few
exhilarating weeks of binary options trading.
The intermediate phase will be recognized as having been reached when the trader is at ease and
trades can be carried out with a minimum of effort. This signals that it is time to begin to examine the
analysis process more in depth to cultivate a greater understanding of how the influence of news
reports and statistics can result in a higher accuracy rate of predictions. Some individuals may be
eager to modify the fundamental strategies or to start creating their own throughout this time. In
addition, more complex binary options strategies can be looked into and tested out. Asset choice
and monitoring ought to be much more simple now, since much will have been learned about these
Lastly, the proficient binary options trading phase is particularly enjoyable. In reaching this phase,
the trader has become entirely familiar and competent in all facets of trading. The majority of
advanced traders utilize their time in development of their own personalized trading methods.
Overall success rates should be fairly high by now, perhaps being no less than 60%. The advanced
phase is far from being the end of the road, however. The learning process does not end here, but is
rather continued on an ongoing basis as changes to binary options trading happen frequently,
causing traders to be ever learning and adapting. Those who do not usually end up losing out on
potential profit opportunities.
The advancement from one skill level on to the next comes about on its own for most people. But
some may find themselves seeking out the ease and familiarity of the beginning phase. While there
is nothing that says that the most fundamental binary trading techniques cannot be used
continuously, by not making the most of other assets, trade types, expiration times, and methods,
there is no way of knowing what greater earning opportunities may have been missed.
The Basics Of Binary Options Signals
A large number of traders now use binary options signals to up their trade volume, boost their profits,
and reduce the amount of time spent on the analysis process. What are these signals exactly? In
simple terms, they are step-by-step trade instruction which tells you which exact trade setups are
likely to be profitable. Consider it “inside information” of sorts, with the difference being that when
trading digital options this information is not consider unethical or frowned upon.
The task of the binary options signal provider is to formulate signals which are highly accurate and
then deliver them to their subscribers. How they arrive at signals will vary by provider, but most use
a combination of analysis software and expert opinion. Signals providers pride themselves on
accuracy and since there is usually a cost for signals, accuracy is necessary. A reputable signal
provider will offer to tell you their accuracy percentage.
Every binary options signal, regardless of the source it was derived from, is going to be time
sensitive. Each signal should provide the exact information needed in order to be sure that the signal
is put into action in a timely manner. It is not advisable to use signal information which has expired.
Although it could produce a profitable binary options trade, there are certainly no accuracy
guarantees one the ideal time for trading has passed.
Most signal providers offer several methods of distribution. Text message and email tend to be the
most popular methods. Since signals are time sensitive, you’ll want to select a method that will allow
you to receive the signal promptly. With the creation of mobile trading apps, many find that the best
combination is text message signals which can then be directly used within a mobile platform. Even
for those who do not trade binary options within a mobile platform, text delivery tends to be fastest.
There are a few binary options brokers which no have signals built into their platform. This is another
fast and easy way to make use of these alerts. In some cases, you may even be able to have a
system automatically trade on your behalf. This is similar to Forex trading robots which execute
trades for traders based on pre-selected parameters. This form of signal use relatively new, but
could be a great option for those who plan to use signals on a regular basis.
The cost for binary options signals can vary quite a bit. Many signal providers now offer low-cost or
free trial offers. Consider using these to test for accuracy before committing to pay for signals. An
accuracy percentage of around 70% is ideal. There are plenty of benefits to being teamed up with a
great signal provider. So long as the alerts are accurate and the cost is reasonable, signals can be
an excellent source of extra profits.
Strategies for gain in binary options
Different trading strategies
Just like stock trading, binary option trading requires the knowledge and use of
strategies to put the odds on its side to gain in the long term. There are two
main types of speculative trading strategies in the world of professional trading:
it is the technical (or graphic) analysis and fundamental analysis that we will
analyse in the first place. We will then deal with the two empirical methods that
are most widely shared on the web: the martingale and trading with the traders’
Trading with technical analysis
The technical analysis – or chart analysis – involves studying the exchange
rates charts of different assets in order to predict their future orientation. This
type of analysis is based on the Dow Theory. This theory, realized by a great
financial analyst and co-founder of the Wall Street Journal, on the principle that
the “market remembers”. This means that what has been observed in the past,
reiterates itself again today and in the future. In other words, the analysis of
decades of charts histories has enabled the technical analysis to identify specific
contexts where it becomes possible to predict the future orientation of an
exchange rate with a significant reliability. The technical analysis therefore
consists of studying the charts using technical indicators (to have access to
certain digital information or additional charts) and observing patterns of
graphics and / or candlestick charts patterns. This type of analysis is most
commonly used by traders. Many books and websites will inform you about its
learning, its method of application and the different strategies associated with
Trading with fundamental analysis
Fundamental analysis is the second branch of market analysis for binary option
trading. This method focuses exclusively on economic statistics and the overall
economic climate to predict the future orientations of the exchange rate. For
example, the crisis of 2008 was an excellent opportunity to stake downwards on
the main publicly-traded companies, especially the banks and investment funds.
On a smaller scale, dozens of economic indicators are published daily (such as
the unemployment rate in a country, for example). All these economic figures
are available in economic calendars available online on the internet. The realtime monitoring of these new ones can help you take decisions to increase or
decrease the principal instruments traded in binary option, including the
currency pairs of the Forex market.
Trading with traders’ tendency indicator
The other empirical method regularly seen on the web consists of monitoring a
tool for “indicator of traders’ tendency” (also called “tool of traders’ sentiment“),
provided by the online broker. This tool describes the balance of positions at the
purchase and sale of each index at a given moment. Provided by the broker, the
tool shows you the percentage (%) of their clients with positions at the
purchase and the percentage (%) of their clients with positions at the sale (in
real time) for a defined financial asset. The clients of an online broker cannot
trade on Wall Street but some have the audacity to trade “by instinct” (and
ignore those who use the martingale method mentioned above…). Therefore,
this type of tool becomes completely obsolete and its reliability is totally
uncertain or even completely absent. Once again, the bonusbinaryoptions.net
team warns you against this type of strategy and invites you to avoid following
Trading with a method of martingale type betting
There are many websites or ebook extolling the merits of using a martingale.
What is a martingale? A martingale is a betting method that consists of
increasing the amount of the initial investment at each loss until a gain is
achieved. Suppose you stake € 20 upwards to the EUR / USD exchange rate.
The principle of the martingale will lead you to stake double your bet until your
winning position of closing. In our example, if you lose your transaction, this
principle will invite you to repeat the same bet for an amount of € 20. If your
position closes again at a loss, you should then bet this time an amount of € 40.
The principle is to offset losses of previous bets until achieving the gain that
was initially sought. The risk can only become very large if you suffer a long
series of consecutive losses. By leveraging € 40, then € 80, then € 160, € 320,
€ 640, € 1028 … In a few blows, the amounts to invest become astronomical.
The result: Your account is empty and you just have to file new capital and file
a dispute against the person who extolled the merits of this strategy.
Your Guide to Online Binary Options
Trading in Binary Options is fast becoming a popular method of
making an easy investment with minimal risk. They appeal to not only
the most experienced traders but also those unfamiliar with the
financial trading world, stock markets and what’s involved.
Here at BinaryOptionInsights.com we have put together a wide range of informative
articles and financial resources to try and answer some of the most important questions
in binary options trading. So whether you are first starting off or looking for
more advanced trading strategies and analysis, our articles are designed to give you the
insights you need to become a successful online trader.
We provide insightful information into some of the top brokers in the industry and set out
clearly what they offer in an easy to compare layout, with clear easy to use strategies
and analysis over the best financial instruments. If you really want to be on the cutting
edge, we recommend you sign up to our emails list, which is designed to give up up to
the moment stock changes as we get them from the brokers. We won’t send you spams
or sales pitches, simply economic and financial indicators to help you trade better.
We are always looking at ways to improve the information we provide our readers so if
we are missing any answers to your questions get in touch and we will do our best to
add it in.
Tips for New Traders to Trade
MAY 22 BY MARIE NELSON IN MONEY | 43 SHARES
From earning a little extra money to making a full time living, or making a lot of
money in a short span of time, binary options trading is an excellent way to
achieve all of this. As it slowly gains popularity all throughout the world,
thousands are making good money with little or no prior knowledge of the
subject, however, binary options trading isn’t a cake walk: success can be
achieved and risks can be minimized by following the tips mentioned below:
9 Tips for New Traders to Trade Binary Options
1. The first and foremost advice to be given to any beginner trader is to select
a good binary options broker for your help in this field. A good broker, who
knows his work, makes all the difference. There are various comparison
websites available to make this choice easier for new traders, so one can
quite easily consult these websites and choose a good binary options
broker of their choice.
2. Secondly, it is advisable to increase your knowledge in the field of binary
options trading and to know that there is always more to learn. There are
training courses available for imparting binary options trading knowledge to
new traders. Reading new books on the subject matter and discussing with
other traders about the matter also adds to the benefit. This type of trading
is a constantly-evolving experience, hence knowledge on the matter is ever
3. Thirdly, trading long term serves better returns, and binary options trading
is a long term activity. Developing a long term plan for your binary trading
and playing the right cards will ensure that you ultimately come out on top.
Resist the temptation to get drawn into fads that do not fit into your overall
strategies and strictly stick to your drawn plans.
4. Fourth is to reduce your risks by resisting the urge to over-invest.
Beginners tend to get carried away to make that one big score but they
must employ some self control as that may be a game changer. New
traders lose more money by getting carried away and over investing.
Binary options brokersadvise to invest not just with courage but also with
5. Fifth, it is essential to keep a clear head while making any decisions about
binary options trading. Beginners should avoid trading when they are
emotionally disturbed, as emotions can create havoc with your trading. It is
very easy to make the wrong decisions in an emotional state, so it is
advisable to stay away from any form of trading until you’ve calmed down
and cleared your mind.
6. Prepping yourself before trading in binary options is the sixth advice.
Studying the market and viewing graphs over time can help new traders
predict behavior of any binary options asset, thereby helping them to make
7. Another very important piece of advice would be to keep apprised of
trading news. Keeping ears and eyes open to catch breaking news about
the market condition can get the binary options trader a clear view of
current situations, making it easier for him to trade during market crashes.
By understanding the root cause for market changes, the new trader can
help corner the market when it rallies or crashes.
8. Hedging trades against each other just ends up decreasing the statistical
probability of earning more profits as opposed to increasing them.
9. Last, but not least, it is very important to have fun while trading binary
options. Beginning binary options traders must ensure that it does not
become a bore or a drag; if a trader has fun while trading, then he or she
will be naturally inclined towards it and will pay more attention and make
better decisions, thereby increasing profits.