What you need to know about Binary Options
Unlike typical investment and trading options, binary options trading is speculative. It means that the main focus on the market is predicting the movement of financial instruments or underlying assets. Assets always move and they only go in two directions: up and down.
Underlying assets are real-world assets. If you start trading, you will be provided with information regarding those assets. However, your choices and trades do not affect them. It is like betting on who wins in the football game you are watching. Whatever happens in your bet does not affect the game, players, and other stakeholders involved.
For example, you want to speculate the movement of gold. If you think its movement will go up in the next few seconds or minutes, you need to call or choose the call option. If you think it’s going down instead, you need to put or choose the purchase option. If your prediction is correct, the money you used to speculate will be returned along with your “prize.” If your prediction is incorrect, you will get nothing and the money you used will not be returned.
As mentioned, market prices move every second and this makes binary options possible. One common question that new traders ask is why market prices can move sporadically within such a short time frame. This happens because of four things: internal events, external events, market pressure, and hype.
External events are major social, political, and economical events that affect the market and the industry related to it. Internal events, on the other hand, can be found within the company that owns the shares being affected.
Market pressure is the effect of the entire market. If major assets are rising up, other related assets will experience appreciation, too. Hype, on the other hand, is an effect created by people who will benefit from the appreciation of the stock.
As a binary options trader, you must be aware of all those factors to have better knowledge that you can use to predict the direction of the underlying assets you are monitoring.
Binary options trading is becoming popular because people do not need to invest time — just money. Gains can be accumulated within an hour and traders only need to choose between two options. Also, thanks to the Internet, you can easily get started on binary trading: Sign up with a reliable broker from a stable of binary options brokers and deposit money as your initial investment.
When it comes to safety, there are three things that should be considered: the market, the broker, and the trader himself. First, it is important to make sure that the broker one chooses is reliable and trustworthy. Second, the markets that one is eyeing must be stable and not too volatile. And most importantly, the trader must have a full grasp of what he is doing.
Securing the first two is easy. But the biggest risk of binary options trading is the trader itself. If the trader treats binary options as a gambling game, he is just putting himself and his money in greater risks.
When To Trade With Binary Options
Binary options trading is doable 24/7. However, some markets only allow day trading. And some are better traded during specific times of the day.
By the way, a few of the underlying assets commonly available in binary options are stock indices, commodities, and currencies.
Primarily, the time when you can effectively trade is dependent on the assets you are going to focus on. For example, if the assets are from a company from the United States, they will move more frequently during daytime in the United States. After all, business hours are usually when the sun is up.
Also, remember the factors that affect the movement in the market. All of those, of course, occur mostly when the business is operating.
To get the most out of binary options, it is recommended to trade when the market is active. The activity in the market makes it possible and easier for the trader to predict where the assets will move.
For example, if you are going to trade using the USD and EUR exchange, the most active time for this exchange is when both major trading exchanges are open for trading. The market for EUR in London opens at 2 a.m. EST and closes at 11 a.m. EST. The market for USD in New York opens at 8 a.m. EST and closes at 4 a.m. EST.
Both are open are between 8 a.m. EST and 11 a.m. EST — the window when both currencies are active on the market. That time is also commonly referred to as peak trading time. If you know that the USD is getting more valuable than EUR, then it will definitely show its movement and favorability during the peak trading time for the USD and EUR exchange.
And that time is the best time for you to trade in binary options. Since you have full advantage and knowledge of the movement of the financial instruments you are watching, the chances of you choosing the right call is high, and that basically means you can turn in a high chance of profit.
In a nutshell, it is important for you to always be aware of the time when the financial instruments that you want to deal with are active on the market. Familiarize yourself with the opening and closing times of major stock and currency exchanges in the world. And know where the companies and stocks are located in the world for you to have greater leverage in binary options trading.
The Beginner’s Guide to Binary Options
So you’re probably wondering, “How do binary options work?” To start with, you must sign up with a broker’s website. In this page, there is a list of brokers that offer binary options. Do note that not all brokers offer this type of speculative trading. Registration is often easy and fast, but it will be discussed in more detail later.
Say that you have already signed up and provided a deposit. The broker’s site will often provide you a platform or application where you can start trading. This can be in the form of a web application or a downloadable program that you can run on your computer, tablet, or smartphone.
A binary options platform often consists of four sections. The first section is a list of markets and underlying assets so you can choose where and what to trade. The second section, which often is the biggest, is the chart. The chart shows the movement of the market you’ve selected. It can be in the form of candle, line, or bar.
The third section often houses additional information like your remaining money, hints, additional features, etc. Lastly, the fourth section is where you can start a trade. Usually, it displays the time (current time, time zone, or expiry time), amount adjuster (strike price and payout offer), and your two options: call or put.
Before you press any of the options, understand these three things: expiry time, strike price, investment, and payout offer. The expiry time is the duration before the trade you chose closes. For example, you chose call and set the time to 60 seconds. Once the 60 seconds are up, the trade ends and you will either win or lose depending on your choice.
Second, the strike price is the current price of the asset you are going to call or put. For example, the stocks at Google are currently at $650, so if you call or put at that moment, $650 is the strike price. The payout offer is the amount that you will get if your prediction is correct.
For example, $650 is the stock price and the broker is offering a 75% payout rate. You then invest $1,000. If your prediction is correct, the broker will provide a payout of $750 plus the $1,000 you invested. If you lose, the investment you have will not go back to you. However, some brokers offer rebates if your prediction is wrong. Usually, the rate is around 5% up to 10% of your investment.
That is basically how to trade in binary options. However, do note that this is the most basic form of the trade. It is commonly referred to as Up/Down trade. Other types of binary options are becoming popular, and instead of two options, you are provided extra options often referred to as “more exotic” options.
About the registration to a broker, which is truly an easy process, you can select one of the many binary options brokers here in the website. All of them are trustworthy and reputable. Also, the ones listed here are all licensed and regulated by national financial authorities.
Aside from that, the site provides detailed information and reviews — which the site’s editors have personally and professionally researched and presented — about each broker listed. There, you will find out specific details you need to know before you start such as minimum deposit price, value added services, and offered markets.
Furthermore, most of them provide binary options demo accounts, guides, and extensive tutorials, which are truly beneficial to veterans and newbies alike. All you need in order to sign up are a Facebook, Google+, or email account. Registration is instant. And to start trading, you will need to provide the minimum deposit.
Selecting The Best Binary Options Brokers
It is crucial that you find the best binary options broker for you. While it’s always good to receive recommendations, ultimately it is you who should decide which one is the best for you.
For example, new traders may want to manage their spending before they become more serious with binary options. Needless to say, they would want a broker that offers a low minimum deposit.
Do know that each trader has different needs and there is no one broker that can provide those needs for everyone.
Anyway, it is good that you are already here in this site. As mentioned, this site has a list of binary options brokers all over the world, carefully selected, curated, reviewed, and assessed. Most of them are registered and based in a country in the European Union (EU).
“Why there?” you might ask. That’s because the EU is currently the prime choice when it comes to global trading. Aside from that, the economic growth of EU countries is steadily going up, albeit slowly. It’s no secret that the European Union is the largest economy in the world.
Moreover, financial authorities in the EU are lauded for being fair and strict. This is especially true when it comes to Cyprus’ very own CySEC (Cyprus Securities and Exchange Commission). Don’t be surprised that most brokers listed here are registered in CySEC and based in Cyprus.
It is advantageous to work with an EU-registered broker. Being a client of one makes a trader capable of being able to trade in EU states and countries. Also, European Union brokers are considered the safest companies to work with.
As mentioned, brokers are only a third of your risk when it comes to binary options. You can minimize that risk by doing in-depth research on various binary options brokers. Thanks to this site’s reviews, you can easily get 50% of the information that you need. The next 25% can be found in the broker’s site. Meanwhile, the remaining 25% can be found in aggregate review sites and social media.
Choosing the best broker does not mean that you should restrict yourself to registering with only one. Thanks to the growing trend of lowering minimum deposits and minimum investment prices in binary options, you can opt to register with multiple brokers.
By doing so, you can comfortably know which is truly the one and only broker for you. Also, you can get firsthand experience of their platforms and services. From there, you will be able to make that very sound decision.
A word of caution, though: Be wary of scams. One example of a binary options scam is a broker requiring you to make an initial deposit, and then following it up with a request for more money, usually a much bigger amount than your initial deposit. Safeguard yourself against such scams by dipping your toes into the world of binary options trading with a demo account, making sure that the broker has a license from a real government regulator such as the CFTC, FCA, FSB, and/or ASIC, and checking if the broker