How to Get Started with Binary Options Trading
Since 2008, investing and making money online with binary options has become increasingly attractive to investors and individuals who invest in shares, equities, currencies, and commodities. There are only two options in binary trading; hence the use of the term “binary”. It is almost like placing a bet, in that you are wagering that an asset will increase or decrease in value over a set period of time.
Binary trading provides options for the market to self-regulate and offers an opportunity to rein in overrated stocks by speculating that a company will see a decrease in its value.
In binary options trading you are betting that the price of a specific asset will either increase or decrease during a set period. You have the luxury of knowing your risk and return up front, before the trade ever takes place. Binary trading is an excellent way to get into the market without a large outlay of capital or capital reserve required.
Get started with 3 easy steps:
Choose a broker from the list below
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General Risk Warning:
Binary options trading carries a high level of risk and can result in the loss of all your funds
Binary and digital options are prohibited in EEA
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. Between 74-89% of retail investor accounts lose money when trading CFDs. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. The financial products offered by the company carry a high level of risk and can result in the loss of all your funds. You should never invest money that you cannot afford to lose.
(*Amount will be credited to account in case of successful investment)
Register a broker account
I personally use six different brokers for trading and would recommend all serious traders to open a few accounts with different brokers in order to build up a good variety of assets.
Start trading with four easy steps:
How Can I Start Trading to Earn Income?
Binary trading is easy. You can do it from anywhere, even at home; you do not need any previous experience. As soon as you have selected a broker or an exchange like Nadex, you can start trading immediately by registering, depositing money, and making your prediction.
Trading can be done any day and at any time of the day, on stocks, indices, currencies, and commodities. You can either choose to trade on the long-term options or short-term options.
Why Would I Invest in Them?
They provide very high returns for the investor, just like online poker for skillful players. You will know what the return is before making the investment. You can get returns for your investment as high as 91% or above, with the lowest being 65%. This provides a good opportunity to get high returns in as short a space of time as 60 seconds.
When trading, you do not own the assets. Instead, you simply predict the direction in which the asset will move in the market for a particular duration of time. The value of the asset may rise or fall and your returns will depend on the prediction you made.
The amount by which the asset’s value changes is not important since the returns are not affected by the size of the change in value. You can trade at any time; there are no extra charges or commissions.
Jenny, 43, Housewife
Amanda, 39, Sales Manager
John, 47, Binary Options Trader
Choosing the Right Broker
Your foray into options trading will be more successful if you choose the right trading platform or binary options broker. Making sure you have the right trading platform or broker involves reading reviews and doing research to make sure you’ve chosen a reliable one.
With 7brokers.com, this work is already done for you. A comprehensive list of the best brokers and trading platforms is available to you when trading with www.7brokers.com, along with helpful hints on the best way to choose the right platform for your needs.
Make Money Online with Binary Option Robot
The trading robot software has a very high win rate, about 83%, so using it for trading will greatly increase your odds of completing successful trades on a regular basis. When you trade using the robot, you do not need any previous knowledge of the platform or binary options trading.
Signal Services Help You to Earn More
Signals are extremely useful in trading and are an essential tool for anyone looking to trade binary options successfully. Whether you are an advanced trader or you’re just starting out, binary options signals give you the tools to make informed decisions before investing.
While no system of trading is foolproof, our signals services exhibit the highest win rates with an accuracy of 70% or more. Signals are extremely useful in situations where you cannot be advised of ongoing developments on the market and need information to make decisions on trading.
The software responsible for the signal has been used by investors for nearly a decade, and analyzes a variety of data from various sources in order to provide an informed signal software.
Are Binary Options a Scam?
Your risks and returns are known prior to your investment; this makes it relatively easy to get into the market without a large amount of investment required. Binary options trading has the potential to allow you to become financially independent and make money online, at the convenience of your home or wherever you wish.
What Can You Find from 7brokers.com?
Part of the appeal of trading them is their simple win or lose scenario on the trade and the fact you will know how much you risk and how much you stand to profit before you even place your trade. It sounds simple, but in reality where moving markets are concerned, it is anything but simple. That is why 7brokers.com is here to help.
7brokers.com is here to provide you with the most useful and important information regarding binary options and forex trading you will find online today. We seek to do this by providing you with very useful information that will significantly improve your trading knowledge. On here you will find information about the different types of trading strategies, comprehensive guides, fresh binary options articles and news from the markets.
How Will We Do It?
7brokers.com was founded by people with extensive experience and knowledge in international finance. Our main author at 7 Binary Options is John Miller.
By making the best use of our founders’ knowledge and skill sets, we aim to develop and consistently maintain 7brokers.com as the best informational binary options and forex trading website online.
What We Cover
Let’s take a look at all the areas of trading that we cover and how these will help you formulate your strategy and help lead you to making consistent profit on your trading:
Guide to Trading Tools
Binary options are typically categorized as a somewhat complex, exotic trade options, but in reality they are extremely simple to utilize and understand the way they work. 7brokers.com will give you an in depth look at the trading tools that are currently available and teach you how to use and apply them to make successful trading decisions.
Binary Options Strategies for Making Money Online
With that being said, you still need to learn the strategies that will help you consistently make profit on your trades.
7brokers.com is your informational source for information and explanations of all of the trading strategies. These will help you learn to predict the most essential requirement of trading, which direction an asset price will trend. If you can learn to make trades that correctly predict which direction an assets price will take, then you will consistently make profit on your trades.
Successful traders often have great success by just utilizing simple methods and strategies.
You can hardly be a successful trader if you don’t know where to go to place your trades. It is imperative that you are able to use more than one broker’s website and learn to use the different tools that each one has to help you make successful trades.
With over 400 trading platforms online, it would be a nearly impossible task for you to visit and review each one. No worries here because we have done a lot of the work for you. We feature updated reviews and information on many of the top binary options trading brokers that can be found online today.
7brokers.com has a comprehensive list of reviews of some of the best and most trusted Signal Providers you will find available online. By signing up with one of them, you will save a huge amount of time on researching and analyzing market data; this will allow you to focus solely on making smart trades that lead you to consistently making profit.
Binary Option Robot Reviews
7brokers.com will also provide you with an in depth analysis and reviews of the Binary Option Robot Software. Quite frankly, we were impressed by their ease of use and exceptionally unique offerings.
One of our main goals is to educate and inform you as much as possible on all the various aspects of binary options trading. There is an old saying that “knowledge is power” and it applies to trading as well. Trading knowledge is best used in an organized and specifically targeted way and at 7brokers.com we are here to help you with that.
Guide to Making Money with Forex Trading
To be successful at binary options trading you need to be very familiar with the aspects of Forex trading as well. We have reviewed the best Forex brokers online to make it easy to choose the best broker for your specific trading needs.
Make us a Consistent Part of Your Trading
We are constantly updating and improving our site because we want to be known as the best informational binary options website there is online today. So come back here often, with the help of 7brokers.com, we will guide you on your way to becoming the most informed and potentially successful trader that you can possibly be.
Start earning money now!
One of the best things about trading is that you can make small low risk investments. You can start trading in our recommended trading platforms in as low as $100, which you may double in a single transaction. Select your preferred trading broker from the top of the page, register, start trading and earning money.
A Brief History of Binary Options
Throughout time, regulations greatly improved thus increasing the parameter of options transactions. The Options Clearing Corporation (OCC) was then created as a safety net to oversee and ensure that investors would buy and sell their assets according to regulation.
The OCC had the authority to enforce bans in instances of due negligence. Binary options would eventually evolve from these standard procedures with the intent of creating a more feasible investment protocol with minimal complications.
Although premature binary options were still being conducted over-the-counter, the new market was limited to the elite and had very little liquidation and no strict regulations. In 2007 however, the OCC changed the guidelines to allow binary options to be bartered on major stock exchanges.
This was approved in 2008 by the US Securities and Exchange Commission (SEC) in order to legalize the classification of binary options as tradable contracts in foreign financial markets. In May of the same year, the American Stock Exchange became the first intercontinental exchange to publicly offer binary options. In June the CBOE followed their lead.
This allows for new binary options brokers to enter the arena thus boosting highly improved and advanced platforms which then enable their constituents to achieve more fruitful trades.
In 2010, critical changes to the odds, risks, and fixed rewards now associated with binary options would further promote their reputation. From then on, important brokers started implementing policies to ensure that this brand of trade would become more user-friendly so that investors would be able to trade options from the confines of their homes as well when out and about. In essence, the sheer genius and beauty of the world wide web made it easy for individuals to trade binary options anytime and from anywhere.
In present day, binary options are rapidly growing in popularity within the ever-changing investment industry. This is due to the many advantages of binary options in comparison with other, more traditional, investment options. Binary options offer a pre-ordained disbursement and damage format in addition to presenting investors with the convenience of creating vast trading positions in primitive assets using a limited cash deposit. Trading preferences could not be any simpler as users only have to decide in which path to maneuver their fundamental equity (ie: up or down).
Simply by trading binary options, traders have vastly improved the possibility of making both invaluable and dependable trades. They can steadily increase their profits while concurrently minimising their risk of exposure as they invest their time in studying and mastering the limitless array of binary option trading scenarios that are now available at their fingertips. With so many options, you can certainly appreciate the sudden evolution of binary options from complete obscurity to a sudden rise in fame.
Binary Options Trading Regulations
In light of recent financial crises and scandals that have erupted over the last decade in the U.S. (known as the most strictly regulated market worldwide), investors can now can be accused to being “too careful.” Regardless, many of the current misconceptions about binary options are largely due to a lack of understanding exactly how the binary option market operates.
The Regulatory Framework Surrounding Binary Options Trading
In the U.K. corporate profits are taxed at 24% and this rate is even higher in the U.S., where companies can be taxed as high as 35%. However, taxes are only 10% in Cyprus. In light of this, it makes complete sense that many brokers choose to base their businesses in Cyprus. Many of you have probably noted that most binary options brokers refuse to accept clients from the American market as they do not wish to be taxed by the U.S. authorities.
There are many that would contend that the financial regulatory standards in countries like Germany and the UK are higher than those of Cyprus. This stems from the fact that they do not have a clear grasp on how the Eurozone market even works.
The European Union (EU) parliament has issued the Markets in Financial Instruments Directive (MiFID) in order to harmonise the regulatory framework of the financial market within the Eurozone. The MiFID was designed to increase consumer protection as well as to integrate the various financial markets into a single market. It should be duly noted that Cyprus is in full compliance of the MiFID, under the Investment Services and Activities and Regulated Markets Law 144(I) of 2007.
Legal Protection Security
There reason there is very little legislation in existence to cover binary trading options is due to the fact that the OTC markets have historically been self-regulated.
Only recently has the framework to regulate binary options been constructed. As a matter of fact, Cyprus is one of the first Eurozone members to in fact have a legal standard for binary options. With this legal definition, the regulatory authorities such as the Cyprus Securities and Exchange Commission (CySEC) is now empowered to act under the financial regulatory framework.
It might shock investors to know that binary options are in fact, not categorized as “financial options” under the U.K’s Financial Services Act, but instead they are regulated under the U.K. Gaming Commission where binary option trades are actually classified as “bets.” In the U.K. gambling debts are known as “debts of honor” and are not enforceable in the court system.
You can imagine how difficult it would be to sue a U.K. based binary options broker for a “debt of honor.” when you have no legal ground on which to stand. Based on this premise, Cyprus is the best place for binary trading options in terms of legal protection.
Beginners’ Guide on the Basics of Trading Binary Options
For the purpose of reference, you may need to bookmark this page as it will prove to be beneficial throughout your binary options trading career. Here is a list of what we are going to cover throughout the page:
- Understanding Binary Options
- The various types of binary options trades
- The basic binary options trading strategies
- The tools you will need while trading binary options
- Some of the things that you need to bear in mind while trading binary options
- Examples of trades in the financial market
- How to get started
Understanding Binary Options Trading
What exactly are binary options? This is a question that has been lingering in the minds of many beginners in the binary options market. Well, this is a form of investment in the financial market, whereby the trader places a trade (a contract) that has a fixed reward as well as a fixed risk.
These trades are referred to as binary options because they involve either one or the other choice. Similarly, these trades entail getting one or the other payout option, once the contract has expired. Some of the trading options in this industry include the up or down options and the touch or no/touch options. In computer language, the term binary refers to either 1 or 0.
In actual sense of the trade, you are actually betting on whether the price of the chosen asset will go up or down within a certain period. While opening a position (contract) on your preferred binary options trading platform, you will be shown the expected payout on the position you would like to open beforehand.
This is a percentage of profit that you can make if your prediction is right at the expiry of the contract. For most binary options brokers, the payout amount ranges between 70 and 85 percent of the invested money in the position. Similarly, if your prediction on the open position is wrong at the time of contract expiry, you will have lost the bet and consequentially the money you staked on the trade.
Suppose you would like to stake $100 on an asset whose current price is “$1612.75 and the expected payout is indicated as 80 percent. You need to stake the $100 on this position and set your preferred expiry period, to say one hour. If at the end of the one hour (the expiry period for your contract) the price of the asset goes up and you had predicted that it would go up, you will have won the position. In this case, you will get the amount you staked on the position, $100, and an additional 80 percent of the staked amount.
In total, you will get $180 from this trade. However, traders need to note that the magnitude by which the price of the commodity move will not determine the payout amount. If you had predicted that the price of the asset will go up and drops instead of going up, by the time the contract expires, you will have lost the trade and consequentially the money you staked on the position.
How to Start Trading with IQ Option
The Main Components of This Trade
All the contracts/trades that you will be placing in the binary options market will always have three key components, namely:
- The strike price
- The expiry time
- The Payout percentage
The strike price in this case is the price of the commodity you have chosen to trade in at the time you open the trade. In the above mentioned example, the strike price of the trade is $1612.75. This is the price of the asset you are trading in at the time you open the trade. It is the price value that will determine whether you have won or lost the position.
The expiry time is the period that your placed contract is expected to expire. It is the period between the time you place the trade and the time it expire. For most brokers in the industry, the trader is allowed to choose his or her preferred expiry period while opening a trade. The expiry period could be as short as 60 seconds or as long as days or even months.
There are brokers in the industry that return a certain percentage of the staked money, if the trader loses the trade. This amount could be as much as 10 percent of the invested money, but is dependent on the trade and the binary options trading platform that you are using.
The Various Types of Binary Options Trades
Currently, there are various types of binary options that traders may trade on their preferred binary options trading platforms. The simplest of all the binary options trades is the Up/down option.
The Basic Binary Options Trading Strategies
We have come up with a comprehensive list of the trading strategies that you will need to succeed in this industry as a beginner.
The Tools You Will Need While Trading Binary Options
Some of the Things That You Need To Bear in Mind While Trading
If you have been reading this page, you must have learned the basics of trading binary options. Before venturing into binary options trading, there are various things that you have to bear in mind, some of which include:
- There brokers with a minimum investment amount of as low as $10
- Trader’s risk is limited to the amount he or she has staked in a trade
- You only lose the amount you had staked in a position, if you lose
- You do not own the asset you have used to open a trade; instead you simply bet on the price movements of the price.
- Trading binary options is comparatively risky. Therefore, invest what you can afford to lose.
- There are numerous trading options in the industry, the commonest and easiest of them being the Up / Down trading option.
- To continually make money while trading in binary options, you need to win most of the traders you place in the market.
- Basically, trading in binary options is designed to be easy to carry out, even for the beginners in the market.
In all cases, the payout you will get after winning a certain trade is stated beforehand. Since the risk you incur while trading binary options is limited to the amount of money you put at stake, you should only risk what you can afford to lose in any position.
The Up/Down Trading Option
Most binary options brokers will feature a graph on each asset listed on their platform. In the case of Gold, the graph provided will have a line to indicate the movement of gold prices over time. From the provided graph, you can see how the price of Gold has been changing over time. As such, you can decide on the probable direction that the price will move in the near future. It is on this basis that you make your prediction on whether the price of Gold will rise or fall in the near future.
If you believe that Gold will appreciate in value in the near future, you should click on the ‘Call’ button to open a trade. You should then indicate the amount you would like to stake in the trade and your preferred expiry period from the dropdown menu provided by the broker and then place the trade. If you believe that the price will drop in the near future, you should click on the ‘Put’ and indicate the amount you would like to stake as well as your preferred expiry period before placing the trade.
Since the choices are only two, there are only to results, you either win or lose the trade. This type of binary options trading options is very easy for the beginners in this market to implement.
As such, it is one of the easiest trading options that new traders should consider trying out. Since the payout on any position is indicated on the platform, even before the trade has opened a position, it should be very easy for beginners in the industry to invest in the financial markets using this trading option.
With the Up/Down binary options trading, everything is designed to be very easy. As such, this is the same procedure that you need to apply, regardless of the underlying asset you would like to open a position on or the binary options trading platform you are using to invest in the financial market. Additionally, you also have the freedom and flexibility to choose whichever asset you would like to make a prediction on, depending on the variety or assets offered by you preferred binary options broker.
It is at the expiry time that the broker determines whether you have won or lost the trade. This is done by comparing the price of the chosen asset at the time of expiry of the contract to the strike price of the asset. If you had chosen ‘Call’ and the price of the asset is higher than the strike price, at the end of the contract period, you win the trade.
Examples of Trades in the Financial Market
Example 1: Using the Up/Down option to trade Google Stock
Based on such information, you stake $1000 on the Google stock asset and set the expiry time to correspond to sometime after 4.00pm Est. For the purpose of this example, we are going to assume that you broker is offering a payout of 70 percent on this asset if you win and a rebate of 10 percent, if you lose.
If after the contract period has expired the Google stock asset has appreciated to a value that is greater than $672.1.00 as you had predicted, you will earn $1700. This includes the $1000 you had staked in the trade and the 70 percent payout, which translates to $700. However, if the price of Google stock goes against your prediction, you will get a 10 percent rebate from the broker. As such, you will get $100, which is 10 percent of the staked amount. In this case, you will lose $900.
In this case, the $672.10 price of the Google stock asset is referred to as the strike price. Now that you had predicted that the price will rise, this is a ‘call’ trade. The $700 that you earned above the invested amount is the payoff; hence your profit for this trade. In some cases, some binary options brokers will offer a rebate amount. This is the amount that the broker will reimburse to you if you lose the trade. In this example, the rebate is set at 10 percent; hence is $100. However, you need to understand that not all binary options brokers offer a rebate for their traders.
As opposed to this example, you may also decide to bet in the opposite direction, if you believe that the price of the Google stock will drop in the near future. In this case, you will have to place a ‘Put’ trade, but the payout will remain to be the same if your prediction is right. Similarly, the loss will also be the same if your prediction is wrong.
Example 2: Using Touch Trade Options to Trade Gold prices
For the purpose of this example, we are going to assume that the payout offered by the broker is 70 percent if the trader wins the trade and a rebate of 15 percent if the trader loses the trade.
If by the expiry period the price has touched the touch price indicated by the trader, the trader will have won the trade. In this case, he or she will get $170, which includes the $100 staked in the positions and the payout amount, which is $70. If the price of Gold does not hit the touch price, the trader will have lost the trade. As such, he or she will only get the rebate amount, which is $15 in this case. As a result, the trader will lose $85.
With the touch trading options, the trader is required to indicate the touch price as well as his or her preferred expiry period before placing the trade. Suppose the trader selects $1617.40 as the touch price and 4.00pm as the expiry period. After placing the trade, bad news regarding the value of the dollar breaks out. This will drive inflation fears and force oil and gold prices to rise. As such, the price of gold will hit the touch price. Although not all brokers in the industry offer the touch trading option, they are the second most popular binary options trading option.
A General Binary Options Trading Example
Trading in the majority of assets, such as oil and gold, provided by your preferred broker should be easy and fast. The following general trading procedure should be applied:
- To begin with, you need to select an underlying asset to trade in, such as a currency pair, gold or oil.
- You then need to select your preferred expiry period from the options provided by your broker; this could be 60 seconds, 1 hour, a day or a week.
- Indicate the amount of money you would like to invest in the position, for instance, you may choose to stake $10.
- Predict the direction you think the price will move towards; up or down. This is done by selecting the up or the down option.
- Prior to submitting your request, you should check the payouts for the position if you win or lose the trade.
- Now click on the apply button to place the trade.
While trading binary options, it is not possible to lose more money than you have staked in the open position(s). Again, it is not possible to make more profit than the indicated payout percentage on any trade you have placed. For most brokers, the payouts offered to traders after winning a position ranges between 70 and 85 percent. Although some brokers do not offer rebates, there are those brokers that offer rebates of up to 15 percent of the staked amount.
What You Have to Remember While Investing in Binary Options
- As opposed to Forex trading, traders in binary options are not restricted by leveraging
- The profit or lose you will make from any trade is known before hand and you cannot lose more than what you have invested in a trade.
- The magnitude by which the price has moved will not affect the much profit or loss you make while trading binary options.
- The amount of payout on any trade is clearly indicated
- The majority of brokers we have listed will offer traders an early closure option. This feature allows traders on their platforms to close the trade at any time, before the expiry time, when they find the price appealing. This allows traders to make an early exist from any trade and to minimise losses.
- All the brokers we have listed offer a payout of between 70 and 85 percent on various assets.
- Trading binary options is comparatively easy, regardless of your experience in the industry of the broker you are using.
- Trading binary options is not associated with any hidden costs and fees
- With this form of trade, you need not to be an expert to make a profit
- The trade entails ‘one or the other’ option, hence is referred to as binary
- Opening a trade on an asset does not mean that you buy it; you are just betting on the price movements of the said asset.
How to Get Started
Since this page is the basic overview of investing in financial market through binary options and making money online, you should navigate to the page that focuses on how to invest in binary options. For more information on how to start trading in binary options, the following tutorial can be of great help.
Binary Options Trading for Beginners
To achieve this, you may need to study the various tips and methodologies offered by the experts in the industry. Additionally, you may also use the risk-free, demo accounts offered by some of the reputable and legitimate online brokers to fine tune your skills in trading binary options.
To succeed in making money by trading binary options, you will also need to master how to analyse the market and read graphs and charts offered by your broker. With these in mind, trading binary options should be easy enough for beginners to continually make a profit.
IQ Option: Trading Window Adjustment
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References and Further Reading:
1. Rethinking risk management (RM Stulz – Journal of applied corporate finance, 1996)
2. One-touch double barrier binary option values (CH Hui – Applied Financial Economics, 1996)
3. Mathematical modeling and methods of option pricing (L Jiang, C Li – 2005)
4. Binary option pricing using fuzzy numbers (A Thavaneswaran, SS Appadoo, J Frank – Applied Mathematics Letters, 2013)
5. Binary options: fixed odds financial bets (H Raw – 2011)
6. Option Trading, Price Discovery, and Earnings News Dissemination* (KI Amin, C Lee – Contemporary Accounting Research, 1997)
7. Option trading and individual investor performance (R Bauer, M Cosemans, P Eichholtz – Journal of banking & finance, 2009)
8. Option trading and the relation between price and earnings: A cross-sectional analysis (LCJ Ho – Accounting Review, 1993)