Seasoned investors know that one of the most important things is the risk management applied on every single trade—especially since the markets only seem to be getting more and more dangerous. No matter what happens while your binary options trade is occurring, the trader cannot lose more than was invested in the transaction. However, binary options have garnered some blowback as being similar to gambling, attracting fraud, scams, and other rigged conditions.

This article will explain how binary options work, but also how to find legitimate trading avenues while avoiding unreliable and fraudulent brokers. We have already hinted at some of the core tenets of binary options in the introduction, but more specificity is still required.

Binary options are based upon a simple yes or no question regarding an underlying asset, usually, posed like this: will this particular market be above this price at this foreseeable time in the future? Stated another way: is the underlying asset going to be above a certain price at a particular date and time.

There are many merits to a good binary options strategy , but asking yourself the correct questions can help. Depending on whether the trader was able to predict correctly, they will receive either one or two stark payoff options: a fixed amount or nothing at all. This simplicity makes binary options one of the easiest financial instruments to trade. However, while the premise is straightforward, there are several terms a trader must get acquainted with in order to successfully participate in options trading.

The strike price is the predetermined price at which the option will execute. This is the targeted price of the trader for the underlying asset. It is the agreed-upon price at which the option holder might buy or sell the asset when it expires. The current price is the price that the underlying asset is currently available in the market.

While this is self-explanatory, it requires emphasis because the current price and the strike price happen to be the two most important factors in determining the payoff for the binary option contract. The underlying asset is the security whose price the binary option contract is based on.

There is a certain preset date and time allotted after which the contract will expire. This is known as the expiration or time to expiry of the binary option contract.

options tend to be more flexible with the expiration date, giving traders the freedom to exit the trade at any point in time before it expires. In Europe, however, traders are restricted to only the expiration time as the only time they buy or sell the option. Expiration price is the price the underlying asset attains when the binary option executes.

The position a trader takes on a binary option depends on whether they are buying or selling the contract. But the trader is selling the binary option, they profit when the current price of the asset is below the strike price. When there is a higher signal that the market thinks it is more likely the contract will close in the money ITM.

Conversely, a lower one means it is likely to close out of the money OTM. As we stated earlier, binary options present a trader with only a single position to take. Like a betting game, you have to decide whether the price of a specific underlying asset will appreciate or not before a certain period of time.

Since binary options have been equated with flipping a coin or betting on a game, an illustration of how it works with a simple game illustration seems appropriate. On the day of the coin flip, participants are invited in the morning to place bets to guess whether the coin will turn up heads or tails when it is eventually flipped. Now, the participants are allowed to place as many bets as they want leading up to the time before the coin is flipped at pm.

Conversely, nothing is paid for every bet that got the outcome wrong. Apart from some minor details, this is essentially how binary options work. Now, there are two sides to the binary options transaction. The traders who buy the binary option are taking an affirmative position, betting that yes , the underlying asset will equal or rise above a given price the strike price by a particular time.

On the opposite side of the equation, the traders who sell a binary option are taking the contrary position: they are staking the claim that no , the price of the same underlying asset will fall below the strike price instead by the time the given period has expired. The time duration before a binary option can expire varies greatly, with some turnarounds being as quick as 60 seconds.

However, if they predicted wrongly, the binary contract is considered to be out of the money OTM and pays nothing. There are other facets of how binary options, but instead of explaining technical jargon, another illustration should suffice:. Binary options are based on posing questions about the fluctuation of a security. The profit a trader makes on a binary contract depends on the position they take.

Traders who buy a binary contract are taking an affirmative position that the price of the underlying asset will meet or rise above the strike price. Conversely, traders who sell contracts are taking the position that the underlying asset will instead be below the strike price. If the buyer is right, and the current price of crude oil is greater or equal to the strike price at p. The difference between binary and other options otherwise known as vanilla options is the payoff structure when the binary option expires.

However, with traditional, vanilla options, the payout is obtained by subtracting the current price of the underlying asset at expiration from the strike price of the option. Halal Brokers — Are you part of the growing community of Muslim traders? These Islamic trading accounts are offered to clients who wish to do halal trading, which allows them to invest without having to separate their investment activity from their religious tenets. Brokers who accept Bitcoin — More and more binary options brokers accept Bitcoin and cryptocurrencies as a means of deposit and withdrawal and also allow speculation on the price of this new type of asset via binary options.

Best Marijuana Stock Broker: Want to Invest in the Growing Legal Marijuana Market? here, You will find a list of the best brokers to invest in US and Canadian marijuana stocks with binary options. These options are the classic binary options. To trade, you just have to choose an underlying asset and determine if its value will be above or below the entry price at expiration time.

This is a binary options contract in which the trader predicts whether the asset to be traded will stay within a defined range of prices IN , or trade outside this define price range OUT before the trade expires.

A one touch option is if the underlying market will go through a set price before the expiry of the trade. If the market does go through this set price it will be settled at , of not the bet will be settled at 0. The Ladder option is decided on whether the market will end the period of the trade above a certain level. The payout in these trades are already predetermined, which is always a fixed amount and can be seen before you trade on any particular platform or broker website.

You therefore know beforehand the risk as well as the profits that you would make at the end of the expiration of the option. All you have to do is set whether or not you believe the price will go up or down from where it currently is by the end of the expiration of the option which may be anywhere from 15 minutes to 1 hour. The rewards gained from trading in binary options are much higher than the other trading options.

This is surely a very high return on an investment contract that would probably be just a 5 minute or an hour old contract. The returns and turnover that an investor gains with binary options is much higher as compared to other interesting options. Moreover, traders find it extremely interesting trading in binary options because of its short contract length, and high returns. Since the investor does not buy the asset but the option, the profits in binary options open up to a larger audience who would have otherwise only invested in stocks that have high values and prices.

Also since binary options are linked to change in the direction of trade and not the difference in price, investors can make huge profits with little movements in the market. Binary option contracts are unique and have some characteristics that sets them apart from other financial instruments. Traders can trade assets in different asset classes, and the traders always have an expiry date or time.

The trader is also put in a position where he knows exactly what the trade will cost him, and what he will gain or lose depending on the outcome of the trade.

There are many reasons why you should trade binary options. Binary options were licensed for the retail trading market the same year that the conventional markets went haywire after the collapse of the subprime mortgage industry in the US.

In the traditional financial markets, there are a lot of factors that traders must contend with. Leverage, margin, slippages, poor internet network and unscrupulous practices by some brokers can affect the trade outcomes, making forex and commodity trading some of the riskiest trading ventures to get into. Binary options trading is devoid of some of these factors. There are no re-quotes, no slippages and no leverage or margin requirements to content with.

There are also no margin calls. Some binary options brokers offer up to 90 assets. That is 90 different financial assets that can present an opportunity to make money at any given point in time. If the market saying about a bull market being in existence somewhere, you surely have better chances of finding such opportunities in the binary options market. YOU DO NOT NEED AN ARM AND A LEG TO TRADE BINARY OPTIONS.

Securities from several asset classes are traded in the binary options market. The asset classes are:. Currencies are the commonest assets traded on the binary options market.

They are traded on a hour basis to reflect their hour operational status. A wide range of currencies which include the major currency pairs and the Yen crosses are traded. There are others but these are the commonest you will see on most binary options platforms. Generally, stock indices are only open for certain hours of the day when the parent indexes are open for business.

Commodities are usually not well represented in the binary options market. But it is almost a constant for gold, silver and crude oil to be listed.

Any other commodities added is a bonus for the trader. Commodities can only be traded when the parent markets traded on the floor of the Chicago Board of Trade CBOT are open for business. Stocks should actually be number 2 on this list because so many stocks are traded. The exact list of stocks differs from broker to broker, but the common technology stocks of Apple, Microsoft, Google and FaceBook are familiar sights here.

Trading is not a simple game. On weekdays, many of you are busy with work and other chores. The off days will give you extra time so that you can pay more attention to your binary platform.

Even though there are many advantages when you trade on weekends, it has some of its limitations too. On the last days of the week, the assets are comparatively less because the stocks and the indices can be traded only during the activation of their stock exchange.

When the Tokyo stock market timings are over, you cannot trade these assets. Only the middle eastern stock market timing matches the weekend trade timings. But if you are not into those markets, the number of assets is very few for you. However, this is not a dead-end. You can still earn some profit by using technical analysis on the price movements. The difference in stock market timings is both boon and a bane. On the one hand, you have 24 hours of trading time, but on the other, these differences might not let you trade your desired assets.

For example, the middle eastern stocks exchange timings are not easy to be adjusted by the UK or US trader because the DFM is 8 hours ahead of New York Exchange. So, either you have to leave that asset or wake up late at night to execute your trades. Some brokerage firms take their days off on weekends because not many traders want to use the platform for technical analysis. To trade on weekends, choose a broker who supports weekend transactions.

You can also contact customer support for more information regarding the trade timings. Due to closing hours, the market actions become flat, and the trading volume drops, giving you a low responsive chart and not a healthy market.

However, these restrictions and be disabled with few alterations by finding an idea brokerage firm and using other available assets. The binary options are a versatile market with numerous assets available to trade in. but all these assets are not present all the time.

This is because different places have different time zones. In the binary market, forex and stocks are heavily traded, especially during the overlapping of major stock market time. The US stocks are widely popular, and they are opened usually between pm GMT to 8 pm GMT or am EST to 4 pm EST.

the activities face a drop between 4 pm GMT and 5 pm GMT. On the weekdays, European stocks like Xetra Dax and FTSE are traded from 11 am to pm GMT. These are the standard times when the binary market opens and closes. But the trading time highly depends on the binary options trading platform you are using. You can always contact customer support to know the trading times for your desired assets. Due to low activities on weekends, the market is not that responsive.

Hence, planning and strategizing the weekend trading on binary is the best option to gain profit. Gap trading means price jumps and is used in the forex market. This trading strategy is best for the weekend as you can trade the gaps in the currencies. The price jumps are caused when some force moves the market and triggers the price to go from one level to another whilst skipping some price levels in between.

There are many reasons for the occurrence of price gaps like, when the volume is high, they can be created once the new movements are about to start. Closing gaps are witnessed mostly on weekends because usually, these days are taken off by other traders, and the new movements are highly implausible. And not a large number of traders are required to form the closing gaps. When those traders invest in the same direction, other traders believe it to be a mistake, start investing in another direction.

For the upward gap, they will sell their assets, causing a fall in the market, and eventually, the gap will close. In the downward gap, the investors will start purchasing assets, causing a rise in the market again, which will lead to a close in gaps. If there is a low volume market on the weekends, brace yourself , as the chances of closing the gaps are high. If you believe the gap is definitely going to close, you can then easily perform your trades because: First, you are aware of the price target, and second, the expiration time.

With this data, only you can trade the high and low types of currencies and even the commodities. Put forward by John Bollinger; these are statistical charts that depict the volatility and the price of an asset over a period of time. This signals you a price channel that the financial market is improbable to set aside.

Bollinger bands are said to be high in prediction, especially on the weekends. There are three lines:. The Bollinger bands are extremely helpful during weekends, and using them properly will give you maximum benefits.

The reason behind this is that with more traders and events happening in the financial industry, the movements will increase, leading to variations in the Bollinger band s. But if the market has low volume, it will become stable, and the chances of any extensive action are less likely to happen. This makes the bands more precise and beneficial. First, you have to open your trading platform and choose the desired asset.

Then open the price chart and use the Bollinger Bands. Secondly, let the market reach the lines of the Bollinger band. And at last, make your forecast about the market turn around. These are some of the standard approaches which can be used. However, you can formulate your own tactics also.

There are many different ways to generate prospects on the weekends. The binary trading is easy and effective not only on the weekdays but on the weekends as well. With the right broker, you can trade in currencies, commodities, and many other financial derivatives. During the weekdays, when the major stock market timings overlap, you get more movements. However, many traders do not trade during the days off and take their leave.

Home » The 5 best Binary Options Strategies for beginners There are only 24 hours in a day, and with long job working hours, it is challenging to make time for trading. But there is a way to make a profit on your money in a short period, as short as 60 seconds. Binary options trading is an expeditious way to make a good profit on your money without having to sit and check trading charts the whole day.

We bring forth for you some best binary option trading strategies to shrink loss and jack up profit on your invested money in seconds. However, winning in binary options trading cannot be consistently achieved through guesswork; you need a good binary options strategy and practice to master this prediction game.

Before stepping onto the field, you must know two basic parameters of binary option trading strategies — the trade amount and the signal. Let us understand these two parameters in detail:. A signal is basically a movement in the market or an indication of whether the prices will rise or fall.

It is more like an instinct after observing the trend going on around you. Signal helps you in identifying the next step more. Clearly, it helps you in predicting whether the prices will go high or fall. Trading is related to business and the market. So, to be good at trading, you must have a decent knowledge of the share or stock market, industry news, and information provided to the public by the CEO.

This is a method where you keep the market news aside and look closely at the trading graph. It is a more centralized approach. You carefully read the graph and analyze events of the past to predict the future.

It is complicated but more reliable. Once your brain gets used to the trading pattern, it will be easy to understand the trend of prices going up or down. It is crucial to decide the amount of money you will trade. Being impulsive or mismanagement of money will only result in loss.

Develop a strategy for managing your money to reduce risks via Binary Options. Here are the two most used and reliable money management strategies — approach based on percentage and martingale. In this method, you decide what percentage of your capital you want to trade.

This is a secure way of managing your money and scaling down potential risks. But it is good to be familiar with all possible approaches. Here you double the trading amount after a loss to recover the previous loss and gain profit simultaneously. Read more about the Binary Options martingale strategy.

One wrong prediction can make you lose a handsome amount of money. Therefore, it is essential to establish certain binary strategies to manage risk and money. Mentioned below are some top trading strategies:. This is one of the best binary trading strategies for beginners. This strategy can be applied everywhere regardless of trading amount or market. First, you must study the trading graph and pattern of lines. You must have observed that they usually go in a zigzag manner.

This might seem like an easy job, but it requires practice. First, it is better to get familiar with trading graphs and their trend on demo trading apps before trading your money in a real-time market.

To apply this strategy, you must study the chart and see the movement of lines. If the line is going up, the prices are increasing and vice-versa. If the line is horizontally straight, then find some other option to trade your money.

It is essential to have practical knowledge, practice on the demo trading sites and get a clear-cut idea. The use of this strategy must be done in combination with the news strategy. First, you must know the nature of the market you are trading in.

Then, after knowing about the ongoing trend, you can start using this strategy. This is a strong strategy that increases the chances of right predictions and winning. The rainbow strategy is a pattern that includes the usage of various averages in actions with varied periods. Each of these periods is identified with a different color. The moving averages are used to recognize the price changes. Moving averages with many periods react slowly to price changes and moving averages with few periods react quickly.

If you observe a strong movement in the asset chart, the moving averages are most likely to move from a slow to a fast direction in real-time trends. The average that moves the fastest will be placed closest to the asset price, the second closest will be the second fastest, and the third closest to the price will be the third-fastest moving average, and so on. When you observe that the numerous moving averages are placed in the pattern as discussed above, you can say a durable movement in price in a determined direction.

Therefore, when you encounter such a pattern and trend, trade your money right away as this is a favorable time. You can choose how many averages you would like to use. Most good traders use three moving averages. If the moving averages are positioned so that the shortest line is above the medium moving average and the longest is below the medium line or moving average.

You must trade on the asset prices falling. It depends on you to determine the number of moving averages in a period. Therefore, it is recommended to use a duplex of periods you used previously in each moving average. This change in the number of periods used in different moving averages will give you reliable ratios, which will, in turn, provide you with precise signals.

Steve Nison introduced the binary candlestick formation strategy in one of his books in the year A good trader must know how to read asset charts. Once you understand its patterns and movements, it will be easy for you to predict the next move of the asset in the charts. For example, there is a pattern formation in the asset charts called the candlestick formation.

The patterns formed by the lines going up and down appear like candlesticks. The top line is the highest price called the mountain, and the bottom line is the lowest, called a valley. There is no one specific formation in this strategy, but there are a few that you must learn to identify and read to trade better. To apply this strategy, you must observe the chart and pattern of prices for a while. You will notice some repeated pattern formation.

Then you can use your knowledge and experience to predict whether the line will go up or fall. Yes, this strategy works that quickly. It is fast and effective. Being a trader of binary options trading, you must be aware that the trading market is not random in the short term.

One more benefit of this strategy is that it saves you a good amount of time. If you play in 5 minutes, you can make more trades per day. However, such short-term binary option trading strategies are required risk management and technical analysis. So, the money flow index strategy is time-saving but also includes lots of risks. To master this strategy and make money every 5 minutes with Binary Options , you must learn technical analysis.

This will help you in understanding whether the other traders are selling or buying. Once you understand this, it will be effortless to use the MFI strategy with the money flow index indicator. MFI index indicator — the indicator tells you the ratio of the asset sold to the number of the asset purchased.

The value is generally between Now that you understand the relationship between the ratio of the MFI indicator and the traders planning on buying or selling the asset, it will be easy for you to choose one option and secure your money. In addition, you can easily estimate the asset price movement after understanding the demand and the supply. In simpler words, if the number of traders buying an asset is much greater than the number of traders selling the same asset.

There will be fewer traders to force the price of assets upwards. As a result, the demand and price will both go down. In the same way, if the number of traders selling an asset is greater than the number of traders buying it, the supply will diminish, and prices will increase. Mentioned below are the ways you can use the MFL index for your next accurate prediction:.

This strategy works best for a short period. Traders usually use this strategy to play 5 minutes bets. In the long run, it is tough to predict the process through this strategy as it goes to extremes. So, avoid using this strategy for your long-term trades. This is a popular strategy among binary options traders. As the name suggests, this strategy uses the movement of asset prices in the last twenty days.

Then use this data to predict the next hit; it might be a high or low. This strategy provides you with two signals:. This strategy can be used easily by beginners. However, the outcome of the turtle strategy has been mixed.

So, you have to predict the price movement. When considering the potential hold for fixed pay-out binary options, at this time, it appears that the first regulated, retail-focused binary options market in some global countries will take root. Save my name, email, and website in this browser for the next time I comment. This binary trading option is quite innovative because here, the broker sets different limits. Any other commodities added is a bonus for the trader. The percentage-based approach is the best money management strategy for binary options traders. Being impulsive or mismanagement of money will only result in loss.

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