How to Evaluate Binary Options Trade Things To Mind

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  • BINOMO
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A Guide to Trading Binary Options in the U.S.

Binary options are financial options that come with one of two payoff options: a fixed amount or nothing at all. That’s why they’re called binary options—because there is no other settlement possible. The premise behind a binary option is a simple yes or no proposition: Will an underlying asset be above a certain price at a certain time?

Traders place trades based on whether they believe the answer is yes or no, making it one of the simplest financial assets to trade. This simplicity has resulted in broad appeal among traders and newcomers to the financial markets. As simple as it may seem, traders should fully understand how binary options work, what markets and time frames they can trade with binary options, advantages, and disadvantages of these products, and which companies are legally authorized to provide binary options to U.S. residents.

Binary options traded outside the U.S. are typically structured differently than binaries available on U.S. exchanges. When considering speculating or hedging, binary options are an alternative—but only if the trader fully understands the two potential outcomes of these exotic options.

Now that you know some of the basics, read on to find out more about binary options, how they operate, and how you can trade them in the United States.

U.S. Binary Options Explained

Binary options provide a way to trade markets with capped risk and capped profit potential, based on a yes or no proposition.

Let’s take the following question as an example: Will the price of gold be above $1,250 at 1:30 p.m. today?

If you believe it will be, you buy the binary option. If you think gold will be below $1,250 at 1:30 p.m., then you sell this binary option. The price of a binary option is always between $0 and $100, and just like other financial markets, there is a bid and ask price.

The above binary may be trading at $42.50 (bid) and $44.50 (offer) at 1 p.m. If you buy the binary option right then, you will pay $44.50. If you decide to sell right then, you’ll sell at $42.50.

Let’s assume you decide to buy at $44.50. If at 1:30 p.m. the price of gold is above $1,250, your option expires and it becomes worth $100. You make a profit of $100—$44.50 = $55.50 (minus fees). This is called being in the money. But if the price of gold is below $1,250 at 1:30 p.m., the option expires at $0. Therefore you lose the $44.50 invested. This called out of the money.

The bid and offer fluctuate until the option expires. You can close your position at any time before expiry to lock in a profit or a reduce a loss, compared to letting it expire out of the money.

A Zero-Sum Game

Eventually, every option settles at $100 or $0—$100 if the binary option proposition is true and $0 if it turns out to be false. Thus, each binary option has a total value potential of $100, and it is a zero-sum game—what you make, someone else loses, and what you lose, someone else makes.

Each trader must put up the capital for their side of the trade. In the examples above, you purchased an option at $44.50, and someone sold you that option. Your maximum risk is $44.50 if the option settles at $0, and so the trade costs you $44.50. The person who sold to you has a maximum risk of $55.50 if the option settles at $100—$100 – $44.50 = $55.50.

Best Binary Options Brokers 2020:
  • BINARIUM
    BINARIUM

    Top Broker!
    Best Choice For Beginners!
    Free Trading Education!
    Free Demo Account!
    Big Sign-up Bonus!

  • BINOMO
    BINOMO

    Perfect For Experienced Traders!

A trader may purchase multiple contracts if desired. Here’s another example:

  • NASDAQ US Tech 100 index > $3,784 (11 a.m.).

The current bid and offer are $74.00 and $80.00, respectively. If you think the index will be above $3,784 at 11 a.m., you buy the binary option at $80, or place a bid at a lower price and hope someone sells to you at that price. If you think the index will be below $3,784 at that time, you sell at $74.00, or place an offer above that price and hope someone buys it from you.

You decide to sell at $74.00, believing the index is going to fall below $3,784 (called the strike price) by 11 a.m. And if you really like the trade, you can sell (or buy) multiple contracts.

Figure 1 shows a trade to sell five contracts (size) at $74.00. The Nadex platform automatically calculates your maximum loss and gain when you create an order, called a ticket.

Nadex Trade Ticket with Max Profit and Max Loss (Figure 1)

Can A Beginner Make Money With Binary Options?

But wait! First we have to see if binary option trading is legal in your country.

Binary Options Trading in your Country

Depending on your country, here are the brokers available to you in April, 2020:

Country Binary Options Available? Broker Info Best Broker
NO Trade stocks, indices, currencies. eToro (visit site)
YES Regulated US Binary Broker Nadex (visit site)
YES Regulated AU Binary Broker HighLow (visit site)
NO Trade stocks, indices, currencies. n/a
Mostly YES Binary Broker for non-EU/US/AU/CA traders IQ Option (visit site)

*Other countries: Binary options is still available to most non-EU/US/AU/CA traders however there may be some exceptions.

  • EU Traders are banned from binary options trading. The best alternative is eToro.
  • US Traders should go to our US Welcome Brokers page.
  • Australian Traders have a great choice available: Highlow.
  • All other traders (if you are not from the US, EU and AU) can sign up with IQ Option.

Beginners think that all a trader needs to do is go on one hot streak!

New traders often say to themselves: “just ten wins in a row and all of a sudden I will be a new trading mogul”. People looking for quick money think, that they can quit while they are ahead on a hot streak and go home richer than they could possibly imagine.

The truth is that you need a strategy and discipline to make successful trades on the long term. You should start by picking a legit broker first.

If you are just starting out with trading, then this is the perfect guide for you to start making money with binary options trading.

Here is our #1 Rated Broker

IQ Option – Best Trading Platform

IQ Option is a trading platfrom that is regulated by CYSEC. It is the best trading binary options broker on our website. It’s a perfect pick for new traders.

  • Trusted CYSEC Regulated Broker
  • Minimum Deposit: $10 (Lowest In The Industry)
  • Free Demo Account

How To Get Started With Binary Options Trading

Unfortunately binary options trading was banned in most countries but there are many more assets that you can trade: stocks, commodities, bitcoin, indices and more. There are many safe and regulated brokers.

You can start with a trading signals provider, especially if you are a beginner. FX Atom Pro looks really promissing.

  1. Step1: Sign up with 24Option
  2. Step2: Make a first deposit
  3. Step3: Start trading using trading signals

Alternatively you can choose a reliable broker like IQ Option that offers free demo accounts.
IQ Option is the most trusted trading platform at the moment. They are regulated by CYSEC and they have a stellar reputation in the industry. The minimum deposit is only $10 which is perfect for beginners.

Forex Trading – The Best Alternative To Binary Trading

Binary options trading may be too risky for you. Or maybe you heard too many horror stories about binary trading? We recommend you to try out Forex trading instead.

Forex brokers offer CFD and even Cryptocurrency trading. Most Forex brokers are regulated and have been around for many years. Here is the best Forex brokers:

Rank Broker Min. Deposit Regulated Features Review
$100 YES + CRYPTO TRADING TRADE NOW
$200 YES + ASIC LICENSE TRADE NOW
$200 YES + COPY TRADING TRADE NOW

Common Mistakes of Beginners- And How To Fix Them

When a beginner goes in unprepared trading binary options, the broker will feast on them. New traders often make mistakes such as taking way to big a position for one trade, taking a bad loss, and then staying way to small the next 5 times.

They may even experience winning easily on small trades, but they never make back the big loss. New traders take way too many trades, let emotions control their trading, and don’t have the self control to stay out of low percentage trades that they know have small chance of making them money.

After knowing all the pitfalls, why would a new trader ever decide to open a binary options account and become a trader? Well, they do it because they have the power to win systematically if they have some intelligence and a plan on their side.

A new trader needs to understand the most common pitfalls, otherwise they may not even know that they are making a mistake while they do it! With that in mind, here are the most common mistakes new traders make, with what they should do instead.

  1. Not taking every trade with a purpose. Beginners often find themselves taking trades based on a feeling, or out of boredom. This is a surefire way to make a broker rich. Never enter into a trade without a defined thesis as to why you are doing it. Think the trade over rationally before entering. Is your thesis really valid? Is it strong? What do you estimate the probability of winning given your experience? Are you hoping for the best outcome or considering the most likely outcome? Make every trade count.
  2. Letting emotion influence – when a trade is entered into, or how big the size of the trade becomes. Never let emotion influence your trading. Good or bad it will never help you. Trading is for cool rational thought, striving to systematically take profits.
  3. Taking way too big sized trades: Understand that you are going to have losses along the way. Even the best professionals do. Never let one trade significantly affect your account balance in a way that would affect your future trading. A good rule of thumb is never to take on a trade bigger than 1/15 of your total account value. With binary options I would recommend 1/20.
  4. Not learning from mistakes and repeating them over and over: Keep a trading journal as we have recommended before. Jot down a quick sentence or two whenever you learn something new. Do whatever you need to do to prevent yourself from repeating mistakes.
  5. Becoming frustrated and quitting right before you get good: The difference between making a lot of money systematically and losing money can be very narrow. Don’t let frustration keep you from realizing your ultimate goal. Understand that there will be lumps along the way, but there will also be victories, and the lumps make the victories feel so much sweeter.

How Beginners Can Make Money

Even with so many ways to mess up, beginners to binary option trading can make money if they work hard and follow a system. The key to binary options trading is to control risk. As a result, a trader can never lose too much money on any particular trade. Hypothetically, a trader has a 50% chance of being correct on any trade whether they buy a call or a put option. To make money, a trader only needs to be correct on about 60% of trades of the trades that they take. This means that of the trades that a beginner with absolutely no edge (an edge is something giving a trader a better than random chance to make money) would take, they need to figure out how to turn about 20% of them into winning trades.

Binary Options – How Much Can You Make?: This is not a simple question. There are certainly traders who make a living with binary options. You could make thousands of dollars every month. However the best is if you start with lower expectations. Making hundreds of dollars steadily is a good way to start.

Here are possible ways that any beginner can easily do this:

  1. Use a signalling service. While most are not are not going to give a trader a significantly better than random chance of making money, they still should tilt the odds into the trader’s favor. This is all any trader can ask for. There are paid services out there such as elite trader, but even a free service from a site like barchart can give you the edge you need.
  2. Learn to use technical indicators. Technical trading involves using strictly price action (price charts) to predict future movements. There are a lot of indicators out there, but some of the most common ones involve using moving averages. Examples of popular indicators are MACD, relative strength index, and bollinger bands. If you can find an indicator that works well for the security you are trading you can gain the edge you need in order to turn some of your would be losing trades into winners.
  3. Trade stocks before trading binary options. Stock trading is less volatile for a trader’s account than binary option trading as long as the trader does not use leverage and sticks to securities priced over $5. If you can figure out how to be correct on more than 50% of your stock trades, you can take what you learn and apply it to binary options to multiply your earnings power.
  4. Track your performance in each binary option security. Most people will be better at trading some stocks or commodities or currency pair than they are at others. The simplified reason for this is that each particular symbol will move differently than the others because each one has its own characteristics and traders involved in moving the price. If you find a handful of option trades that you are consistently profitable in, stick with what works and increase your size. You don’t need to waste your time and money on unprofitable trading.
  5. Buy the right option length for your trading style. Some trading styles will work better over very short term trades, and some will work better over trades held for a long time. Know your style and the appropriate length option you should buy. A value investor for instance would not be sensitive to price changes over a 1 minute option, but may be correct on a super high percentage of trades over a 6 month period.

Binary Option Trading Is Not Easy For Beginners

The problem with this dream is, how often does this really happen? Let’s just say a lot of brokers would never be in business if it happened very often that beginners made money.

Above all, beginners have dreams of being smarter, better, and luckier than everyone else who has every done something, but the harsh reality is that trading in any form is not easy.

Especially when it comes to making money from trading, it takes hard work, dedication, and a commitment to learning. And when I say learning I don’t mean just reading a couple articles, I mean actually learning from your wins, from your losses, from hard earned experience. As a result never take a trade and learn nothing from it, especially as a new trader.

What Our Readers Asked

The short answer is yes, you can make a lot of money trading binary options. However it will be very hard to do so if your initial deposit is low. Always keep in mind that binary options is risky and you could also lose money.

A binary options broker makes money when you lose your trade. This is the main reason why there are not fees when trading.

Yes, many traders have success with binary options trading. You can even follow some of these traders. In order to do so, pick a broker that offers social trading. This way you can pick your favorite trader and copy their actions.

Do We Recommend New Traders Even Try Binary Options?

Of course! Every successful trader was new at some point. Just because a lot of traders go into trading without educating themselves or having realistic expectations doesn’t mean you will as a new trader. In fact, since you are reading this article you almost decidedly will not. At How We Trade our job is to prepare new traders for success. So move forward knowing you have a strong ally in us!

Interested in opening an account? Check out our homepage for the best trading platforms, along with our top rated binary options brokers.

IQ Option – Best Trading Platform

IQ Option is a trading platfrom that is regulated by CYSEC. It is the best trading binary options broker on our website. It’s a perfect pick for new traders.

  • Trusted CYSEC Regulated Broker
  • Minimum Deposit: $10 (Lowest In The Industry)
  • Free Demo Account

Binary options 1 minute how to trade them

Binary option minute also known as turbooptions. There are expiry times of 30 seconds, but option 1 minute is the most popular. Its advantages: quick profit on a strong trend, optimal yields, the possibility of earnings on liquid currencies. Despite the attractiveness of this timeframe, for beginners it is a trap. No wonder the professionals advise beginners to work currency pairs with reasonable liquidity (Canadian, Australian dollars, etc.) at hourly intervals. Why trading 1 minute options is danderous, how to avoid loss and to earn, what are the strategies, read on.

How to earn with binary options duration of 1 minute

The risk of trading with a short expiration (scalping) is that immediate profit just seems simple and quick. Professionals advise beginners to select the hourly time frames and work currency pairs with reasonable liquidity. Assets like EUR/USD, better to avoid stocks at the beginning.

The main problems of minute options:

  • slippage. Binary options with a duration of 1 minute are frequently used for a strong trend. When there is demand, supply drops sharply, which leads to slippage. There is a possibility to buy an option on a trend reversal;
  • redraw. The most common strategy minute options trading based on candlestick analysis but the signals of the oscillator or candles can be delayed. The inaccuracy of transmission of the quotations leads to the redrawing of candles, with the result that the transaction is unprofitable;
  • price noise. Its nature is a separate small transactions that in either direction change the direction of schedule. Even a strong trend is not a straight line and has in the short term a zigzag shape. Expiring 30 to 60 minutes on a strong trend with almost 100% guarantee will bring profit, 1 minute expiration can give loss.

The first two problems are eliminated by working with a reliable broker (a list of good brokers look here). Price noise is smoothed by more high time frames.

Rules of trading in binary options “1 minute”:

  • to trade only in strong trend. At the time of the flat the volatility is so low that the probability of loss is close to 50%;
  • be sure to follow fundamentals. Remember that at the time of the news (report) the traders spend some time to analyze the situation and then make a decision;
  • look for a broker with a fast platform without lag and redrawing. Reviews, tips, forums, personal experience will help.

Working with minute options every day, through time you’ll develop your trading strategy and understand how to minimize risks. Remember that real trading is different from demo account. Getting strategies on the result of a demo account 80% on the real market percentage is about 70%.

Binary options strategies with duration of 1 minute

1. Indicator Pin-bar

Tactics of binary options are based on graphical analysis and confirmation signals. The pin-bar is a reversal pattern that is formed in a time when buyers purchase the volume of sellers and sellers quickly sell an asset, while price rises under the pressure of demand (upper pivot point). Pin bar suggests that the market is already saturated and in the near future the price reverses in the opposite direction. Additionally, oscillator (RSI, stochastic) is used for confirmation.

2. Trade on the news

Favorite trading strategy of novice traders. The essence is to analyze:

  • economic calendar that shows the date of publication of important news. Trend plays the news from one hour to one day;
  • dates of publications of financial statements of companies. If the report is good and surpasses the expectations of investors, then it’s almost a guaranteed profit;
  • the economic situation of a country. Example: the recent rupture of diplomatic relations with Qatar immediately led to the fall of oil from 53 to 48-49 USD. Another example is a political scandal with Trump, who immediately strengthened the Euro against the dollar.

The advantage of tactics — no dependency on a broker and platform. Trade can be performed with almost any broker.

3. Channel strategies

Levels of support and resistance, Fibonacci levels, indicators of “Bollinger Bands” and “Ichimoku Cloud” are all tools for market analysis, determining the corridor of the prices. The breakdown of the levels says about the origin of the strong trend (a correction, because the power of price is confirmed by the oscillator). Bounce from the borders suggests that the price is slowly but surely going to the opposite level. The duration of expiry 1 minute gives good results on a minute timeframe.

4. Strategies with moving average

Binary options strategy 1 minute with one moving allows you to earn using candlestick analysis. If the indicator crosses above the candle and goes down — buy a PUT option. Moving closer to the candle, the better the prognosis. The period of the moving — 8.

Tactics with multiple moving averages (three is enough) based on what the market need to log in to their intersection. The periods are selected individually for each currency pair. The direction of the option corresponds to the direction of moving.

What exactly not to do when trading minute options:

  • to get involved with martingale strategy. Binary options 1 minute subject to the laws of the market, not probability theory. The use of martingale calculator can lead to the loss of the entire deposit within 4-6 trades. Read more about Martingale here;
  • work on only one indicator or the news without the use of confirming signals;
  • use expert advisors downloaded from unknown websites, the signals of companies (paid or free) without confirmation and without an understanding of how they work;
  • make predictions for a large sum of deposit. The normal forecast is amounted to 2% of the deposit, the amount of simultaneously opened positions not more than 20% of the deposit amount;
  • use a hedging strategy. If the prediction was unsuccessful but a binary option 1 minute is still in force, open the opposite option with double amount. The strategy of hedging and arbitrage used only by professionals. Beginners, incorrectly assessing the market, may easily lose money.

Summary. Scalping in binary options — strategy for professionals. Having no experience, not aiming for a quick profit. Options trading 1 minute is a difficult job requiring patience, perseverance and experience. Successful scalping is a performance not less than 80% of profitable trades of not less than 100 open positions. Keep statistics of transactions, analyze the reasons of loss and profit and deal with the same traders like you. And if you still doubt whether to get acquainted with binary options trading find out the opinion of specialists.

Best Binary Options Brokers 2020:
  • BINARIUM
    BINARIUM

    Top Broker!
    Best Choice For Beginners!
    Free Trading Education!
    Free Demo Account!
    Big Sign-up Bonus!

  • BINOMO
    BINOMO

    Perfect For Experienced Traders!

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