Binary options are a type of online trading, where you as a trader predict thru web or mobile platform, whether the price of a certain underlying asset will go up or down. Under the term – underlying assets we have in mind stocks of major companies like Google, Microsoft, FB…, currency pairs, indexes and commodities (silver, oil, gold…). In case, that your prediction will be correct you earn fixed sum, which you are aware of even before placing an investment. In most cases, returns from binary trades range from 170% to 192% per trade. So if you invest $50 you get additional $35 – $46 to your initial investment. To create one trade you can invest as small as $1. Beware, though at first glance it may look simple, binary options trading is not as easy as some portals may and do say. It is possible to make a lot of money, but it’s also possible to lose a lot. An investor who does not have any previous experience with the market and does not plan to acquire it can expect a great loss. To succeed in binary trading it is essential not to be naive and not to fall for scams that promise “bulletproof systems that will make money in your sleep” which are hiding behind every corner.
TradingBeasts.com is a serious portal about Binary Options and Forex/CFD. We actively trade, write educational articles, news, we verify and compare brokerage companies and warn our readers about suspicious projects or scam marketing campaigns. We also have a list of good sources for further education (books, tutorials, papers, and films).
Read and study with TradingBeasts.com:
- The Ultimate binary options guide – and other articles in our Academy
- What reliable binary brokers we have tested and we use for our trades.
- How to create a demo account for trading with virtual money.
- News from the world of binary options – market news, analysis, news from popular brokers
How to successfully trade binary options
In our first step, we choose an asset we want to trade. In our example, we chose the currency pair EUR/USD with 89% return from a successful trade. The choice of an asset is up to you. There are about 200 underlying assets which we can trade, each asset has different profitability. In the second step, we decide, when our trade should end and evaluate. So, if we want our trade to end in 30 minutes, then we select an expiration time of 30 minutes. Subsequently, we choose how much we want to invest in this particular trade. When we trade classic binary options we can invest only as little as $1.
Now we moved to the most important point at which we have to decide, whether the price of our option will go Up, or Down. When you trade classic binary options, only one of these three situations can occur. Either your trade will be successful and you receive a predetermined profit, which in our case would be $50 + $44.5 = $94.5. Or the trade will end up unprofitable and you lose the invested amount (Unlike from forex (without set up stop-loss) the biggest possible loss is your investment in this particular trade). The third situation occurs very rarely and we can meet with it when the price doesn’t change at all (price of the option when we entered the trade is the same as in the moment when the option expired). In this type of situation, most brokers give the investment back to the trader.
As you’ve probably noticed we get from correct prediction only 89% extra money from the invested amount. So, you might ask “How could possibly binary options be such a good extra income?”, when you don’t even earn 100% from what you have invested. The main reason behind this is because you can use binary strategies, which can significantly help you to create a majority of successful trades. Please bear mind that even with strategies no one can accurately predict the market and make all trades winners. Without binary strategies trading would be, however, very risky and hazardous and it wouldn’t have anything in common with meaningful and responsible investing.
What my profit will be like?
It depends entirely on you. With the right binary strategy, you can boost your capital by 100% in a week. Equally, with a bad strategy or without a strategy you can just as quickly lose it. The basis is to be as patient as possible and to hold to your selected strategy, which you know that works (for example from a demo account). Binary options trading is about a long-term profit and not about making one (or even a row of) successful or unsuccessful trade.
Is binary trading risky?
Any kind of trading or investing is risky and you have to count with that. If you enter the world of trading you should invest only such amounts that you can afford to lose. Some fraudulent servers (or even scams) may encourage you to borrow money from your friends or family members, if necessary because it is a guaranteed thing that your investment will return. But we are a serious portal and we most certainly do not advocate such claims. Although binary options have a great advantage that the risk is eliminated only to your investment into the trade, we, binary traders still operate on a financial market. And there are no guarantees. The market is merciful only to those who are prepared and know the risks. For instance, traders who do not apply any trading strategy can most likely expect to lose their capital.
How to determine, whether the price will go Up or Down? – Binary strategies
Some newbies try to do this by guessing and they usually determine the future price direction just according to the chart which is provided to them by the broker. I would not be afraid to state that such trades are completely random and made without using any strategy. But that is not the way we trade at TradingBeasts.com, we know that in order to become a successful trader who makes a long-term profit you most certainly need binary strategies.
These strategies can significantly help you to increase your success rate. They also allow you to constantly improve your results because all the created trades have a meaning and they were built on the basis of a specific pattern. Which means you can repeat them, results which can be achieved again usually mean success.
Binary options and its advantages
A great advantage of binary options is that if the price changes only by a single pip in your direction, you receive a full profit from the trade. Let’s look at an example. You entered a trade at a moment when the oil price was set up to a value of 1.5797 and you have selected the expiration time of 30 minutes and upwards direction. A 30-minute trade ended at the price 1.5798, thus it changed only by a single pip you will still secure for your correct prediction full profit from the trade. It is because in binary trading doesn’t matter, how much the price changes, but if it changes in the direction you chose.
Is it possible to try out binary trading? (Risk-free) Demo account
For traders who do not have a lot of experience with trading (or none), the demo account is a perfect opportunity to try everything out without giving at stake your own money. The demo version works on entirely the same principle as a real account, the only thing which is different is that you are trading with imaginary chips. That means that you can not make any profit from trading on a demo account, but you also can’t lose anything (apart from imaginary funds). Most brokers offer practice account right after you load your real account with at least the minimum deposit. However, if your trading on demo account doesn’t reach your expectations you can at any time withdraw the money you have deposited into your real account (if you trade with a licensed and a trusted broker). But we also know about brokers who do not require even initial deposit you can use the demo version freely with no obstacles. For more information read our separate article: free demo account for binary options
Where do we trade binary options?
TOP 5 Rated Regulated Brokers
|Rank||Broker||Regulated As a regulated broker is regarded a company that complies with the requirements of regulatory bodies such as the European CySEC, the British FCA or the Australian ASIC||Expert ratings Expert ratings are purely based on the experience of our visitors and our team members||Min. deposit||Max. Payouts Funds which are credited to your account in case of a correct prediction|
General warning: When trading with real money, your capital is at risk
The comparison above doesn’t cover all brokers out there, we might be partners with some of the listed companies
The term „broker“ was already mentioned in the article. But do you know, who this broker really is? A binary broker is a company that arranges the transaction between a buyer and a seller. It is basically a place where demand meets supply. Here, you can trade. Every broker has its own web platform, so no downloading is required. There are dozens of brokers or even hundreds of them. If you are looking for a reliable and a trustworthy broker who cares about their traders you need to look for certain aspects. One of them is broker’s credibility, which can be gained by a reputation among traders and by licenses. A license is obtained by a broker in exchange for a large fee to the regulatory authorities. These authorities are responsible for a constant supervision over the broker and over all their actions.
In Europe, the two most reliable regulatory authorities are CySEC (Cyprus Securities and Exchange Commission) and FCA (Financial Conduct Authority). In Australie, it is – ASIC (Australian Securities and Investments Commission). These authorities can be contacted in case of any problem with the broker. They will try to solve the problem or even make a compensation.
Apart from a credibility, we should focus on payouts, a minimum deposit, and a minimum investment. We should also find out whether our broker provides a demo account if we plan on using it. Traders who do not speak English can also appreciate a trading platform and a customer support in their native language. On our website, you may find many brokerages reviews. Currently, as the best option is from our point of view IQ Option, a fully regulated binary broker with superior payouts and a free demo account.
All recommended brokers went thru our testing process. In a 3 month time period, we act as a regular trader and we actively create trades as any other trader. If we find out any problem with the broker, we mark him as „not recommended“ or even as a „scam“. The fact that a broker makes it to the selection of recommended brokers does not necessarily mean that it will stay there forever. In case that the broker is not capable of maintaining high-quality services as on the beginning, we reduce the rating of the broker on the website or we even completely remove it from the list of our recommended brokers.