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Binary Options: What are they and How to Start Trading Them

April 2021

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Binary options (BO) trading has many positive features. Starting with your first trade, you will have the possibility to get up to 85% of the amount you invested. Another important feature of this trading type is its high-security/low-risk level in comparison with other options. The risk level of a particular financial operation can easily be identified in advance because binary options give you the possibility to see the amount of your expected profits or losses immediately. Beyond that, when using these instruments, the trader can choose a time period during which a specific option’s execution shall be performed, and that means that it is possible to perform short-term trading.

If you are not sure that you will do everything right on the first try, or if you don’t want to risk your money before you are ready, just try to perform your trading operations with minimum financial investments or on a demo account. You can independently set your own account’s size because binary options allow you to invest as little as $1. After becoming more experienced, you will be able to close transactions with larger financial volumes.

What are binary options?

Binary options are a simple and profitable method to make money on the financial markets. The key advantages of these instruments lay in the simplicity of work and in the possibility to get high, and most importantly, known-in-advance profits from your transactions. All you have to do is find the right way to determine how the price of a certain asset (currencies, oils, or stocks) will change during a specific time.

But like many trading methods binary options may have some small disadvantages. For example, if you fail to correctly determine the changes in the exchange rate of the assets, then you will not receive a profit.

Binary option types

Many brokers offer a wide variety of trading instruments while modernizing old ones and developing new tools. In this section, we will list the most popular tools and those most commonly used for trading.

  • Binary option – high/low

    When using this instrument it is very important to correctly forecast the increase or decrease of the price within the specified time. All you have to do is to select one of the actions. If upon completion of the option’s execution, the price is higher than at the beginning, you will get your profit. This is one of the most popular variants.

  • Binary option – Touch

    When working with this instrument, you have to determine the level that the price will touch (i.e., reach or will not reach) during its increase or decrease. Regardless of the direction the price goes, after reaching the determined mark, you receive your money. Another variant is when the price does not reach the determined mark. If using the previous variant, you get your profit after the first touch, then using this variant you have to wait until the transaction’s execution is completed. In case the price doesn’t touch the predetermined mark within this period of time, then your profit remains.

  • Binary Option – Range

    When working with this instrument, the price must remain within the range preset by the trader. To make the execution of the range profitable, the trader has to specify the price range, in which (in his view) the price will change during the specified period of time. The trader gets a profit in when the price doesn’t go beyond the specified frames.

  • Binary Option – Spread

    When working with this instrument, it is not only about forecasting if the price is to be above or below the current mark. You also have to indicate its exact value. For example, you can make a forecast of the price decrease by 10 points within the next 30 minutes. Such option type is riskier because it can be a lot more complicated to forecast such precise data than just to indicate if the price goes up or not. But if you deal often with such transactions, many brokerage companies will give you a higher percentage because the risk level of such transactions is bigger.

Step-by-step guide on binary options trading

To start making money on binary options follow the simple instructions below. This step-by-step guide will allow you to easily get started in the binary options market, as well as get extra payments from the Traders Union in the form of a rebate of part of the spread for each transaction completed. Follow these steps:

  • Register on the Traders Union website

    By becoming a member of the Traders Union and opening an account with a selected binary broker, you will get extra payments in the form of a rebate for each transaction completed on the binary market.

  • Choose a broker from the Traders Union Binary Rating

    Only reliable binary options brokers are presented in this rating, and they are regularly verified by Traders Union experts. The higher a broker is in the rating table, the more popular it is among customers. Choose a binary broker with the highest confidence rating from the Top 5 that suits your goals.

  • Open a real trading account on the broker’s website

    Go to the broker's website using the Traders Union referral link on the Union's website. Open a real trading account on the broker's website and enter the number of this account in the “Accounts” section of your personal account in Traders Union.

  • Deposit to a brokerage account and start trading

    After the account is confirmed by the Traders Union specialists, you can start working on the binary market and start buying and selling binary options.

Make transactions and you will get an extra payment from the Traders Union regardless of the result of the trade as the rebate will be credited to both profitable and unprofitable transactions.

Why Is It Better to Trade Through Traders Union?

Top 3 binary options brokers

Next, choose the most suitable broker for you. The choice of a partner may be based on many factors relevant to organizing comfortable and secure conditions and performing beneficial trading investments. Either one of our Top 3 BO brokers’ ratings will be able to help you find the most suitable partner for you.

Binary.com

Because of its twenty years of experience in the global financial market, this platform can be considered one of the largest and most profitable brokers. Here you can trade indices, currencies, and commodities around the clock and non-stop during the weekend. The company allows you to simultaneously process 15 transactions at once. Customers’ funds are stored in accounts that are separate from those of the broker.

Binary.com is a licensed binary options broker, regulated in Malta, the UK, Ireland, and Japan, and provides its services to users all over the world.

Its platform allows users to have two types of accounts – demo and real. The minimum deposit is $5. Moreover, Binary.com’s clients can trade in three different currencies, namely US dollars (USD), euros (EUR), and British pounds (GBP). You may deposit and withdraw funds using Mastercard and Visa bank cards. Wire transfer systems and Western Union, as well as various e-payment systems such as WebMoney, InstaDebit, UKash, and ClickandBuy.

Go to the broker's website

IQ Option

IQ Option started its brokerage activity in 2013. The company provides financial services in Europe and the US, and its clients have access to trading assets on the binary market, Forex, and stock markets. IQ Option has been repeatedly awarded prestigious awards as “Best Binary Options Broker in Europe” by Global Banking & Finance Review. Following the Communicator Awards in 2017, the IQ Option trading application was recognized as the best in this finance category.

IQ Option provides some of the most favorable trading conditions in the binary options market. The company's clients can use a browser-based broker’s proprietary trading platform to make transactions on the binary market, as well as trade CFDs and shares at the same time.

For trading binary options, IQ Option provides one type of account, where you can make deals with classic options "Higher/Lower" with a yield of up to 89-90%, as well as digital trade options with a yield of up to 900%. The minimum bet on this type of account is $1 and the brokerage commission for transactions is from $1 to $19, depending on the trading asset used.

Go to the broker's website

Binomo

The Binomo company is one of the most popular binary options on the market. Since 2018, Binomo has been an "A" category member of the International Financial Commission (FINACOM). This indicates a high degree of reliability by the broker and compliance with international financial standards. In 2015 and 2016, Binomo was awarded prestigious awards such as Forex Expo Awards’ the "Best Broker for Novice Traders" and the IAIR’s “Broker of the Year” Award.

The Binomo broker provides high-level service and favorable trading conditions for working with binary options. The company has a demo account allowing you to test the broker's trading platform and your trading strategies. The minimum deposit to enter the real market is $300 and the brokerage commission is $2.

Binomo offers its clients three types of trading accounts, such as Standard, Gold, and VIP. They differ in the amount of the minimum deposit, the number of available trading instruments, as well as the availability of ensuring the capital invested.

Go to the broker's website

Of course, the list of brokers doesn’t end here, because the financial market presents plenty of opportunities for BO trading. We have provided you with the information about the three best BO companies. If you want to see the full list of binary brokers, visit our Binary Brokers Ratings.

Best binary options strategies

It is practically impossible to make a large profit while trading binary options without using a well-considered strategy. Any trader is free to choose his trading strategy and brokerage company depending on his goals.

Some people just use “trendy” strategies with these instruments, others trade using long-term or short-term strategies, and some users aim to get their profits by using any method necessary. Today, the financial market is full of various BO trading strategies, and it would be virtually impossible to list all of them here. Also, keep in mind that the financial market is constantly changing and is frequently being influenced by different political and economic factors. So it is not always easy to find the right trading strategy that would work permanently and smoothly under such conditions. Let’s examine the most suitable strategies for beginners:

  • Three-in-a-row strategy

    This strategy is based on the three most popular trade indicators:

    Moving Average (moving the average price on a chart, which helps to determine the trading trend and when to stop trading);

    Stochastic (helps in determining the price deviation at the moment from its previous values);

    RSI (relative strength index measures a trend’s strength and determines the spots for chart changes).

    Simultaneous use of all three instruments gives traders the ability to perform the correct assessment of the situation on the market and to make an informed bid. All too often, there are situations in which every indicator (separately from other indicators) may give an imprecise signal. However, while using these indicators simultaneously, they can filter out each other’s values, thus making it possible for traders to perform a proper analysis of the current market situation and take benefits from this BO trading strategy.

  • Using the “reverse” strategy for binary options trading

    The strategy’s main idea is to define on a chart those moments when the price enters a trend and to forecast the next most appropriate moment to make your bid and get some profit. The following indicators should be used to analyze a chart under this strategy: Bollinger Bands, MACD, and MA. When using this strategy it is important to make bids in the timeframe that shows a steady upward trend.

  • Using the “spring” strategy for binary options trading

    This reversal strategy lies in bidding against the main trend. This may not always be easy, and to work under this trading strategy it’s recommended to use three indicator types: CCI (market prices analyzing indicator), Bollinger Bands (channel indicator), and Stochastic (as mentioned before, it serves to determine the price deviations at the given moment from its previous values). With this strategy, you can use any time frame you want – from 5-minute intervals and more.

  • Using the “Martingale” strategy for binary options trading

    This is one of the most popular BO trading strategies. Its system is based on the theory of probability. There are only two directions that the price may take during the trading process—either up or down—and the probability of each direction is equal to 50%. A trader puts a certain amount on the selected option, and in case he wins, then he repeats this transaction. In the event of a failed transaction, he doubles the amount to cover his losses from the previous bad transaction in case of success. The experienced traders point out that, even with frequent losses, this BO trading strategy still works great because a large number of bad transactions in a row is a rare occurrence in the BO field, and sooner or later, your winnings will cover your losses. This strategy is excellent for experienced traders, who already have a certain amount of money on their accounts, and who can understand and analyze the market’s conditions.

  • Using the “New Martingale” strategy for binary options trading

    The “New Martingale” strategy was originally developed and practiced by the well-known trader and trainer Mr. Nikolay Kokar. The “New Martingale” strategy is based on its predecessor, the “Martingale” strategy, but now boasts several improved features. The main idea is that when trading with the “New Martingale” strategy you enter the market only at the time that this strategy is ready to pan out. This strategy has two key rules you should follow while trading: (a) it’s necessary to determine the trend precisely and correctly and (b) to be able to analyze 30-minute charts when the price on the chart begins its sharp fall because that is the right moment to enter the market.

Binary options’ live charts

Live charts are increasingly popular among traders and beginners like them very much. When using live charts you don’t have to register with brokers, and it becomes even simpler to set indicators and test strategies.

Live charts are also quite user-friendly because, unlike Forex trading, BO trading is much easier and requires fewer instruments. Therefore, live charts are easy-to-use, have no lag time, and allow traders to monitor trading in real-time.

Binary option bonuses for beginners

Brokers often offer their beginners various bonuses. This extra capital can be used during the trading process along with the trader’s main funds, but users can withdraw them out of their accounts only subject to certain conditions set by the broker. Such bonuses are of several types:

  • 1

    Binary option bonuses at registration

    This type of bonus is granted as a deposit amount at registration. It is often charged after the first deposit placement. It can be equal to 100% of the trader’s own deposit. The percentage is different from trader to trader and the peak amount is limited. To withdraw the obtained bonus funds the trader has to perform the requisite quantity of transactions (specified by broker) using the bonus amount. Always check the broker’s terms and conditions.

  • 2

    Binary option bonuses on additional deposits

    These are additional trading funds that are provided by a broker depending on the sum invested by a trader. The quantity of such bonuses is a bit lower than the one at registration, but they also make some positive contributions by adding free capital for one’s trading.

  • 3

    Risk-free option bonuses

    The idea behind this bonus is as follows. A broker insures the trader’s first transactions. If in performing his first transactions the trader loses money, the broker can replace the lost funds to cover those losses. The advantage of such a bonus is that the trader takes no risks during the trading process. If he loses money, then his loss is covered (reimbursed) by the broker, and if he reaches profitability, he keeps all his earnings.

  • 4

    No-deposit bonus or binary options without investments

    These bonuses are deposited to a trader’s account during registration by the broker and require no initial deposit by the trader. Such bonuses usually have stricter withdrawal conditions, but allow a new user to test drive the working principles of the platform and provide a safe opportunity to learn how to trade. Often, such bonuses are given automatically, but in some cases, a special application may be required to get them.

  • 5

    Cash back bonuses

    This is the simplest bonus type. The basic idea is that the broker compensates a part of the trader’s losses – normally 15-20%. This bonus should be used only when the trader is at a loss. However, there is no need to return a bonus if trading at a profit.

  • 6

    Referral bonuses

    Referral bonuses are deposited into a trader’s account for every referee attracted to the brokerage. Moreover, a certain percentage is paid into a trader’s account for every deposit into the account by another broker’s customer who registered on a platform through the referral link of the trader.

Binary options used on free demo accounts

A demo account is an account that uses virtual funds. Traders can use a demo account to evaluate the quality and conditions of a broker’s trading platform. Aside from that, demo-accounts are frequently used by beginners to practice their skills and by experienced users to test new BO trading strategies. It is very important when the broker has such an account type on its platform, thus giving its customers the chance to use the platform for free.

Demo accounts are very easy to use and their added benefit is that you cannot lose your real money. So using a demo account of a real one can teach you a lot without any monetary risk. When the time comes to enter the real market, you will be well-informed about all instruments and strategies and your trading will be much easier with your newly-gained experience!

Traders Union recommends that beginners try trading binary options by using demo accounts of the flowing brokers:

Risks when trading binary options

Binary options are popular trading tools that allow you to earn a fixed profit of up to 80%. But don’t forget that there is always a risk of losing your investment in any trade.

The risks of losing money when trading binary options depend on various factors, so let’s consider the most common of these, which are:

  • The lack of a trading strategy and overconfident trading are the primary mistakes of novice traders. Be careful to use prudence and to thoroughly analyze the market.

  • Trade options with “one-touch” mechanisms (where the yield can reach 200-400%) should be avoided. This presents a risk of losing your investments. Instead, choose a more cautious type of option like the classic “up/down” option.

  • Incorrect forecasting of the option price movement. Don’t trust unverified trading signals and sources. They can turn out to be unprofitable.

  • Ignoring the money management rules. Open a deal using an amount that does not exceed 5-10% of your deposit. I repeat. Use the money management rules and do not exceed 5-10% of your deposit.

Above, we examined the trading risks directly when working with binary options, but don’t forget that the success of working on the binary market also depends on the broker’s reliability. In order not to become a victim of scammers, bucket shops, or short-lived successes, choose trusted brokers from the Traders Union Binary Options Rating.

Binary options | Expert’s opinion

When working with binary options, you may have a lot of questions and wish to benefit from any expert’s opinion who works with binary options. Antony Robertson, an experienced Traders Union trader and financial analyst, is one of the outstanding professionals in this area.

He opines that binary options trading is one of the most profitable areas of the Forex market, but you must exercise discipline and the correct approach to this activity. Antony Robertson recommends using your trading strategy when trading binary options and do not rely on luck or chance. He emphasizes that despite the relative ease of working with binary options, these trading tools still require forecasting and analysis. Remember that a high level of profitability, which can be obtained with successful BO trading, can turn into a loss for a trader who takes a frivolous approach to his work.

Also, special attention should be paid to the choices of a binary broker. The more reliable and proven the company is, the more chances you have to get a stable income when trading binary options. When choosing a broker, pay attention to its trading terms, its regulation, experience in the market, as well as customer feedback regarding cooperation with the broker.

All this information is presented in the profile of each binary broker from the Traders Union Rating, where the company's reliability is confirmed by its high position in the ratings table.

Antony Robertson

Antony Robertson,

Traders Union Financial Analyst

Author of this Article

Grant Adlington

Grant Adlington

Independent
trader-analyst

In 2008, he graduated from the London Institute of Banking and Finance, Department of Finance, Investments, and Risk;

In 2009, he became the youngest trader-analyst at Global Invest;

In 2010, he became an independent analyst at TD Ameritrade;

In 2011, he defended his Ph.D. thesis on Economics at the University of California-Berkeley;

From 2012 to 2018, he worked in various American and International brokerage firms;

Since 2018, he has worked with the Traders Union as an independent expert and trader as well as with other trader associations as a freelancer;

He has 12-years of experience in continuous trading in the Forex currency market.

Recent binary options reviews from traders

  • RORG

    lhet0512

    07.04.2021

    Comment

    Leaving RORG. wondering why I didn't do it before. the application does not work intermittently. take a commission to withdraw their own money. I have not seen such nonsense anywhere else.

  • Banc De Binary

    rachithmadusanka

    07.04.2021

    Comment

    Awful application, incorrect information, hidden commissions, for speculation by, you earn for the broker, not for yourself. You can't get through to support. I do not recommend it unambiguously.

  • Ukoptions

    Artur

    06.04.2021

    Comment

    For three days of constant calls, it is unrealistic to get through to client managers. (I already doubt they exist). The letter in support from 6/01 was answered "will we figure it out" really? for the 21st year of the 21st century? They say there are a lot of requests, there are more clients. and the fact that more managers need to be hired will come to mind when clients leave?

  • Grand Capital Ltd.

    dinar

    29.03.2021

    Comment

    The company Grand Capital cancels the transaction. These trades are considered by the company to be invalid due to non-market quotes. I usually trade on the news, I made about $ 2000. And broker Grand Capital canceled my profit. I do not recommend this broker.

  • Yardoption

    malwennas

    28.03.2021

    Comment

    Broker Yardoption is a scammer. The company's managers invited clients, persuaded clients to fund a trading account, and then they blocked these accounts. A lot of traders were unable to withdraw money from here. There are many negative reviews about Yardoption on the Internet.

  • HY options

    mn_irshadmohamed

    28.03.2021

    Comment

    Before trading with HY options, think carefully, money is constantly disappearing from the account, the last straw was 40% of the daily profit, they did not find support even in the terminal, the screen was sent and silence, apparently the broker dropped to the usual kitchen. the application is buggy all the time, sometimes it hangs not in your favor. the desire to cooperate with them was discouraged.

  • Grand Capital Ltd.

    mal

    24.03.2021

    Comment

    Grand Capital is very weak in terms of brokerage services. Although the website claims that Grand Capital has the lowest spreads, in fact the spreads are quite common. But the technical support is not professional at all. The usual questions are answered for a long time.

  • Yardoption

    shah02

    24.03.2021

    Comment

    There are many negative reviews about the YardOption broker on the Internet. When a client credits money to an account, then he is provided with the service of a personal manager and analyst. They provide market analysis and entry signals. It is on such analyzes that clients lose money.

  • Corsa Capital

    MDFaruk

    23.03.2021

    Comment

    Money is paid out without problems, but orders are executed within 30 seconds. You can only play with take profit and stop loss.

  • OptionTime

    vijay01

    22.03.2021

    Comment

    OptionTime is torment. The application takes several minutes to load, the quotes change during this time, and instead of trading, I look at the loading screen. Support is slow, responds with water. The information content in the application is zero, which movements were almost impossible to track in securities. The terminal for the computer in my opinion has not changed since 2006. Shame in one word. To change the tariff, you need to perform a whole ritual.

Videos about binary options

You can get more information by watching our topic-oriented video archive. It provides a good overview of all the peculiarities of working with binary options and focuses on how to make money on binary options. See here:

FAQs

What are Binary Options?

Binary options are financial trading instruments. When working with them you can easily make large profits. To do this, you just need to correctly predict the change in the price of the selected asset.

Are there risks when working with binary options?

As fast as making a profit when trading binary options, you can incur losses. To avoid this, you need to carefully analyze the market and follow the rules of money management.

Can I trade binary options on a demo account?

If the selected binary broker provides a demo (training) account, then you can start working with binary options without investment. Traders Union experts recommend choosing a broker from the TOP-3 ratings of binary options brokers.

How to start trading binary options?

To start working in the binary market, register on the Traders Union website, then select a reliable broker from the rating and open a real trading account with this company using the Union's referral link. This way you will receive a rebate for your trade and will be able to count on legal assistance.