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Binary or Digital Options (*) are a relatively new form of trading in the global financial markets. Trading binary options results in only two possible outcomes for a trader: win or lose (0/1). If the trade is correct (a win), the trader can earn payouts of 65-95%. If the trade loses, the trader may receive a refund of 0-15%. In most cases, the combined total of the Payout and Refund Rates does not exceed 90% of the initial trade value.

(*) Extremely Risky Financial Instruments

 

✅ Advantages -Why Trading Binary Options?

1) You may trade any popular financial market (Forex, Stocks, Indices, Commodities, etc)

2) You don’t have to pay any Margin on a trade (No Margin Calls)

3) You may profit from both a Bull or a Bear (falling) Market

❌ Disadvantages -Why Trading Binary Options?

1) Extremely risky asset class

2) Legal restrictions in many countries

3) Not easy to find reliable binary options brokers (many scams)

» Binary Options Strategies

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📌 The Basics when Trading Binary Options

Here are the basic terms when trading binary options:

• Call / Put: It defines if you trade a Bull Market (Call) or a Bear Market (Put)

• Expiry date: Defines the duration of an opened position

• Strike price: It is the price that defines the Win/Loss

• Payout: It defines the Return you get if your trade wins

• Refund Rate: It defines the Refund you get if your trade loses

Which are the Most Common Types of Binary Options?

There are many types of traded binary options, here are the most common types:

1) High / Low Options – Traders predict if a market move Above or Below a specific price level

2) Touch / No Touch Options – Traders predict if the price of an asset reaches (Touch) or not (No Touch) a specific price before it expires

3) 60 Sec Options –Trade the market in 60 sec (it is very risky and we certainly do not recommend this type of trading binary options)

4) Boundary Options – Traders predict if the price of a particular asset expires within or without a specific price range

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🏛️ Which Financial Markets Can I Trade Using Binary Options?

Almost every type of financial market or traded asset is available today for binary options traders:

1. Forex Market

The Forex market is one of the most popular financial markets in the world. You can trade pairs such as EUR/USD, GBP/USD, USD/JPY, EUR/AUD, and more. The most popular Forex pairs, known as ‘The Majors,’ include:

EUR/USD | GBP/USD | USD/JPY | CHF/USD | USD/CHF | USD/AUD | USD/NZD | USD/CAD

2. Stocks & Indices

You can trade popular stocks from the US, Western Europe, Asia, and beyond. Popular indices are also available, such as Nasdaq, Dow Jones, S&P 500, DAX, FTSE, and others.

3. Commodities

Many commodities are available for binary options trading. The most popular is Gold, but you can also trade Silver, Copper, Platinum, Natural Gas, and Oil. Some brokers also offer Corn, Wheat, Sugar, Cotton, Coffee, and more.

Binary Options Bonuses

Almost every binary options broker offers a welcome bonus nowadays. While a high deposit bonus is attractive, it should not be the most important factor you consider:

• No-Deposit Bonus

This bonus is offered to new traders. You receive free cash to trade, but to withdraw it, you must first trade about 20 times its amount.

• Deposit Bonus

Mainly offered to new traders, deposit bonuses in the binary options industry typically range from 30% to 100%. Like the no-deposit bonus, to withdraw a deposit bonus, you must trade about 20 times its value.

• Loyalty Bonus

This bonus is offered to existing clients as an incentive to make additional deposits.

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 🔠 BINARY OPTIONS GLOSSARY 

Financial Asset

An asset is the underlying instrument used to determine the exercise of a binary option contract. It may be a Forex currency, a commodity, a stock, or an index. Underlying assets are also called underlying securities.

At-the-Money Option

An at-the-money option is a contract where the strike price equals the market price of the underlying asset. This point can also be described as the break-even point.

Binary Options or Digital Options

Binary options are financial contracts with only two possible outcomes: either they expire in-the-money and win, or they expire out-of-the-money and lose. There are two main categories:

Binary call options win if the price of the underlying security at expiration exceeds the strike price.

Binary put options win if the price of the underlying security at expiration is below the strike price.

Early Closure

Early closure is an option available to the holder, allowing them to close a trade (open position) before the predefined expiration time.

Expiry Time

Expiry time is the date when a binary option contract expires.

Exotic Options

Exotic options are contracts traded on exclusive markets by certain brokers. Binary options are a simplified form of exotic options.

Fundamental Analysis

Fundamental analysis examines macroeconomic data such as growth, political developments, and central bank policies. Fundamental analysts try to determine if an asset’s market price is undervalued or overvalued relative to its true value.

In-the-Money Options

In-the-money options are binary option contracts whose current price is above the strike price. If the contract is in the money at expiration, the holder gains a predefined profit.

Over-the-Counter (OTC)

OTC contracts are financial instruments sold directly between two parties.

Out-of-the-Money Options

Out-of-the-money options are contracts whose current price is below the strike price. If the contract expires out-of-the-money, the holder incurs a loss.

Payout Rate

The payout rate is the return rate of a binary option contract when it expires in the money. Typically, this rate ranges between 70% and 85%.

Refund Rate

The refund is the amount returned to the investor if a binary option does not expire in the money.

Strike Price

The strike price of a binary option contract is the price at which the contract will be exercised.

Technical Analysis

Technical analysis is a set of tools and techniques used to study the price trend of a financial asset. It can be applied across various timeframes, from intraday to several years. Observing past price patterns may indicate profitable trades and the best times to buy or sell.

Touch / One Touch Option

A one-touch option is a binary option type that pays out if the underlying security touches a predetermined price level before the contract expires.

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■ Binary Options Glossary

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