What is Binary Option Trading?
Binary options are one of the most controversial trading instruments. For a reason, see, on the one hand, they’re super easy to trade and therefore perfect for beginners. And they are perfect for traders with small accounts because you can open a IQ Options account with as little as $10. But then on the other hand, there are some binary options brokers out there that are simply a scam. Most of them are overseas and when you wire money to them, you’ll never see it again. So let’s take a closer look at binary options and see if they are legit, and if you can’t really make money with binary options.
So in this Article, you’ll learn
- How binary options work
- Can you really make money with binary options?
- What are the best binary options brokers that are not a scam?
- Are binary options legit?
- Is it safe to trade binary options?
- And what is the best strategy for binary options?
So let’s get started. So how do binary options work? Well, binary options are super easy to understand because you just need to make a decision if a certain market is above or below a certain price by a certain time.
Now, let me give you an example. Let’s say you believe that gold will close above $1,700 by the end of the day. So you can place a binary option straight. The price of a binary option will be between zero and $100. And that’s the amount that you need to put on the table to place this bet. So let’s say the price of the binary option to bet on gold being above $1,700 by the end of the day is $40. Now, if by the end of the day gold closes above $1,700, you get $100 back.
So you put $40 in and you get $100 back so your profit is $60. Now if gold closes below $1,700 then you get nothing back. And since the broker took $40 out of your account and you get zero dollars back, your loss is $40. Now is this making sense? Because if it does Bookmark our website so that I know that we are going at the right pace.
So here’s the cool thing. Binary options are available for a wide variety of underlying markets. So they’re available for major indices like the Dow Jones, The S&P 500, NASDAQ. They are available for major commodities like crude oil, gold, silver, and they’re available for major currencies like the EUR versus USD. The USD versus the JPY, the GBP versus the USD. And they expire daily or even hourly.
So if you don’t want to wait until the end of the day, you can trade a binary option that expires in the next hour. All you need to do is decide whether a certain market is closing above or below a certain price within the next hour. As you can see, the possibilities are almost endless.
So the next question is, can you really make money with binary options? If you trade with a reputable broker – yes. So we’ll talk about the best binary option brokers that are not a scam in a few moments. But let’s talk about how to make money with binary options first.
So here are the three things you need to know.
- Is the market more likely to go up or down?
- Will the market closed above or below a certain level?
- What is the maximum price you’re willing to bet?
Now, I will show you a simple trading strategy for binary options in the next Article. But before I show you this strategy, let’s first talk about what are the best binary option brokers.
Best Binary Option Brokers
As a regulated broker under CySEC, this suggests that IQ Option is additionally a MiFID compliant broker. In other words, IQOption is permitted to supply its services to clients within the EEA. Another benefit for clients of being regulated by CySEC is that the incontrovertible fact that IQOption is additionally a member of the Investors Compensation Scheme. Under this scheme, each of IQ Option’s clients’ funds is protected up to a maximum amount of 20,000 euros.
But for traders that are outside the EEA, their accounts are managed by a separate sister company called IQ Option Ltd. the corporate is predicated in Mahe, Seychelles and is regulated by the Seychelles Financial Services Authority (FSA)
You see there are a lot of fraudulent binary option brokers and scammers out there, and you need to be careful. You see, the only broker that I would ever trust is the IQ Options.
And the best! They allow customers like us to open an account directly with them so you’re cutting out the middleman, which means lower commissions for you. if you want to trade binary options, trade them at IQ Option. Now, before we continue, let me ask you, is this helpful thus far? Because if it is, Bookmark our website because this way I know which Articles you like the best and I’ll make more of them.
Are Binary Options Legit?
Now, as stated earlier, there are many unregulated brokers who just take the customer’s money and never return it. Most of those brokers are operating offshore in countries that have very few or no regulations at all.
Binary options are legal and available to trade in the United States, but only on a CFTC, a regulated United States exchange. In a nutshell, as long as you trade binary options on IQ Option, it’s legit and legal.
is binary options trading safe?
Now this leads us to the next question, is binary options trading safe?
Now, we already talked about the regulations, so we don’t need to cover this again. As a trading vehicle binary options are very safe since they are not leverage. This means that you cannot lose more money than you have in your account.
Here’s an example, if you have $500 in your account and you want to put on a trade in which you risk $50, IQ Option will automatically reserve $50 from your funds. Now when the order is filled, these $50 will automatically be deducted from your account. So your balance is now $450.
Now, if you are right, IQ Option will give you $100 back as soon as the options expire. In this case, your account balance will jump from $500 to $550. So you made $50. Because of this mechanism, it’s impossible for you to lose more money than you have in your account. So as you can see, trading binary options is safe.
what is the best strategy for binary options?
So next question, what is the best strategy for binary options? The best strategy for binary options is a strategy that makes it easy for you to pick a direction of the market. After all, in order to make money with binary options, you need to know,
- Is the market more likely to go up or down?
- Will the market close above or below a certain level?
- What’s the maximum price you’re willing to bet?