Welcome to the largest expert guide to binary options and binary trading online.

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A binary option is a fast and extremely simple financial instrument which allows investors to speculate on whether the price of an asset will go up or down in the future, for example the stock price of Google, the price of Bitcoin, the USD/GBP exchange rate, or the price of gold. The time span can be as little as 60 seconds, making it possible to trade hundreds of times per day across any global market.

Before you place a trade you know exactly how much you stand to gain if your prediction is correct, usually 70-95% if you invest $100 you will receive a credit of $170 $195 on a successful trade. This makes risk management and trading decisions much more simple. The outcome is always a Yes or No answer you either win it all or you lose it all hence it being a binary option. The risk and reward is known in advance and this structured payoff is one of the attractions.

Exchange traded binaries are also now available, meaning traders are not trading against the broker.

To get started trading you first need a regulated broker account (or licensed). Pick one from therecommended brokers list, where only brokers that have shown themselves to be trustworthy are included. The top broker has been selected as the best choice for most traders.

If you are completely new to binary options you can open a demo account with most brokers, to try out their platform and see what its like to trade before you deposit real money.

Thesevideoswill introduce you to the concept of binary options and how trading works. If you want to know even more details, please read this whole page and follow the links to all the more in-depth articles. Binary trading does not have to be complicated, but as with any topic you can educate yourself to be an expert and perfect your skills.

The most common type of binary option is the simple Up/Down trade. There are however, different types of option. The one common factor, is that the outcome will have a binary result (Yes or No). Here are some of the types available:

The basic and most common binary option. Will a price finish higher or lower than the current price a the time of expiry.

This option sets a high figure and low figure. Traders predict whether the price will finish within, or outside, of these levels (or boundaries).

These have set levels, higher or lower than the current price. The trader has to predict whether the actual price will touch those levels at any point between the time of the trade an expiry.

Note with a touch option, that the trade can close before the expiry time if the price level is touched before the option expires, then the Touch option will payout immediately, regardless of whether the price moves away from the touch level afterwards.

These options behave like a normal Up/Down trade, but rather than using the current strike price, the ladder will have preset price levels (laddered progressively up or down).These can often be some way from the current strike price.As these options generally need a significant price move, payouts will often go beyond 100% but both sides of the trade may not be available.

Below is a step by step guide to placing a binary trade:

Use ourbroker reviews and comparison toolsto find the best binary trading site

Assets lists are huge, and cover Commodities, Stocks, Cryptocurrency, Forex or Indices. The price of oil, or the Apple stock price, for example.

Options can expire anywhere between 30 seconds up to a year.

Remember 100% of the investment is at risk so consider the trade amount carefully.

Will the asset value rise or fall? Some broker label buttons differently.

Many brokers give traders a chance to ensure the details are correct before confirming the trade.

Options fraud has been a significant problem in the past. Fraudulent and unlicensed operators exploited binary options as a new exotic derivative. These firms are thankfully disappearing as regulators have finally begun to act, but traders still need to look for regulated brokers.

Note!Dont EVER trade with a broker or use a service thats on ourblacklist and scams page, stick with the ones we recommend here on the site. Here are some shortcuts to pages that can help you determine which broker is right for you:

Compare all brokers if you want to compare the features and offers of all recommended brokers.

Bonuses and Offers if you want to make sure you get extra money to trade with, or other promotions and offers.

Low minimum deposit brokers if you want to trade for real without having to deposit large sums of money.

Demo Accounts if you want to try a trading platform for real without depositing money at all.

Halal Brokers if you are one of the growing number of Muslim traders.

The number and diversity of assets you can trade varies from broker to broker. Most brokers provide options on popular assets such as major forex pairs including the EUR/USD, USD/JPY and GBP/USD, as well as major stock indices such as the FTSE, S&P 500 or Dow Jones Industrial. Commodities including gold, silver, oil are also generally offered.

Individual stocks and equities are also tradable through many binary brokers. Not every stock will be available though, but generally you can choose from about 25 to 100 popular stocks, such as Google and Apple. These lists are growing all the time as demand dictates.

The asset lists are always listed clearly on every trading platform, and most brokers make their full asset lists available on their website. Full asset list information is also available within our reviews.

The expiry time is the point at which a trade is closed and settled. The only exception is where a Touch option has hit a preset level prior to expiry. The expiry for any given trade can range from 30 seconds, up to a year. While binaries initially started with very short expiries, demand has ensured there is now a broad range of expiry times available. Some brokers even give traders the flexibility to set their own specific expiry time.

Expiries are generally grouped into three categories:

These are normally classed as any expiry under 5 minutes

These would range from 5 minutes, up to end of day expiries which expire when the local market for that asset closes.

Any expiry beyond the end of the day would be considered long term. The longest expiry might be 12 months.

While slow to react to binary options initially, regulators around the world are now starting to regulate the industry and make their presence felt. The major regulators currently include:

) Cyprus Regulator, often passported throughout the EU, under MiFID

Australian Securities and Investments Commission (

There are also regulators operating in Malta and the Isle of Man. Many other authorities are now taking a keen a interest in binaries specifically, notably in Europe where domestic regulators are keen to bolster the CySec regulation.

Unregulated brokers still operate, and while some are trustworthy, a lack of regulation is a clear warning sign for potential new customers.

Recently,ESMA(European Securities and Markets Authority) moved to ban the sale and marketing of binary options in the EU. The ban however, only applies to brokers regulated in the EU. This leaves traders two choices to keep trading: Firstly, they can trade with an unregulated firm this is extremely high risk and not advisable. Some unregulated firms are responsible and honest, but many are not.

The second choice is to use a firm regulated by bodies outside of the EU. ASIC in Australia are a strong regulator but they will not be implementing a ban. This means ASIC regulated firms can still accept EU traders. See our broker lists for regulated or trusted brokers in your region.

There is also a third option. Traders who register as professional are exempt from the new ban. The ban is only designed to protect retail investors. A professional trader can continue trading at EU regulated brokers such as IQ Option. To be classed as professional, an account holder must meet two of these three criteria:

Open 10 or more trades per quarter, of €150 or more.

Have worked for two years in a financial firm and have experience of financial products.

We have a lot of detailed guides and strategy articles for both general education and specialized trading techniques. Below are a few to get you started if you want to learn the basic before you start trading. From Martingale to Rainbow, you can find plenty more on thestrategy page.

For further reading on signals and reviews of different services go to thesignals page.

If you are totally new to the trading scene then watch this great video byProfessor Shillerof Yale University who introduces the main ideas of options:

The ability to trade the different types of binary options can be achieved by understanding certain concepts such as strike price or price barrier, settlement, and expiration date. All trades have dates at which they expire.

When the trade expires, the behaviour of the price action according to the type selected will determine if its in profit (in the money) or in a loss position (out-of-the-money). In addition, the price targets are key levels that the trader sets as benchmarks to determine outcomes. We will see the application of price targets when we explain the different types.

There are three types of trades. Each of these has different variations. These are:

Also called the Up/Down binary trade, the essence is to predict if the market price of the asset will end up higher or lower than the strike price (the selected target price) before the expiration. If the trader expects the price to go up (the Up or High trade), he purchases a call option. If he expects the price to head downwards (Low or Down), he purchases a put option. Expiry times can be as low as 5 minutes.

Please note: some brokers classify Up/Down as a different types, where a trader purchases a call option if he expects the price to rise beyond the current price, or purchases a put option if he expects the price to fall below current prices. You may see this as aRise/Falltype on some trading platforms.

The In/Out type, also called the tunnel trade or the boundary trade, is used to trade price consolidations (in) and breakouts (out). How does it work? First, the trader sets two price targets to form a price range. He then purchases an option to predict if the price will stay within the price range/tunnel until expiration (In) or if the price will breakout of the price range in either direction (Out).

The best way to use the tunnel binaries is to use the pivot points of the asset. If you are familiar with pivot points in forex, then you should be able to trade this type.

This type is predicated on the price action touching a price barrier or not. A Touch option is a type where the trader purchases a contract that will deliver profit if the market price of the asset purchased touches the set target price at least once before expiry. If the price action does not touch the price target (the strike price) before expiry, the trade will end up as a loss.

A No Touch is the exact opposite of the Touch. Here you are betting on the price action of the underlying asset not touching the strike price before the expiration.

There are variations of this type where we have the Double Touch and Double No Touch. Here the trader can set two price targets and purchase a contract that bets on the price touching both targets before expiration (Double Touch) or not touching both targets before expiration (Double No Touch). Normally you would only employ the Double Touch trade when there is intense market volatility and prices are expected to take out several price levels.

Some brokers offer all three types, while others offer two, and there are those that offer only one variety. In addition, some brokers also put restrictions on how expiration dates are set. In order to get the best of the different types, traders are advised to shop around for brokers who will give them maximum flexibility in terms of types and expiration times that can be set.

Trading via your mobile has been made very easy as all major brokers provide fully developedmobile trading apps. Most trading platforms have been designed with mobile device users in mind. So the mobile version will be very similar, if not the same, as the full web version on the traditional websites.

Brokers will cater for both iOS and Android devices, and produce versions for each. Downloads are quick, and traders can sign up via the mobile site as well. Our reviews contain more detail about each brokers mobile app, but most are fully aware that this is a growing area of trading. Traders want to react immediately to news events and market updates, so brokers provide the tools for clients to trade wherever they are.

Binary options means, put very simply, a trade where the outcome is a binary Yes/No answer. These options pay a fixed amount if they win (known as in the money), but the entire investment is lost, if the binary trade loses. So, in short, they are a form of fixed return financial options.

The steps above will be the same at every single broker. More layers of complexity can be added, but when trading equities the simple Up/Down trade type remains the most popular.

Call and Put are simply the terms given to buying or selling an option. If a trader thinks the underlying price will go up in value, they can open a call. But where they expect the price to go down, they can place a put trade.

Different trading platforms label their trading buttons different, some even switch between Buy/Sell and Call/Put. Others drop the phrases put and call altogether. Almost every trading platform will make it absolutely clear which direction a trader is opening an option in.

As a financial investment tool they in themselves not a scam, but there are brokers, trading robots and signal providers that are untrustworthy and dishonest.

The point is not to write off the concept of binary options, based solely on a handful of dishonest brokers. The image of these financial instruments has suffered as a result of these operators, but regulators are slowly starting to prosecute and fine the offenders and the industry is being cleaned up. Ourforumis a great place to raise awareness of any wrongdoing.

These simple checks can help anyone avoid the scams:

. This is clear warning sign. Binaries are a high risk / high reward tool  they are not a make money online scheme and should not be sold as such. Operators making such claims are very likely to be untrustworthy.

. Some operators will funnel new customer to a broker they partner with, so the person has no idea who their account is with. A trader should know the broker they are going to trade with! These funnels often fall into the get rich quick marketing discussed earlier.

. Professional brokers will not make cold calls they do not market themselves in that way. Cold calls will often be from unregulated brokers interested only in getting an initial deposit. Proceed extremely carefully if joining a company that got in contact this way. This would include email contact as well any form of contact out of the blue.

. When taking a bonus or offer, read the full terms and conditions. Some will include locking in an initial deposit (in addition to the bonus funds) until a high volume of trades have been made. The first deposit is the traders cash  legitimate brokers would not claim it as theirs before any trading. Some brokers also offer the option of cancelling a bonus if it does not fit the needs of the trader.

. Avoid allowing any account manager to trade for you. There is a clear conflict of interest, but these employees of the broker will encourage traders to make large deposits, and take greater risks . Traders should not let anyone trade on their behalf.

Binary trading strategies are unique to each trade. We have astrategysection, and there are ideas that traders can experiment with. Technical analysis is of use to some traders, combined withcharts, indicators and price action research. Money management is essential to ensure risk management is applied to all trading. Different styles will suit different traders and strategies will also evolve and change.

There is no single best strategy. Traders need to ask questions of their investing aims and risk appetite and then learn what works for them.

This will depend entirely on the habits of the trader. With no strategy or research, then any short term investment is going to win or lose based only on luck. Conversely, a trader making a well researched trade will ensure they have done all they can to avoid relying on good fortune.

Binary options can be used to gamble, but they can also be used to make trades based on value and expected profits. So the answer to the question will come down to the trader.

The main benefit of binaries is the clarity of risk and reward and the structure of the trade.

If you have traded forex or its more volatile cousins, crude oil or spot metals such as gold or silver, you will have probably learnt one thing: these markets carry a lot of risk and it is very easy to be blown off the market. Things like leverage and margin, news events, slippages and price re-quotes, etc can all affect a trade negatively. The situation is different in binary options trading. There is no leverage to contend with, and phenomena such as slippage and price re-quotes have no effect on binary option trade outcomes. This reduces the risk in binary option trading to the barest minimum.

The binary options market allows traders to trade financial instruments spread across the currency and commodity markets as well as indices and bonds. This flexibility is unparalleled, and gives traders with the knowledge of how to trade these markets, a one-stop shop to trade all these instruments.

A binary trade outcome is based on just one parameter: direction. The trader is essentially betting on whether a financial asset will end up in a particular direction. In addition, the trader is at liberty to determine when the trade ends, by setting an expiry date. This gives a trade that initially started badly the opportunity to end well. This is not the case with other markets. For example, control of losses can only be achieved using a stop loss. Otherwise, a trader has to endure a drawdown if a trade takes an adverse turn in order to give it room to turn profitable. The simple point being made here is that in binary options, the trader has less to worry about than if he were to trade other markets.

Traders have better control of trades in binaries. For example, if a trader wants to buy a contract, he knows in advance, what he stands to gain and what he will lose if the trade is out-of-the-money. This is not the case with other markets. For example, when a trader sets a pending order in the forex market to trade a high-impact news event, there is no assurance that his trade will be filled at the entry price or that a losing trade will be closed out at the exit stop loss.

The payouts per trade are usually higher in binaries than with other forms of trading. Some brokers offer payouts of up to 80% on a trade. This is achievable without jeopardising the account. In other markets, such payouts can only occur if a trader disregards all rules of money management and exposes a large amount of trading capital to the market, hoping for one big payout (which never occurs in most cases).

In order to trade the highly volatile forex or commodities markets, a trader has to have a reasonable amount of money as trading capital. For instance, trading gold, a commodity with an intra-day volatility of up to 10,000 pips in times of high volatility, requires trading capital in tens of thousands of dollars. However, binary options has much lower entry requirements, as some brokers allow people to start trading with as low as $10.

The payouts for binary options trades are drastically reduced when the odds for that trade succeeding are very high. While it is true that some trades offer as much as 85% payouts per trade, such high payouts are possible only when a trade is made with the expiry date set at some distance away from the date of the trade. Of course in such situations, the trades are more unpredictable.

Some brokers do not offer truly helpful trading tools such as charts and features for technical analysis to their clients. Experienced traders can get around this by sourcing for these tools elsewhere; inexperienced traders who are new to the market are not as fortunate. This is changing for the better though, as operators mature and become aware of the need for these tools to attract traders.

Unlike in forex where traders can get accounts that allow them to trade mini- and micro-lots on small account sizes, many binary option brokers set a trading floor; minimum amounts which a trader can trade in the market. This makes it easier to lose too much capital when trading binaries. As an illustration, a forex broker may allow you to open an account with $200 and trade micro-lots, which allows a trader to expose only acceptable amounts of his capital to the market. However, you will be hard put finding many binary brokers that will allow you to trade below $50, even with a $200 account. In this situation, four losing trades will blow the account.

Unlike in other markets where the risk/reward ratio can be controlled and set to give an edge to winning trades, the odds of binary options tilt the risk-reward ratio in favour of losing trades.

When trading a market like the forex or commodities market, it is possible to close a trade with minimal losses and open another profitable one, if a repeat analysis of the trade reveals the first trade to have been a mistake. Where binaries are traded on an exchange, this is mitigated however.

These are two different alternatives, traded with two different psychologies, but both can make sense as investment tools. One is more TIME centric and the other is more PRICE centric. They both work in time/price but the focus you will find from one to the other is an interesting split. Spot forex traders might overlook time as a factor in their trading which is a very very big mistake. The successful binary trader has a more balanced view of time/price, which simply makes him a more well rounded trader. Binaries by their nature force one to exit a position within a given time frame win or lose which instills a greater focus on discipline and risk management. In forex trading this lack of discipline is the 1 cause for failure to most traders as they will simply hold losing positions for longer periods of time and cut winning positions in shorter periods of time. In binary options that is not possible as time expires your trade ends win or lose. Below are some examples of how this works.

Above is a trade made on the EUR/USD buying in an under 10 minute window of price and time. As a binary trader this focus will naturally make you better than the below example, where a spot forex trader who focuses on price while ignoring the time element ends up in trouble. This psychology of being able to focus on limits and the dual axis will aid you in becoming a better trader overall.

The very advantage of spot trading is its very same failure the expansion of profits exponentially from 1 point in price. This is to say that if you enter a position that you believe will increase in value and the price does not increase yet accelerates to the downside, the normal tendency for most spot traders is to wait it out or worse add to the losing positions as they figure it will come back. The acceleration in time to the opposite desired direction causes most spot traders to be trapped in unfavourable positions, all because they do not plan time into their reasoning, and this leads to a complete lack of trading discipline.

The nature of binary options force one to have a more complete mindset of trading off both Y = Price Range and X = Time Range as limits are applied. They will simply make you a better overall trader from the start.Conversely on the flip side, they by their nature require a greater win rate as each bet means a70-90% gainvs a100% loss. So your win rate needs to be on average 54%-58% to break even. This imbalance causes many traders to overtrade or revenge trade which is just as bad as holding/adding to losing positions as a spot forex trader. To successfully trade you need to practice money management and emotional control.

In conclusion, when starting out as a trader, binaries might offer a better foundation to learn trading.The simple reasoning is that the focus on TIME/PRICE combined is like looking both ways when crossing the street. The average spot forex trader only looks at price, which means he is only looking in one direction before crossing the street.Learning to trade taking both time and price into consideration should aid in making one a much overall trader.

A Study of Optimal Stock and Options Strategies(Dash, Mihir and V., Kavitha and K.M., Deepa and S., Sindhu, 2007)

Is There Money to Be Made Investing in Options: A Historical Perspective(Doran, James and Fodor, Andy, 2006)

An Investors Guide to Trading Options(Virginia B. Morris, Bess Newman Lightbulb Press, Inc., 2004)

Trading Binary Options: Strategies and Tactics(Abe Cofnas John Wiley & Sons, 2011)

Binary Options: Fixed Odds Financial Bets(Hamish Raw Harriman House Limited, 2011)

Binary Options: Strategies for Directional and Volatility Trading(Alex Nekritin John Wiley & Sons, 2012)

How to Trade Binary Options Successfully: A Complete Guide to Binary Options Trading(Meir Liraz Liraz Publishing)

Option Trading and Individual Investor Performance(R Bauer, M Cosemans, P Eichholtz Journal of banking & finance, Vol 3 Issue 4, 2009)

Binary Option Pricing Using Fuzzy Numbers(A Thavaneswaran, S.S Appadoo, J Frank Applied Mathematics Letters, Vol 26, Issue 1, 2013)

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The information on this site is for general information purposes only and does not claim to be comprehensive or provide legal or other advice. The views expressed in contributor articles or on the forum are expressed by those contributors and do not necessarily reflect the views of BinaryOptions.net. Articles and other publications on this site are current as of their date of publication and do not necessarily reflect the present law or regulations. BinaryOptions.net accepts no responsibility for loss which may arise from accessing or reliance on information contained in this site. BinaryOptions.net is not responsible for the content of external internet sites that link to this site or which are linked from it. USA REGULATION NOTICE: Please note if you are from the USA: some binary options companies are not regulated within the United States. These companies are not supervised, connected or affiliated with any of the regulatory agencies such as the Commodity Futures Trading Commission (CFTC), National Futures Association (NFA), Securities and Exchange Commission (SEC) or the Financial Industry Regulatory Authority (FINRA). We warn US citizens of the dangers of trading with such entities and strongly advise that they take legal advice on this in the US.