Best Binary Options Broker 2020!
Free Trading Education!
Free Demo Account!
Perfect for Beginners!
2 place in the ranking!
Here we list and compare the best binary options demo accounts with no deposit requirements 2020, and look at whether a free demo account really is ‘free’ and even where you can get a trial account with no sign up at all.
For traders, a free demo account makes a lot of sense. You get to try the trading platform, or a mobile demo app, at no financial risk. Brokers should also be proud to show off their platform and customer service, so traders should be able to use a demo account without deposit and with a simple sign up process.
Brokers with Demo Accounts in Russia
A Guide To Demo Accounts
‘Try before you buy’ is a concept we’re all familiar with – both on and offline. When it comes to trading sites, this concept takes the form of the demo account; something that’s a feature of virtually all online binary options brokers you’ll come across. From the broker’s point of view, this is their chance to ‘wow’ you with their platform and its multitude of features. It’s where they hope to earn your trust – or at the very least, to get hold of your email address. Likewise, as a prospective binary options trader, the demo account gives you the opportunity to put the platform to the test. Does it work? Can you make sense of it? Does it feel right? These are the questions you need answers to before you hand over your cash. Here, we take a close look at binary options demo accounts; how they can help you and what to look for as you decide whether to move on from the demo to the real deal…
Head on over to a broker’s website and the “Try it now” button (or something very similar) will feature prominently. The way most demos work is simple; the broker gives you a set amount of virtual money to play with ($1,000 is a popular figure). You then use this “money” to explore the platform; placing as many or as few trades as you wish. Losses and gains are credited to this virtual, dummy balance. So is it always safe to sign up? At the very least, the process tends to involve submitting your email address and specifying a user name. (That said Ayrex offer a ‘no sign up’ demo account)
Download on Mobile Devices
If you intend to use the demo account app on a mobile device, it also usually involves downloading the company’s app. Bearing in mind that it’s never a good idea to hand over personal information blindly – or download software from an unknown party, it’s advisable to do your homework first. What can you glean from independent reviews of the site? Where is it based? What do actual users have to say about it? Even though it’s just a demo, it’s still important to know that you’re in safe hands. Be especially wary if the demo sign-up process takes the form of a data-mining exercise – i.e. if you are encouraged to provide large quantities of personal information. There really should be no need to provide bank account details at this stage; if the platform is requesting this and you are (rightly) uncomfortable with it, there are plenty of other platforms out there that don’t require this information – so consider looking elsewhere.
How To Use A Demo Account
At heart, binary options demo accounts provide the chance to test-drive the platform. So here are the areas to focus on as you put the platform through its paces…
Compare trading platforms without deposits
What you are looking for is a “full-fat” experience of this particular broker’s trading platform. If you eventually decide to use it as a tool for real life trading, it has to be a tool that’s comfortable to use. As such, it should ideally be fully representative of the live platform in terms of access to all features. A demo account allows more than one platform to be compared. This is useful both for the novice trader, but also for more experienced users looking to ensure they are trading with the best provider. It is of course, possible to have accounts with different brokers to ensure the best payouts on specific assets and trades.
Demo trading account should match live platform
The idea behind most demo accounts is that you see the results of your simulated trading activity reflected in your virtual balance. For a true picture here, it’s important that the payout rates mirror those in real life. So for instance, on the live account, if the payout rate on a particular asset is 85%, it’s important that the same rate applies on the demo account, too. Likewise, if the live account features a returns slider, that slider should work in exactly the same way on the demo as on the real thing.
Is binary options trading for you?
As a novice in this area, you may be weighing up binary options alongside other forms of trading. As well as reading around the subject, signing up to no-deposit binary options demo accounts can be a useful method of hands-on research.
Exploring new asset classes
Let’s say you have only ever traded one or two asset types in the past (forex, for instance). Binary options demo accounts provide a risk-free environment to explore new areas. From indices through to commodities and individual shares, the demo should ideally provide access to all assets available on the live version, giving you scope to experiment.
Demo accounts as part of your education
Some brokers provide access to a wealth of educational and instructional resources – suitable for novices and more experienced traders alike. A range of brokers focus on user education, featuring an introduction programme, a range of seminars and various guides. The demo account is one of the best ways to find out whether you actually understand what you’ve been learning. Likewise, if you are still honing a strategy, a demo account can be invaluable for putting it to the test. Consider it a ‘practice account’. IQ Option will even allow you to back test trading strategies on the demo account or even test robots in real time.
News and analysis: how does the alerts system stack up?
Many platform providers claim to be able to keep you in the loop – where ever you are. An alerts system can certainly be invaluable in keeping you up to date with changing market conditions and informing you of new opportunities. So the demo account lets you see just how useful such a service really is – as well as allowing you to test out the mobile-friendliness of the platform.
Best Binary Options Broker 2020!
Free Trading Education!
Free Demo Account!
Perfect for Beginners!
2 place in the ranking!
A growing segment of the demo account picture is for the full trading app experience to be available via a demo account app. The brokers who have taken the time to make this available, are more likely than not to have the better trading platforms – after all, they have gone to the extra effort of making sure as many people as possible see it.
Free Accounts – Check It Actually Is Free!
Some brokers will offer a demo account, and refer to it as “free” – but it actually requires a deposit in order to gain access. Given the benefits of a demo account, it might be worth paying a deposit, particularly if it is a brand you want to check out – but tread carefully. In some cases, the initial deposit can trigger a bonus, which may impact withdrawal limits. Where this is the case, the demo account is certainly not “free”. In most cases, a demo account will not require a deposit. The broker should have enough faith in their platform that you will not look anywhere else after trying theirs. Those that impose restrictions (such as needing a deposit, or large amounts of sign up information) perhaps do not have as much confidence in their offering.
Some brokers will promote competitions and contests among their demo users. This encourages traders to use the platform more, but also aids the broker in converting those demo account holders into real money users. These contests come in many guises but often carry real money rewards – another step in hoping traders make the move to real money. These contests are just another marketing tool for the broker, but offer traders a good incentive to stay active. No deposit is required to enter so there is no risk for the trader – and they can be a lot of fun.
Finding the Best Accounts in Russia
A demo account should be a risk-free, no-obligation way of testing a platform. It can be especially useful for finding out whether the user experience described by the broker is all that it’s cracked up to be. Ideally, you’ll do some homework on the broker before signing up to the demo (checking key areas such as whether it is regulated and whether the payout rates are competitive) to avoid wasting your time on a broker who might have a swish website but less than adequate service. Finally, it’s worth noting that once you’ve signed up to a demo, access to it might be granted for a limited time only. So if you do sign up – don’t forget to make the most of it. The very best demo accounts are free, exactly the same as the real platforms, and not time limited.
Free Demo Accounts
If you are new to binary options, demo accounts can be a great place to start. While you may understand the concept of trading, actual trading with real money can be a daunting prospect. For the inexperienced trader risking your own money can be a nervous time and as such we highly recommend using a demo before you feel confident trading real money.
Not only is it an excellent plan to start practice trading with virtual money for novice traders, but a demo account can also be a real benefit for those who are switching brokers. What better way to check out that new broker and get to grips with a new trading platform than doing so without risk.
While many brokers only offer a practice mode to traders once the money is deposited, we have researched the best in the marketplace and found those that offer a free demo account with no deposit required. Not only do these brokers provide demos, but they also want their traders to do well and provide a whole range of educational tools to guide you.
In this article, you will learn:
All the different types of demo platforms Why traders should always practice trade How to use them to maximise your profits
The Right Practice Broker
You probably don’t have the time to search through scores of brokers looking at each, the requirements that go with it and testing them all to find the one that’s right for you. Are we right? Our experts have done precisely that. We have vetted the various binary options brokers to test the following when it comes to demo accounts:
Is a Demo Account Offered
It is unusual for a good broker not to offer a practice account these days. It is a critical way to attract new traders, so it stands to reason that part of their package to encourage you to open an account, is to offer a demo platform.
How Easy is it to Use
Is the demo account easy to use? Because it is a simulated version of the live platform, it should represent the actual trading environment. You also need to be able to access it from a mobile device so that you can trade on the move.
The Demo Account Cost
When we say; “the demo account cost” what we mean is whether or not you need to deposit to gain access. Some brokers will allow you to enter your email address and start using it straight away. Others will insist on a deposit to open an account first.
With some brokers come certain conditions. While some will offer a one-time demo account that you have to use within a specific amount of time, others will allow you to reload your balance or open more than one.
If you choose wisely, you should be able to find brokers that allow you to try before you deposit funds. This way you have nothing to lose if you
Why Use a Demo Account
Demos or practice accounts are there to give the novice trader some “practise” before they start to risk their own money. As with lots of things, gaining the skills takes lots of practice, it certainly does help to use a demo before you trade for real.
These accounts allow your to have a few “test runs” at trading with virtual funds before you start to use your own money. For those who have a little more experience, a practice account is also a great way to test new strategies or broker features.
You may trade a certain way, but you may be looking to try out a new method. With a test account, you can try out new theories without the risk. If you are looking to make the switch from another broker, it is also a great way to get to grips with trading on a different platform.
Demo Account Tips
Some accounts have limitations. Some brokers will only allow you 72 hours of trading. That is plenty of time to get to grips with a platform and test out a few trades if used correctly, but when you sign up, you don’t have whole days to play. Even though a practice account uses virtual money, it is still essential to get the best demo account out there and gain crucial experience for when you start to trade with real money. If you plan on using automated tools like robot software, make sure the demo account allows that too.
Start using your account as soon as you sign up. If you only have 72 hours you need to capitalise on that time. Don’t sign up and forget about it Get familiar with the platform. Learn how to use their charts. If this isn’t the trading site for you, then you will soon discover this Make sure the mobile experience is right for you. Is it easy to use and visually pleasing or does it make your head spin? Now is the time to get to grips with the functionality Focus on finding the correct trading figure. When you start, it can be hard to know how much of your funds to trade. A demo account allows you to experiment with this Try different assets. You may have a strength in one particular area. Don’t just stick with one, when it’s virtual it’s important to experiment Don’t get impatient. If you are consistently winning while trading on your virtual account that is great and may boost your confidence to start trading for real Make your mistakes with the demo account. Not with your real money. Also, consider that you may not experience loss with your virtual account Check out the educational tools on offer from that broker. Take the time to learn beforehand so that you will become more profitable when you trade for real
If you are new to binary options, demo accounts can be a great place to start.
Our Recommended Shortlist
Our reviews and recommendations give you a comprehensive shortlist of contenders, but it is up to you to make the final decision. We have conducted countless surveys based on some points, but only you will be able to know what works for you. There is no harm in choosing a few and taking advantage of all of them. Even making a small deposit in each and trialling each demo could save you losses in the long run.
Use the demo accounts on all platforms until you are satisfied that you have found the one that works for you. Then follow our tried and tested tips to make sure you maximise your practice experience. Once you have experienced successes and perhaps losses from virtual trading, you will no doubt feel more comfortable and confident trading with real money. Find your strengths, know your limitations and enjoy trading.
In our experience demo accounts used correctly enhance the trading experience and make trading more comfortable, especially for the first time trader.
Frequently Asked Questions
Are binary demo accounts free to use?
Generally, binary options brokers require you to deposit real money before they allow you to use a demo account. There are a few selected brokers that do offer free versions.
Do all brokers offer demo accounts?
No, not all brokers offer practice accounts, but the top brokers do. Some of these will require a minimum deposit before you can use the account.
Can I use a demo account with no deposit?
Most brokers require a minimum signup deposit when you open an account to use the features of their demo account but not all.
Are all trade types and assets available?
With many brokers, you can trade as you would on the live system, but a few brokers do restrict the number of assets available.
Do they come with any time restrictions?
With some brokers, yes, they do come with time restrictions. When you deposit your funds, some brokers may place a cap of say 48 hours on the demo account.
Shelly is proud of her current position as Head of Brand for a well-known organisation that owns several brokerages in the trading sector. She’s consulted for us since 2020 and readers can benefit from her insider knowledge of how brokers work.
How to Succeed with Binary Options Trading 2020
Welcome to the largest expert guide to binary options and binary trading online. BinaryOptions.net has educated traders globally since 2020 and all our articles are written by professionals who make a living in the finance industry and online trading. We have close to a thousand articles and reviews to guide you to be a more profitable trader in 2020 no matter what your current experience level is. If you wish to discuss trading or brokers with other traders, we also have the world’s largest forum with over 20 000 members and lots of daily activity. Read on to get started trading today!
Top Brokers in Russia
What is a Binary Option and How Do You Make Money?
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 the recommended 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 it’s like to trade before you deposit real money.
Introduction Video – How to Trade Binary Options
These videos will 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:
- Up/Down or High/Low – The basic and most common binary option. Will a price finish higher or lower than the current price a the time of expiry.
- In/Out, Range or Boundary – This option sets a “high” figure and “low” figure. Traders predict whether the price will finish within, or outside, of these levels (or ‘boundaries’).
- Touch/No Touch – 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.
- Ladder – 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.
How to Trade – Step by Step Guide
Below is a step by step guide to placing a binary trade:
- Choose a broker – Use our broker reviews and comparison tools to find the best binary trading site for you.
- Select the asset or market to trade – Assets lists are huge, and cover Commodities, Stocks, Cryptocurrency, Forex or Indices. The price of oil, or the Apple stock price, for example.
- Select the expiry time – Options can expire anywhere between 30 seconds up to a year.
- Set the size of the trade – Remember 100% of the investment is at risk so consider the trade amount carefully.
- Click Call / Put or Buy / Sell – Will the asset value rise or fall? Some broker label buttons differently.
- Check and confirm the trade – Many brokers give traders a chance to ensure the details are correct before confirming the trade.
Choose a Broker
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! Don’t EVER trade with a broker or use a service that’s on our blacklist 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. This information is also available within our reviews, including currency pairs.
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:
- Short Term / Turbo – These are normally classed as any expiry under 5 minutes
- Normal – These would range from 5 minutes, up to ‘end of day’ expiries which expire when the local market for that asset closes.
- Long term – 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:
- Financial Conduct Authority (FCA) – UK regulator
- Cyprus Securities and Exchange Commission (CySec) – Cyprus Regulator, often ‘passported’ throughout the EU, under MiFID
- Commodity Futures Trading Commission (CFTC) – US regulator
- Australian Securities and Investments Commission (ASIC)
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 assets of €500,000 or more
- Have worked for two years in a financial firm and have experience of financial products.
Strategies and Guides
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 the strategy page.
Signals and Other Services
For further reading on signals and reviews of different services go to the signals page.
If you are totally new to the trading scene then watch this great video by Professor Shiller of Yale University who introduces the main ideas of options:
Education for beginners:
Types of Trades
How to Set Up a Trade
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 it’s 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:
Let us take them one after the other.
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 a Rise/Fall type 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 developed mobile 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.
What Does Binary Options Mean?
“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.
How Does a Stock Trade Work?
Steps to trade a stock via a binary option;
- Select the stock or equity.
- Identify the desired expiry time (The time the option will end).
- Enter the size of the trade or investment
- Decide if the value will rise or fall and place a put or call
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.
Put and Call Options
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.
Are Binary Options a Scam?
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. Our forum is a great place to raise awareness of any wrongdoing.
These simple checks can help anyone avoid the scams:
- Marketing promising huge returns. 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.
- Know the broker. 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.
- Cold Calls. 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.
- Terms and Conditions. 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 trader’s 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.
- Do not let anyone trade for you. 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.
Which Are The Best Trading Strategies?
Binary trading strategies are unique to each trade. We have a strategy section, and there are ideas that traders can experiment with. Technical analysis is of use to some traders, combined with charts, 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.
Are Binary Options Gambling?
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.
Advantages of Binary Trading
The main benefit of binaries is the clarity of risk and reward and the structure of the trade.
Minimal Financial Risk
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.
Greater Control of Trades
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.
Disadvantages of Binary Trading
Reduced Trading Odds for Sure-Banker Trades
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.
Lack of Good Trading Tools
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.
Limitations on Risk Management
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.
Cost of Losing Trades
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.
Spot Forex vs Binary Trading
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 a 70-90% gain vs a 100% 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.
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