Currency Binary Options Trading

Best Binary Options Brokers 2020:
  • Binarium
    Binarium

    Best Binary Options Broker 2020!
    Free Trading Education!
    Free Demo Account!
    Perfect for Beginners!

  • Binomo
    Binomo

    2 place in the ranking!

Trading Forex with Binary Options

Binary options are an alternative way to play the foreign currency (forex) market for traders. Although they are a relatively expensive way to trade forex compared with the leveraged spot forex trading offered by a growing number of brokers, the fact that the maximum potential loss is capped and known in advance is a major advantage of binary options.

Defining Binary Options

Binary options have two outcomes: They settle either at a pre-determined value (generally $100) or at $0. This settlement value depends on whether the price of the asset underlying the binary option is trading above or below the strike price by expiration.

Binary options can be used to speculate on the outcomes of various situations: Will the S&P 500 rise above a certain level by tomorrow or next week? Will this week’s jobless claims be higher than the market expects? Or will the euro or yen decline against the U.S. dollar today?

For example, say gold is trading at $1,195 per troy ounce currently and you are confident that it will be trading above $1,200 later that day. Assume you can buy a binary option on gold trading at or above $1,200 by that day’s close, and this option is trading at $57 (bid)/$60 (offer). You buy the option at $60. If gold closes at or above $1,200, as you had expected, your payout will be $100, which means that your gross gain (before commissions) is $40 or 66.7%. On the other hand, if gold closes below $1,200, you would lose your $60 investment, for a 100% loss.

Binary Option Buyers and Sellers

For the buyer of a binary option, the cost is the price at which the option is trading. For the seller of a binary option, the cost is the difference between 100 and the option price and 100.

From the buyer’s perspective, the price of a binary option can be regarded as the probability that the trade will be successful. Therefore, the higher the binary option price, the greater the perceived probability of the asset price rising above the strike. From the seller’s perspective, the probability is 100 minus the option price.

All binary option contracts are fully collateralized, which means that both sides of a specific contract – the buyer and seller – have to put up capital for their side of the trade. So if a contract is trading at 35, the buyer pays $35, and the seller pays $65 ($100 – $35). This is the maximum risk of the buyer and seller and equals $100 in all cases.

Thus the risk-reward profile for the buyer and seller in this instance can be stated as follows:

Buyer

  • Maximum risk = $35
  • Maximum reward = $65 ($100 – $35)

Seller

  • Maximum risk = $65
  • Maximum reward = $35 ($100 – $65)

Forex Markets

Binary options in forex are available from exchanges such as Nadex, which offers them on the most popular pairs such as USD-CAD, EUR-USD, and USD-JPY, as well as on a number of other widely-traded currency pairs. These options are offered with expirations ranging from intraday to daily and weekly. The tick size on spot forex binaries from Nadex is 1, and the tick value is $1.

The intraday forex binary options offered by Nadex expire hourly, while the daily ones expire at certain set times throughout the day. The weekly binary options expire at 3 P.M. on Friday.

Best Binary Options Brokers 2020:
  • Binarium
    Binarium

    Best Binary Options Broker 2020!
    Free Trading Education!
    Free Demo Account!
    Perfect for Beginners!

  • Binomo
    Binomo

    2 place in the ranking!

For forex contracts, Nadex calculates the expiration value by taking the midpoint prices of the last 25 trades in the forex market, eliminates the highest five and lowest five prices, and then takes the arithmetic average of the remaining 15 prices.

Examples of Binary Options in Forex

Let’s use the EUR-USD currency pair to demonstrate how binary options can be used to trade forex. We use a weekly option that will expire at 3 P.M. on Friday, or four days from now (or Monday). Assume the current exchange rate is EUR 1 = USD 1.2440.

Consider the following scenarios:

1. You believe the euro is unlikely to weaken by Friday and should stay above 1.2425. The binary option EUR/USD>1.2425 is quoted at 49.00/55.00. You buy 10 contracts for a total of $550 (excluding commissions). At 3 P.M. on Friday, the euro is trading at USD 1.2450. Your binary option settles at 100, giving you a payout of $1,000. Your gross gain (before taking commissions into account) is $450, or approximately 82%. However, if the euro had closed below 1.2425, you would lose your entire $550 investment, for a 100% loss.

2. You are bearish on the euro and believe it could decline by Friday, say to USD 1.2375. The binary option EUR/USD>1.2375 is quoted at 60.00/66.00. Since you are bearish on the euro, you would sell this option. Your initial cost to sell each binary option contract is, therefore, $40 ($100 – $60). Assume you sell 10 contracts, and receive a total of $400. At 3 P.M. on Friday, let’s say the euro is trading at 1.2400.

Since the euro closed above the strike price of $1.2375 by expiration, you would lose the full $400 or 100% of your investment. What if the euro had closed below 1.2375, as you had expected? In that case, the contract would settle at $100, and you would receive a total of $1,000 for your 10 contracts, for a gain of $600 or 150%.

Additional Basic Strategies

You do not have to wait until contract expiration to realize a gain on your binary option contract. For instance, let’s say by Thursday the euro is trading in the spot market at 1.2455, but you are concerned about the possibility of a decline in the currency if U.S. economic data to be released on Friday are very positive. In this case, your binary option contract (EUR/USD>1.2425), which was quoted at 49.00/55.00 at the time of your purchase, is now at 75/80. Therefore, you could sell the 10 option contracts you had purchased at $55 each, for $75, and book a total profit of $200 (or 36%).

You can also put on a combination trade for lower risk/lower reward. Let’s consider the USD/JPY binary option to illustrate. Assume your view is that volatility in the yen – trading at 118.50 to the dollar – could increase significantly, and it could trade above 119.75 or decline below 117.25 by Friday. You, therefore, buy 10 binary option contracts (USD/JPY>119.75, trading at 29.50/35.50) and also sell 10 binary option contracts (USD/JPY>117.25, trading at 66.50/72.00). Therefore, you pay $35.50 to buy the USD/JPY>119.75 contracts, and $33.50 (i.e., $100 – $66.50) to sell the USD/JPY>117.25 contracts. Your total cost would be $690 ($355 + $335).

Three possible scenarios arise by option expiration at 3 P.M. on Friday:

  1. The yen is trading above 119.75. In this case, the USD/JPY>119.75 contract has a payout of $100, while the USD/JPY>117.25 contract expires worthless. Your total payout is $1,000, for a gain of $310 (or about 45%).
  2. The yen is trading below 117.25.In this case, the USD/JPY>117.25 contract has a payout of $100, while the USD/JPY>119.75 contract expires worthless. Your total payout is $1,000, for a gain of $310 (or about 45%).
  3. The yen is trading between 117.25 and 119.75: In this case, both contracts expire worthlessly and you lose the full $690 investment.

The Bottom Line

Binary options are a useful tool as part of a comprehensive forex trading strategy but have a couple of drawbacks in that the upside is limited even if the asset price spikes up, and a binary option is a derivative product with a finite lifespan (time to expiration).

However, binary options have a number of advantages that make them especially useful in the volatile world of forex. For starters, the risk is limited (even if the asset prices spikes up), the collateral required is quite low, and they can be used even in flat markets that are not volatile. These advantages make forex binary options worthy of consideration for the experienced currency trader.

Portfolio

No open positions.

Ref. Potential Payout Contract Details Purchase Indicative
Total

Ready to trade?

Already have an account?

Winning the contract

Asian options settle by comparing the last tick with the average spot over the period.

If you select “Asian Rise”, you will win the payout if the last tick is higher than the average of the ticks.

If you select “Asian Fall”, you will win the payout if the last tick is lower than the average of the ticks.

If the last tick is equal to the average of the ticks, you don’t win the payout.

Winning the contract

If you select “Matches”, you will win the payout if the last digit of the last tick is the same as your prediction.

If you select “Differs”, you will win the payout if the last digit of the last tick is not the same as your prediction.

Winning the contract

If you select “Ends Between”, you win the payout if the exit spot is strictly higher than the Low barrier AND strictly lower than the High barrier.

If you select “Ends Outside”, you win the payout if the exit spot is EITHER strictly higher than the High barrier, OR strictly lower than the Low barrier.

If the exit spot is equal to either the Low barrier or the High barrier, you don’t win the payout.

Winning the contract

If you select “Even”, you will win the payout if the last digit of the last tick is an even number (i.e., 2, 4, 6, 8, or 0).

If you select “Odd”, you will win the payout if the last digit of the last tick is an odd number (i.e., 1, 3, 5, 7, or 9).

Winning the contract

If you select “Higher”, you win the payout if the exit spot is strictly higher than the barrier.

If you select “Higher”, you win the payout if the exit spot is higher than the barrier.

If you select “Lower”, you win the payout if the exit spot is strictly lower than the barrier.

If the exit spot is equal to the barrier, you only win the payout for “Higher” contracts

If the exit spot is equal to the barrier, you don’t win the payout.

Winning the contract

If you select “Over”, you will win the payout if the last digit of the last tick is greater than your prediction.

If you select “Under”, you will win the payout if the last digit of the last tick is less than your prediction.

Winning the contract

If you select “Higher”, you win the payout if the exit spot is strictly higher than the entry spot.

If you select “Lower”, you win the payout if the exit spot is strictly lower than the entry spot.

If you select “Allow equals”, you win the payout if exit spot is higher than or equal to entry spot for “Higher”. Similarly, you win the payout if exit spot is lower than or equal to entry spot for “Lower”.

Winning the contract

You win the payout if the market price ends in the digit you have selected.

Winning the contract

You win the payout if the market price does not end in the digit you have selected.

Winning the contract

If you select “rises”, you win the payout if the market price is higher than the entry spot.

If you select “falls”, you win the payout if the market price is lower than the entry spot.

Winning the contract

If you select “Stays Between”, you win the payout if the market stays between (does not touch) either the High barrier or the Low barrier at any time during the contract period.

If you select “Goes Outside”, you win the payout if the market touches either the High barrier or the Low barrier at any time during the contract period.

Winning the contract

If you select “Rises”, you win the payout if the exit spot is strictly higher than the entry spot.

If you select “Falls”, you win the payout if the exit spot is strictly lower than the entry spot.

Winning the contract

If you select “Touches”, you win the payout if the market touches the barrier at any time during the contract period.

If you select “Does Not Touch”, you win the payout if the market never touches the barrier at any time during the contract period.

Winning the contract

If you select “rises”, you win the payout if the market price is higher than the entry spot.

If you select “falls”, you win the payout if the market price is lower than the entry spot.

Pay-out

By purchasing the “Close-Low” contract, you’ll win the multiplier times the difference between the close and low over the duration of the contract.

Pay-out

By purchasing the “High-Close” contract, you’ll win the multiplier times the difference between the high and close over the duration of the contract.

Pay-out

By purchasing the “High-Low” contract, you’ll win the multiplier times the difference between the high and low over the duration of the contract.

Winning the contract

If you select “Reset-Call”, you win the payout if the exit spot is strictly higher than either the entry spot or the spot at reset time.

If you select “Reset-Put”, you win the payout if the exit spot is strictly lower than either the entry spot or the spot at reset time.

If the exit spot is equal to the barrier or the new barrier (if a reset occurs), you don’t win the payout.

Winning the contract

Call Spread

  • Win maximum payout if the exit spot is higher than or equal to the upper barrier.
  • Win up to maximum payout if exit spot is between lower and upper barrier, in proportion to the difference between exit spot and lower barrier.
  • No payout if exit spot is below or equal to the lower barrier.

Put Spread

  • Win maximum payout if the exit spot is lower than or equal to the lower barrier.
  • Win up to maximum payout if exit spot is between lower and upper barrier, in proportion to the difference between upper barrier and exit spot.
  • No payout if exit spot is above or equal to the upper barrier.

Winning the contract

If you select “High Tick”, you win the payout if the selected tick is the highest among the next five ticks.

If you select “Low Tick”, you win the payout if the selected tick is the lowest among the next five ticks.

Winning the contract

If you select “Only Ups”, you win the payout if consecutive ticks rise successively after the entry spot.
No payout if any tick falls or is equal to any of the previous ticks.

If you select “Only Downs”, you win the payout if consecutive ticks fall successively after the entry spot.
No payout if any tick rises or is equal to any of the previous ticks.

Entry Spot

The entry spot is the first tick after the contract is processed by our servers.

The Average

The average is the average of the ticks, including the entry spot and the last tick.

Entry Spot

The entry spot is the first tick after the contract is processed by our servers.

Exit spot

The exit spot is the latest tick at or before the end time.

The end time is the selected number of minutes/hours after the start time (if less than one day in duration), or at the end of the trading day (if one day or more in duration).

The start time is when the contract is processed by our servers.

Entry Spot

The entry spot is the first tick after the contract is processed by our servers.

Exit spot

The exit spot is the latest tick at or before the end time.

The end time is the selected number of minutes/hours after the start time (if less than one day in duration), or at the end of the trading day (if one day or more in duration).

The remaining time is the time remaining until the contract expires.

The start time is when the contract is processed by our servers.

Entry Spot

The entry spot is the first tick after the contract is processed by our servers.

Entry spot

The start time is when the contract is processed by our servers and the entry spot is the next tick thereafter.
If you select a start time in the future, the start time is that which is selected and the entry spot is the price in effect at that time.

Exit spot

The exit spot is the latest tick at or before the end time.
If you select a start time of “Now”, the end time is the selected number of minutes/hours after the start time (if less than one day in duration), or at the end of the trading day (if one day or more in duration).
If you select a specific end time, the end time is the selected time.

Contract period

The contract period is the period between the next tick after the start time and the end time.

The start time is when the contract is processed by our servers.

The end time is the selected number of minutes/hours after the start time (if less than one day in duration), or at the end of the trading day (if one day or more in duration).

Contract period

The contract period is the period between the next tick after the start time and the end time.

The start time is when the contract is processed by our servers.

The end time is the selected number of minutes/hours after the start time (if less than one day in duration), or at the end of the trading day (if one day or more in duration).

High, Low and Close

The high is the highest point ever reached by the market during the contract period.

The low is the lowest point ever reached by the market during the contract period.

The close is the latest tick at or before the end time. If you selected a specific end time, the end time is the selected time.

Contract period

The contract period is the period between the first tick (after start time) and the end time.

The start time begins when the contract is processed by our servers.

The end time is the selected number of minutes/hours after the start time.

High, Low and Close

The high is the highest point ever reached by the market during the contract period.

The low is the lowest point ever reached by the market during the contract period.

The close is the latest tick at or before the end time. If you selected a specific end time, the end time is the selected time.

Contract period

The contract period is the period between the first tick (after start time) and the end time.

The start time begins when the contract is processed by our servers.

The end time is the selected number of minutes/hours after the start time.

High, Low and Close

The high is the highest point ever reached by the market during the contract period.

The low is the lowest point ever reached by the market during the contract period.

The close is the latest tick at or before the end time. If you selected a specific end time, the end time is the selected time.

Contract period

The contract period is the period between the first tick (after start time) and the end time.

The start time begins when the contract is processed by our servers.

The end time is the selected number of minutes/hours after the start time.

Reset Time

At reset time, if the spot is in the opposite direction of your prediction, the barrier is reset to that spot.

The exit spot is the latest tick at or before the end time.

The end time is the selected number of minutes/hours after the start time.

The start time is when the contract is processed by our servers.

The entry spot is the first tick after the contract is processed by our servers.

Entry spot

The start time is when the contract is processed by our servers and the entry spot is the next tick thereafter.

Exit spot

The exit spot is the latest tick at or before the end time.
The end time is the selected number of minutes/hours after the start time (if less than one day in duration), or at the end of the trading day (if one day or more in duration).
If you select a specific end time, the end time is the selected time.

Entry Spot

The entry spot is the first tick after the contract is processed by our servers.

Entry spot

The start time is when the contract has been processed by our servers.

The entry spot is the next tick after the start time.

Exit Spot

The exit spot is the last tick when the contract ends. Contract ends when all ticks rise or fall successively, or when a single tick breaks the predicted pattern.

Contract duration

Please refer to the asset index for each asset’s minimum and maximum contract durations based on trade type.

Contract duration

Please refer to the asset index for each asset’s minimum and maximum contract durations based on trade type.

Contract duration

Please refer to the asset index for each asset’s minimum and maximum contract durations based on trade type.

Contract duration

Please refer to the asset index for each asset’s minimum and maximum contract durations based on trade type.

Note: Asian contracts will be refunded at the purchase price if the contract doesn’t end within 5 minutes.

Note: Digit contracts will be refunded at the purchase price if the contract doesn’t end within 5 minutes.

Note: Ends Between/Ends Outside contracts will be refunded at the purchase price if there are less than 2 ticks between the start and end times.

Note: Even/Odd contracts will be refunded at the purchase price if the contract doesn’t end within 5 minutes.

Note: Higher/Lower contracts will be refunded at the purchase price if there are less than 2 ticks between the start and end times.

Note: Over/Under contracts will be refunded at the purchase price if the contract doesn’t end within 5 minutes.

Note: Rise/Fall contracts will be refunded if:
• There are less than 2 ticks between the start and end times
• The contract doesn’t end within 5 minutes (for tick duration contracts)

Note: Stays Between/Goes Outside Contracts will be refunded at the purchase price if there are less than 2 ticks between the start and end times.

Note: Touch/No Touch contracts will be refunded at the purchase price if there are less than 2 ticks between the start and end times.

Note: High Tick/Low Tick contracts have a strict duration of five ticks.

Our Company

Education

Banking

Trading

Partner With Us

In the EU, financial products are offered by Binary Investments (Europe) Ltd., W Business Centre, Level 3, Triq Dun Karm, Birkirkara, BKR 9033, Malta, regulated as a Category 3 Investment Services provider by the Malta Financial Services Authority (licence no. IS/70156).

Outside the EU, financial products are offered by Binary (SVG) LLC, Hinds Building, Kingstown, St. Vincent and the Grenadines; Binary (V) Ltd, Govant Building, Port Vila, PO Box 1276, Vanuatu, regulated by the Vanuatu Financial Services Commission (view licence); Binary (BVI) Ltd, Kingston Chambers, P.O. Box 173, Road Town, Tortola, British Virgin Islands, regulated by the British Virgin Islands Financial Services Commission (licence no. SIBA/L/18/1114); and Binary (FX) Ltd., Lot No. F16, First Floor, Paragon Labuan, Jalan Tun Mustapha, 87000 Labuan, Malaysia, regulated by the Labuan Financial Services Authority to carry on a money-broking business (licence no. MB/18/0024).

This website’s services are not made available in certain countries such as the USA, Canada, Hong Kong, Japan, or to persons under age 18.

The products offered via this website include binary options, contracts for difference (“CFDs”) and other complex derivatives. Trading binary options may not be suitable for everyone. Trading CFDs carries a high level of risk since leverage can work both to your advantage and disadvantage. As a result, the products offered on this website may not be suitable for all investors because of the risk of losing all of your invested capital. You should never invest money that you cannot afford to lose, and never trade with borrowed money. Before trading in the complex products offered, please be sure to understand the risks involved and learn about Responsible Trading.

In the EU, financial products are offered by Binary Investments (Europe) Ltd., W Business Centre, Level 3, Triq Dun Karm, Birkirkara, BKR 9033, Malta, licensed and regulated as a Category 3 Investment Services provider by the Malta Financial Services Authority (licence no. IS/70156).

In the Isle of Man and the UK, Synthetic Indices are offered by Binary (IOM) Ltd., First Floor, Millennium House, Victoria Road, Douglas, IM2 4RW, Isle of Man, British Isles; licensed and regulated respectively by (1) the Gambling Supervision Commission in the Isle of Man (current licence issued on 31 August 2020) and by (2) the Gambling Commission in the UK (licence reference no: 39172).

In the rest of the EU, Synthetic Indices are offered by Binary (Europe) Ltd., W Business Centre, Level 3, Triq Dun Karm, Birkirkara, BKR 9033, Malta; licensed and regulated by (1) the Malta Gaming Authority in Malta (licence no. MGA/B2C/102/2000 issued on 01 August 2020), for UK clients by (2) the UK Gambling Commission (licence reference no: 39495), and for Irish clients by (3) the Revenue Commissioners in Ireland (Remote Bookmaker’s Licence no. 1010285 issued on 1 July 2020). View complete Regulatory Information.

Binary.com is an award-winning online trading provider that helps its clients to trade on financial markets through binary options and CFDs. Trading binary options and CFDs on Synthetic Indices is classified as a gambling activity. Remember that gambling can be addictive – please play responsibly. Learn more about Responsible Trading. Some products are not available in all countries. This website’s services are not made available in certain countries such as the USA, Canada, Hong Kong, or to persons under age 18.

Trading binary options may not be suitable for everyone, so please ensure that you fully understand the risks involved. Your losses can exceed your initial deposit and you do not own or have any interest in the underlying asset.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75% of retail investor accounts lose money when trading CFDs with Binary Investments (Europe) Ltd. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

Currency Binary Option

DEFINITION of Currency Binary Option

Currency binary options offer an all-or-nothing fixed payoff based on the exchange rate when the option expires, which can be as little as five minutes after buying the option. Binary options are really a means to speculate on currencies, rather than an investment.

BREAKING DOWN Currency Binary Option

Currency binary options are a form of online gambling on currency markets, rather than investing, because unlike spot trading you lose your entire stake if the binary option is not in the money at the time of expiration. The premium on a currency binary represents the consensus odds that the strike exchange rate will be reached by expiration. To make any money, you have to be right well over half the time.

Because the odds are stacked in favor of the house, short-term volatility in currency markets makes winning consistently with binary options very difficult. No-one, not even the best professional forex traders, can know what will happen to an exchange rate in the next 10 minutes. However, binary options trading, which is a relatively new and completed unregulated market, does appeal to people who enjoy addictive gambling products, like online poker.

Currency binary options are mostly limited to major currency pairs like EUR/USD, GBP/USD and USD/YEN. Like forex spot trading, investors can start trading online with relatively small amounts of capital. For a more in-depth look at binary options, read our guide Trading Forex With Binary Options.

Best Binary Options Brokers 2020:
  • Binarium
    Binarium

    Best Binary Options Broker 2020!
    Free Trading Education!
    Free Demo Account!
    Perfect for Beginners!

  • Binomo
    Binomo

    2 place in the ranking!

Like this post? Please share to your friends:
Binary Options Online Trading
Leave a Reply

;-) :| :x :twisted: :smile: :shock: :sad: :roll: :razz: :oops: :o :mrgreen: :lol: :idea: :grin: :evil: :cry: :cool: :arrow: :???: :?: :!: