Unlike some instruments, in which the trader is actually purchasing the asset itself – although generally not for delivery, but rather to sell or buy at a later date to someone who will actually take it for delivery – digital options are simply contracts that are based on an underlying asset. The asset itself is not actually purchased, not even as a future. This has a number of benefits, one of which is that digital or binary options can use virtually any underlying asset as the basis for their contracts. This means that every major market could potentially have digital option contracts available for it. In practice there are a few major markets that are commonly seen used with digital options.

Forex

Perhaps the most actively traded market for digital options is the Forex market. Many people move to digital options from Forex day trading, and it is an easy transition to continue using the same underlying assets. At the same time, the Forex market is often easier to understand than the very nuanced commodities markets, and there is nearly always some major shift occurring in the world’s currency values, making it ideal for finding short-term contracts. Different digital option platforms offer different currency pairings, but generally all of the major benchmark pairs are included. The most common pairings available in digital option markets are: USD-RAND, USD-CAD, USD-JPY, USD-CHF, GBP-USD, AUD-JPY, EUR-USD, NZD-USD, EUR-JPY, EUR-CHF, EUR-GBP, and GBP-JPY.

Commodities

Commodities are widely traded as digital options as well, although the selection is generally limited to those commodities which see a lot of active movement. Most traders find purchasing digital option contracts on commodities somewhat more difficult than Forex pairs, simply because every commodity reacts to its own set of fundamentals. For example, while Oil might react very strongly to the price of the USD, and the global demand as indicated by the production strength of the world, Orange Juice reacts primarily to weather and natural events which impact the production of oranges, and therefore the overall supply. Many digital option trading platforms have a limited selection of commodities, but generally include at least: Oil, Gold, Silver, and Copper.

Stocks

Most digital option platforms also include contracts on a number of benchmark stocks. While the stock markets are large enough that platforms will not represent them especially well, most platforms try to get at least a handful of stocks from each of the major sectors of the market. For example, a common selection might include: Apple, Coca Cola, JPMorgan Chase, Microsoft, McDonalds, Barclays, Telefonica, and Johnson & Johnson.

Indices

Quality Binary Options brokers such as we list on this site offer a wide range of global Indices that you can trade using binary options.

Binary options are very simple. They are, in essence, a contract in which the trader predicts whether an underlying asset will increase or decrease in value over the life of the contract. How the asset price moves during the contract is unimportant – all that matters for the sake of determining whether a contract expires in-the-money or out-of-the-money is whether the price when the contract expires is higher or lower than it was at purchase.

A binary options trader finds an asset they’re interested in, and finds a contract on it. Most binary options contracts have a starting length of one hour, and as time passes that length shortens – generally platforms allow traders to purchase contracts down to fifteen minutes before expiry, although some allow purchases as close to five minutes before expiry. Once a binary option contract has been found, the trader purchases either a Call contract (if they believe the price will end higher than at purchase) or a Put contract (if they believe the price will end lower).

When the contract expires, if the binary option trader purchased the correct contract, they have finished in-the-money, and generally receive a payout of between 155% and 180% of their initial investment. If they purchased the incorrect contract, they have finished out-of-the-money, and lose their initial investment, often receiving 10% to 15% back.

This high payout means that a binary options investor can make a sizable amount of money in a single hour. For example, if an investor sees that an announcement was made that is likely to increase the price of Gold, they might log in to their binary options platform to find a contract on Gold. They might find one with 47 minutes remaining, with Gold at 1104, with a payout of 170%. Believing the price will go up, they purchase a $1000 Call contract. Over the next 47 minutes the price might fluctuate, going up and down as the market adjusts to the data, but at the end of the 47 minutes it ends at 1104.7, so they have finished in-the-money and receive a payout of $1700, for a profit of $700 in less than an hour.

Because contracts are so short on binary options, many people who are just getting into trading, or do it in their spare time find it ideal. In an hour a day a trader can in theory make a lucrative living, as they develop strategies and become better acquainted with what fundamental events impact asset prices. Over time a simple hour a day can be enough to realize large returns with binary options trading, especially if in that hour multiple contracts are purchased to help hedge against losses and to better cover the movements of the market.

Many people build a virtual portfolio of assets they tend to trade in, however, and this can be a strong way to make binary options more profitable. Because binary options can be purchased on virtually any underlying asset, many people are tempted to trade on everything, and as such end up spread a bit thin, with little understanding of most of the assets they’re involved in. Coming up with three or four core assets which comprise a binary option portfolio can be a good remedy for this, and can help ensure that more subtle changes in the market are detected and leveraged for gain.

This doesn’t mean that a binary option portfolio shouldn’t be diverse, however. Often when one sector of the market is stagnant, another is moving, and the ability to purchase a contract no matter what’s going on is a great asset. As a result, building a portfolio which includes assets from different asset classes is a good idea.

For example, a binary option portfolio might include eight different assets that the investor trades in exclusively. A sample portfolio might include: EUR-USD, USD-JPY, EUR-CHF, Gold, Oil, Corn, Apple stock, and BP stock. This gives the investor a good diversity across three classes – Forex, commodities, and stocks.

Having three benchmark currency pairs helps ensure that there is always something happening with one of them that leaves an opening for a binary option contract. EUR-USD often moves, based either on the shifting strength of the Euro or the USD. In some cases the Euro may be stagnant, however, and including the USD-JPY pair makes it much more likely that a currency contract can still be found. In other cases the USD might be sitting without shifting, in which case it is possible the Euro and the Swiss Franc (CHF) will see some change.

Similarly, while Gold and Oil are often connected in their movement – since the same fundamentals often drive them, such as a strengthening USD – they are also separate enough commodities that one may see changing value even if another is static – unlike, for example, Gold and Silver, which are nearly always tied. Corn rounds out the commodity spectrum, by introducing a crop commodity, susceptible to weather events. Finally, including two stocks in the binary option portfolio allows for a more traditional market approach. Choosing two stocks from very different sectors – in this case a tech stock and an energy stock – is a good idea, to help keep a diverse portfolio.

Both traditional options and binary options are derivatives – which is to say that their value is derived from the value of some other asset. Traditional options, however, confer the actual option to either buy or sell that asset at its strike price. It is this option that gives them their name, and much of the strategy involved in traditional options has to do with whether that option is exercised or whether the option is allowed to expire.

Most traditional options are of a class known as exchange traded options, as well. This means they are actually traded on an official market, and everything is settled through a clearing house, with standardized contracts. While there are a handful of exchange traded binary options, generally when people refer to binary options they are talking about an over-the-counter (OTC) form of binary options, traded between two private parties.

Binary options also do not include the option to purchase or sell the asset itself. The asset is used in a binary option only as a benchmark for the option itself to determine whether the contract has expired in-the-money or out-of-the-money. The underlying asset exists solely as a proxy, and in fact virtually anything could be used as an underlying asset, although most binary options utilize traditional assets that one might also see in a traditional option contract.

Binary options simplify many other aspects of the traditional option as well, which is one reason many people prefer them. While traditional options may have variable contract lengths, where the option can be exercised at any point during the contract, binary options have a fixed contract length, generally around one hour. This removes the need for the trader to ever decide whether they want to exit their contract. Similarly, the potential for profit and loss in a binary option is fixed, unlike a traditional option, where the profit or loss is determined by how much the underlying asset swung in value.

Purchasing a binary option entails simply finding an underlying asset with a contract available, determining whether the value will increase or decrease before the contract expires, and purchasing either a Call or Put option respectively. If at the contract expiry the investor was correct in their prediction, they have finished in-the-money, and receive a fixed payout. If they were incorrect, they have finished out-of-the-money, and suffer a fixed loss. This is incredibly different from a traditional option, in which an investor might purchase an option, and then watch the underlying asset day to day to see how far it shifts, to decide whether they want to exercise their option to either buy or sell the asset.

Perhaps the biggest draw for binary options is the fact that risk is almost entirely managed. In a binary option transaction the trader knows from the outset how long their contract will last, and exactly how much their profit will be in the event of an in-the-money expiry, and exactly how much their loss will be in the event of an out-of-the-money expiry. All of this is taken care of by the instrument itself, without the need for complicated stop-loss protocols. This allows the binary option trader to build a strategy around well-understood profit and loss margins, giving them an advantage over traditional Forex traders.

Contract lengths in binary options are also entirely fixed, which many people find to be a relief after trading Forex. Most binary option contracts have a duration of less than an hour, so that there is virtually no period when a trader is bought into a contract but not able to be actively involved. Many Forex traders who dislike thinking about their Forex contracts while they sleep, wondering whether they’ve hit stops while away from their terminal, find binary options to be a welcome change. Some people are also concerned about broker manipulation, especially in the spot Forex market. Because binary options use publically available data to determine strike prices and expiry prices, there is much less possibility of manipulation.

Most people who move from traditional Forex trading to binary options continue to trade with Forex currency pairs. The general principle remains the same – determining the direction a currency pair is going to shift. Rather than hoping for an enormous shift, however, and figuring out how much leverage is needed to make a reasonable profit, with a binary option all the trader needs to determine is directionality. If the currency pairs finishes the contract in the correct direction – even if it has only changed by a fraction of a point – the payout is the same as if it had shifted enormously, and is generally around a high 170% return. This removes a great deal of the work of Forex trading, where large shifts have to be hunted out to eke out a good profit.

Binary options trading has the added benefit of having a much broader selection of asset classes to choose from. Should a trader wish to trade not only Forex currency pairs, but also commodities and stocks, they can do so without having to understand an entirely new system. The same simple system that is used for Forex binary options is also used for commodity binary options and stock binary options, and many traders purchase contracts across different asset classes at the same time.

To help you get started on the right foot, we’ve created a list of five essentials every binary option broker must have:

1.  Free Binary Option Trading Account

Even though binary option trading used to only be open to people who could pay high fees to brokers, no less than $500, today you should never have to pay for a binary option trading account. In fact, most binary option trading accounts offer traders not only a free platform to trade on, but a demo account as well. So traders know how to use the platform before they start depositing money.

2.  Bonuses and Special Offers

While not all binary option brokers offer bonuses and special offers, the most competitive sites will. This is especially important for beginning players who may not have established accounts at all yet. Often you can get a bonus between $250 – $1000 when you sign up for a free account. Many online brokers, like AnyOption and Binarix Trading also offer weekend bonuses and holiday bonuses to give traders easy ways to make high return trades.

3.  Easy to Use Binary Option Trading Platform

Not all binary option trading platforms are the same. It’s important to know which platforms to use so that you can pick your assets and easily manage more than one asset at a time. This will help you make sure that you trade in the money and that you get a high return on your investment in no time.

4.  A Range of Assets to Choose From Worldwide

The best binary option trading brokers will have a range of assets for you to choose from. From stocks and commodities to forex currencies and bonds — a good binary option broker should have a range of assets for you to choose from. This will make it easier for you make a high return on your investment if you pick assets that you are familiar with and balance your portfolio across different markets.

5. Safe, Secure Deposit and Customer Service

The best binary option brokers will surely have a safe deposit option where you can use a credit card or trusted e-payment source. In addition, it’s important that every binary option broker you use have clear contact information so that if you have a problem making a payment, you’ll be able to reach someone. Some of the best binary option brokers even have online chat services so that you can easily connect with a representative need be.

When choosing your binary option broker, make sure that you evaluate them properly. It’s best to make the right decision about which broker to go with from the start and to make sure that the broker brings you the best possible benefits so that you can make high return trades.

What Makes Binary Options Easy to trade

Binary options are some of the most simple types of options to trade. They are easy enough for beginning traders to use, but are sophisticated for traders with years of experience in investment banking, forex and other finance methods for making money. There are only three parts to every trade, so you never have to worry about the complexity of making the trade, you just have to make three good decisions and you’ll be in the money.

Step One – Picking An Asset

When trading binary options, the first thing you have to do is pick a binary option asset. There are many different types of assets available online for traders to choose from, including stocks, commodities, currencies and forex options. Their are also several different financial markets that you can trade on worldwide — giving you endless options.

Step Two – Select the Time of Expiration

The second step is to determine what time you think that the binary option will expire. Binarix Option Trading and AnyOption trading each have different options for the time of expiration. From one day and one week to one hour, the choices give binary option traders a flexibility that no other traders have.

Step Three – Pick the Direction

The third step for a binary option trader, is to determine which direction you think that a binary option will move — above or below. Unlike other types of financial trading where you need to determine how much an option will be above or below a certain point, or how many pips it will move, with binary options trading you only need choose the direction that you think the price of the underlying asset will move.

After you’ve completed these three steps, all you need to do is enter the amount of money you would like to trade and wait for the binary option to expire. There are different rates of returns for different brokers, but for the most part you should make a high return on your trade above 70% if you made three good choices.

Binary options are increasingly becoming the number one choice of many online traders because they are so simple, exciting and fast. There is no way that you can’t enjoy a good binary option trade an also make some money if you learn the three steps and pick the right asset, direction and time of expiration.

Tip One – Pick a High Return Broker that Gives Great Bonuses

Before you even make your first trade, you’ll want to set yourself up for success. Make sure that you survey all the different binary option brokers online and find a binary option broker with a free trading platform, lots of assets and markets to choose from and a high return on your trade. ( Our recommended Binary Options Broker is Anyoption)

Tip Two – Trade One Hour Options

There are lots of different types of options to trade on, one year, one month, one day and even one hour. Knowing which option to choose is all dependent on if you want to make money fast or slow. However, since it’s typically very challenging to determine how the markets will be reacting in one year, one month or even one week, make sure that you trade on a platform that allows you to buy one hour options. One hour options are not only the fastest way to make money, but they provide you with greater flexibility than other options.

Tip Three – Read the News Like a Hawk

If someone told you that you could make thousands of dollars from reading the news, you’d probably be combing the news 24 hours a day 7 days a week. Well, binary options are an apparatus for just that — people who love to read the news can make tons of money with binary option. Why? Because people who read the news know what important events are coming up and can predict how markets will react — the basics of any good binary option trade.

Tip Four – Plan Your Trading Schedule

Let’s look at an example. In the morning you go online and start reading the financial news. You see that Apple has a new tablet reader coming out and they are going to announce the details of the new product at 3 pm that day. Since there is much anticipation about what Apple is going to say, you can go online and read reviews from experts about what Apple might be releasing.

However, you might be working too hard. If you were a more seasoned trader (or read this article) you’d know that when companies make announcements about new technology their stocks usually shoot up… Knowing that information, would be a great indicator to get online and to schedule a binary option trade for right as the information is going live — that way you’ll be able to catch the upswing of the asset and make a high return, simply from reading the news.

While it may be new to the online trading audience, binary option trading is not new. In fact, it’s been one of the high rollers on Wall Street’s best kept secrets for years. Originally from Europe, binary option trading was only available in European markets for years and only slowly crept into the American market. However, because of the nature of these high return (up to 81%) fast options, they were kept in very private trading markets and only available to licensed stock brokers willing to pay high fees to trade.

For years, traders were making high returns on binary options in short amounts of time. While most people thought it was because they were highly skilled, really, what it boils down to is just that these traders had the opportunity and knew how to take advantage of it

For those of you who don’t yet know what binary option trading is, the premises is very simple. Binary option traders have the option to trade on several financial markets worldwide. In fact, unlike many other types of online trading, binary option has more open markets to trade on worldwide and more trading hours — making it an ideal way to make money for independent traders.

All a trader has to do to make a high return on their trade is pick which asset to trade on, which direction that they think the price of the asset will move — up or down — and a time of expiration. Once they’ve selected the parameters of the trade, it’s fairly simple, they just have to wait for the trade to expire. If they made the correct prediction, they’ll be in the money and make up to 81% return on their initial investment! For example a trader who invests $100 would make $181 in just one hour — talk about a high return.

Another great thing about binary option is that there are no minimums or maximums to trading — you can trade as little or as much as you like. On several binary options trading platforms, you can also determine how long you want a trade to last, one hour, one day, one week or one month — so that you can make the most accurate predictions possible.

Binary option trading is surely the fastest, most exciting way for traders to make high returns on their investments. Now that it’s available to the public, there’s no reason to wait — just set the parameters of your trade and start making money.

Binary option trading is a new type of online finance trading. While the concept of binary trading has been around for years, it was only recently that at simplified version became available to the public — making it easy for newbie traders to start making the high returns that pros have been making for years.

The premises of binary option is simple. Traders can trade on a number of stocks, commodities, and currencies from around the world. All a binary option trader has to do is determine which direction they think the asset will move — up or down. For example, if a trader decides that they want to buy an oil stock that will expire in one hour, all they have to do is determine whether they think the price of the stock will increase or decrease by the time of expiration.

Unlike more sophisticated online trading schemes, with binary option the traders does not have to determine how much the option will go up or down — it can be a little or a lot, one pip or two, and the trade will be making easy money with binary option. In addition, some of the best binary option players are able to make easy money by just reading the news, betting on the direction of an asset and waiting one hour to get their high return.

Binary options trading is really the way of the future. It’s very simple for new traders to learn and lots of fun once you get comfortable picking your stocks, expiration times and direction. Traders typically work from the comfort of their own homes and manage portfolios with several different assets. While each asset is different, this range of assets gives binary option traders the ability to play many assets at one time and to make the most of every trade and market — the best way to make easy money with binary option.

While some binary option traders come from the e-trading world, most people who want to get into online trading start with binary option because it is simple and provides some of the highest returns on the market within the shortest amount of time. In addition, it’s easy to get started with a free account on several different binary option broker websites and to start making easy money online within a matter of minutes — all you have to do is pick a broker, sign up for an account and start trading — it doesn’t get easier than that.