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Binary Options Review – Can You Make Money With Binary Options?
Binary options have become increasingly popular over the years. Now they are being banned in countless countries. In this binary options review, you will learn the complete truth about binary options. You will learn how they work and why they are getting banned. And don’t worry, I am not a binary option promoter, so this binary options review will be the real objective truth and not some scammy promotional post.
What are Binary Options
Before we get into the interesting stuff, I just want to explain what binary options even are. Binary options aren’t anything new. I actually own a derivative book published in 1989 and already in this book, there is a short paragraph about binary options.
Binary options are a derivative just like futures, vanilla options… This means their price is based on an underlying asset which can be almost anything (e.g. a stock). Just as the name implies, binary options are options. In fact, they are exotic options meaning that they work somewhat different than normal vanilla options.
Binary Options Trading Explained
Binary options are ‘make it or break it’ bets. This means either you win a certain amount of money or you lose a certain amount of money. There is no in between. They are fixed-return options.
Usually, you can’t select a strike price for binary options. So the strike price normally is always the underlying asset’s trading price. The time frame that a binary option is active can vary a lot. But most binary options brokers only offer very short-term binary options with expiration times of a few minutes or similar.
If you are wrong on a binary option position, you lose your entire investment. If you are right, you will achieve a profit. The size of this profit depends on the payout ratio of your broker. A common payout ratio is around 70% which means that you will receive 70% profit on your initial investment if you are right.
Just like with vanilla options, two different types of binary options exist: Call and Put options.
As you can see on the following payoff graphs, a Call option profits if the underlying asset’s price increases, whereas a Put option profits from a decrease in the underlying’s price.
Call Binary Option Payoff Put Binary Option Payoff
Here is an example of a binary option trade:
The underlying asset is XYZ which is trading at $100. You decide to buy a Call binary option meaning that you think that XYZ’s price will go up. You pay $10 for the Call option. The option expires in five minutes and its payout ratio is 70%.
Now there are two possible scenarios:
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- XYZ’s price increases and the option expires: If this happens, you were right and will make a profit of $7.
- XYZ’s price decreases and the option expires: If this happens, you were wrong and thus lose your entire investment of $10.
To recap, to trade a binary option, you will need to choose:
- An underlying asset
- A time frame
- An option type (Call or Put)
- An investment amount
What Most People don’t tell you about Binary Options…
Now let us get into the interesting part of this binary options review. I will now tell you something that most other websites won’t tell you:
Binary option aren’t legitimate investment products! That’s right! Binary options aren’t legitimate products!
Why? Because they aren’t fair. Just like a game of roulette in a casino isn’t fair, binary options aren’t either.
Let me explain to you why binary options are set up just like gambling products.
The payout ratio of a binary option is always less than your risk. This means you can’t win as much as you can lose. This makes them unfair products.
To understand this better, I want to present you an example of a coin flip game. You probably are aware of the fact that a coin has about a 50% probability of landing on tails and a 50% probability of landing on heads.
So the odds of picking the right side are about 50%.
Now I want to ask you a question: would you play a coin flip game in which you could lose $1 if you pick the wrong side and win $0.5 if you choose the right side?
I hope you wouldn’t because this game is unfair for you. On 10 rounds of this game, the expected outcome would be 5 wins and 5 losses. But if you would lose $1 five times and only win half a Dollar five times, you would be at an overall loss.
Over the long run, you will lose money playing this game.
Binary options work the same way as the just described game. Your wins will always be smaller than your losses. So to make any money with binary options, you would have to have an extraordinary high win rate.
Predicting very short-term price movements is very hard and therefore, it is practically impossible to make any money with binary options.
A binary option with a payout ratio of 70% would mean that you would have to have a win rate of almost 60% just to break even! And that’s without even taking commission costs into account! Even with a win rate of 60%, you wouldn’t make any money.
In addition to this expected negative return, your odds of making any money are even lower due to how binary option brokers execute your binary option positions. Often, brokers will get you into a Call option position above the current underlying asset’s price and into Put option positions below the current underlying’s price. This means that it isn’t even enough to predict the correct direction. The underlying asset has to go all the way above (for Call options) or below (for Put options) the ‘by your broker’ chosen price. This means the odds are even worse than 50/50.
And believe me, using some fancy indicators won’t be enough to make you win and the broker lose.
But doesn’t the broker want you to win?
NO! Binary options are Over-The-Counter (OTC) products which means that the broker is your counterparty. In other words, they take the other side of your trade. That is a huge conflict of interest. The broker is practically trading against you. Therefore, most binary option brokers will go as far as possible to make you lose (and to make them win).
And that is still not everything!
By far the most binary option brokers are based (and regulated) in countries like Cyprus, Cayman Island, Bahamas etc. Regulations from these countries are very sketchy and untrustworthy.
This means there is no guarantee that you will get your money back after depositing it to such a broker!
That is also the reason why there have been countless incidents of people not getting their money. So even if you are extremely lucky and win some money with binary options, you probably won’t be able to withdraw these winnings.
But why have binary options become so popular if they are a blatant scam?
Great question! Binary option brokers have done everything possible to promote their scammy binary options. When I say everything, I mean everything!
Binary option brokers have literally created thousands of fake accounts on countless sites to tell everyone how great binary options are. Just go to any forum (e.g Quora) on the internet and look at threads about binary options. Many questions and most of the answers are from binary option promoters themselves. Due to this, loads of unknowing people have become lured into the trap of binary options.
Furthermore, almost all binary option brokers offer very lucrative affiliate programs. So tons of (greedy) trading sites have been promoting binary options because the binary option brokers have been paying them to do so.
Conclusion – Can you Make Money Trading Binary Options
Once again, binary options are a complete scam and they aren’t legitimate investment products. So if you want to get into trading, binary options aren’t the way to go! In other words, you can’t make money with binary options (unless you are a binary options broker).
I am not even exaggerating when I say that your money would be better off in a casino than with a binary option broker!
If someone is promoting binary options, they are either in bed with the binary option brokers or they have no clue what they are talking about.
Here is a short recap of why binary options aren’t legit:
- You have an expected negative return
- Bad executions
- Conflict of interest
- The broker is trading against you
- Sketchy regulations
- Countless incidents of non-withdrawable money
- Shady promotional tactics
These facts are also the reason why binary options are getting banned in countless countries. Even the EU has finally recognized that binary options aren’t real investment vehicles. That is why the new ESMA regulations are banning binary options.
One example of a binary option broker is IQOption. They aren’t as scammy as some other binary option brokers, but they still aren’t trustworthy! Make sure to check out my IQOption review/exposé .
Trading is hard enough on its own. You really shouldn’t make it even harder by trading binary options. If you do, you will lose your money! No one except for the binary option broker is making money with binary options!
Besides the fact that binary options brokers are stealing unknowing traders’ money, binary options are also shedding a bad light on the entire trading industry and on normal options.
Normal vanilla options are real investment vehicles that have an actual purpose. Trading real (vanilla) options is a legitimate thing and can be very profitable. Sadly, a lot of newer traders fail to distinguish between real (vanilla) and binary options even though there is a huge difference (namely that binary options are a scam and vanilla options aren’t).
If you want to do yourself a favor and learn more about real vanilla options, make sure to check out my free options trading education .
Hopefully, you enjoyed this binary options review and learned why you should NEVER EVER trade binary options!
Have you ever been scammed by a binary options broker or have you had a similar experience?
Let me know in the comment section below! If you have any questions, please let me know as well.
Also, make sure to share this binary options review so that more people can learn about the dangers of binary options.
19 Replies to “Binary Options Review – Can You Make Money With Binary Options?”
Its being long time since i thought to go into binary options before. However i never did so as i was not sure what is real and what is just a good scam. Thenks to some of the points you pointed at i feel more confidence about getting started.
You know the funny thing is, when I first started investing in the stock market, someone told me about binary options and I looked into it.
I did a little research and even created an account, but I never put any money in it.
Like you stated, it seems like lately everyone and their mother is “investing” in binary options’ but it’t the affiliate commissions they’re interested in.
Investing in binary options isn’t easy because it leans more towards gambling.
It;s a shame that no one is actually taking the time to teach people about binary options the right way.
Thanks for posting,
Exactly! You got it.
I have had a go at binary options and it is like you said not far off gambling. Everybody gets different results so you win and some you lose. If you want to go down the route of binary options you are a little safer with a longer term option, any thing from a day to 2 hours, be warned tho the pay out can sometimes be a lot less.
Hello and thank you for this binary options review.
When I was looking into affiliate marketing, I signed up with a guy who was doing binary trading. The way his site was advertised made it seem like he was offering something else, which is why I signed up. When I found out what binary options really are (thank you Google!), I immediately unsubscribed. However, I continued to get emails from this guy.
This is a very good explanation of why binary options are not for the faint of heart, and I am glad that I did not go further with it.
Thanks for sharing. I am very glad that you found my article informative.
Great post describing how binary options operate.
I am totally agree with your point here, binary options ” make it or break it, massive profits or loosing everything”.
I do the binary trading since 2009, I must admit I lose money more by paying the brokers than do trading.
Making a killing trade is harder than eating by a shark!
I want to try out you recommended iq option here, but I would like to know if they offer any options training?
I’ll bookmark your site and come back for more info.
Thanks for sharing your thoughts on Binary Options. I see you are interested in IQ Option. You can check out my full review of IQ Option here.
Interesting articles in here. I never understood how binary options worked and you have been able to clarify this for me. Im glad I read your article. I see a lot of advertising about bitcom which I presume is the same thing. Am I right with my presumptions?
Ive always steered away from trading as I was once bitten by currency trading – buying Yen at a low and supposedly selling at a high. I need to look more into what you are offering.
Thank you for the knowledge you offer.
Thanks for the comment Paula. I am very glad to hear that this article helped you. Bitcoin and cryptocurrencies in general have similar issues. Even though they aren’t as useless and scammy products as binary options, many brokers that offer them are very sketchy.
I deeply sympathize with many consequent losses! I was one of the victims of those guys on ICP Trading Group, after waiting endlessly on my profits as promised for many months, I decided to source for other means of unblocking/refunding my shares as soon as I can.
I feel that these people are not human beings, they have no hearts, they are evil and it is absolutely best not to have anything to do with them.
This is a great article, since I’ve actually done Binary Options myself, and turned into a nightmare. Not that I invested so much in it, but everything what you state in this article is true. And it is good that you warn people about it, and in the world of today, making an investment is a big risk anyway. Keep up the good work!
I am sorry to hear that you are a victim of the shady binary options brokers. It is great to see that binary options are finally getting banned in more and more countries so that fewer people will be suffer the same fate as you.
I lost everything thing I had to Gtoptions,after months of searching had to hire a refund professional company to recover my funds. I’m glad I got a refund others weren’t so lucky. Happy to share my experience.
Thanks a lot for sharing! I hope your story helps people avoid binary options (brokers) in the future.
This is a great article. I was also a victim and lost almost all I had worked for. I do not wish the binary option scam on my worst enemy. I went broke for over a year and finding solutions to my situation was the only thing on my mind. I’m glad I did.
Thank you so much for sharing your story about binary options. Hopefully, this will help someone else avoid them. I am very glad to hear that you recovered.
Hi Louis, I’ve just started your options master course and saw this thread going and wanted an opinion on Nadex ( North American Derivatives Exchange). I’ve been trying to learn to trade binary, spread, and more recently a little bit of touch brackets with Nadex. I believe this exchange to be legitimate since they are regulated in the US and are not OTC. However their options contracts/strikes are arranged so that you almost have to day trade..the longest durations being a max of one week. I’ve had some good wins and even more losses:) I believe most of my woes come from trying to trade short term trends, and have concluded that 1) I need more duration time and 2) trading directionally in the short term is not good probability. Would you agree with my assessment? This is why I’m now getting educated in your type of options. Thanks, John
First of all, sorry for the late reply. Secondly, I personally have no experience with Nadex options. Therefore, I can’t really tell you much about them. Nevertheless, I agree with your thoughts on duration. In my opinion, it is extremely hard to predict very short term price moves because as soon as you look at intra-day (option) price moves there is a lot of almost unpredictable noise.
I really hope my education will help.
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Binary Options Guide: The Truth About Binary Options
Trading binary options can seem deceptively simple, but leaning too far into that notion can blind people to some of the risks that often accompany this type of trading.
Before I go any further, I want to make it clear I’m not a binary options trader. I trade penny stocks and teach day trading. I’d love to see you join the Trading Challenge — it’s the result of over two decades of trading and a decade of teaching. It’s awesome.
If you’re interested in taking the binary options path, it’s critically important to understand exactly what you’re getting into and set appropriate expectations. And you should get a mentor who trades binary options. Seriously. Preparation is key.
Again, I don’t trade binaries. For the most part I think they’re scams. Can you trade them successfully? There are successful traders in every niche. But most traders lose. That’s the reality of the industry.
It doesn’t matter if you’re trading forex, penny stocks, options, big caps, or … binary options. Most traders lose and most trading teachers don’t want you to know about it. So I’m going to tell you about binary options in this post. But I don’t trade them and I don’t recommend it.
Will trading binary options enable you to buy a villa in the South of France next year? Probably not. Will they allow you to quit your full-time job and finally start on that novel you’ve always wanted to write? Don’t count on it.
Here, we’ll take a look at what binary options trading is all about and you can decide whether it’s right for you. As you read, keep in mind that binary options are getting outlawed in more and more countries. Companies are getting shut down. Or they’re based overseas in places where you can’t sue them. More on that later.
Table of Contents
What Are Binary Options?
Before we dive into specific binary options trading strategies, let’s review exactly what binary options are. According to Investopedia’s definition:
A binary option, or asset-or-nothing option, is a type of option in which the payoff is structured to be either a fixed amount of compensation if the option expires in the money, or nothing at all if the option expires out of the money. The success of a binary option is thus based on a yes or no proposition, hence “binary”. A binary option automatically exercises, meaning the option holder does not have the choice to buy or sell the underlying asset.
At the core, binary options are based on a yes or no proposition. You must decide whether you believe an underlying asset will be above or below a specific price at a specific time.
Binary trades are ruled by expiry times. These time constraints indicate how long you have to make your predictions regarding whether you believe an underlying asset will be above or below a specific price at a specific time. Once the expiration limit occurs, your predictions determine whether you gained or lost money.
Expiration times vary from binary option to binary option. Some of these minimums are known as short expires, which means the expiration date is actually within mere minutes of the buy-in.
There are medium and long expiries, as well. For medium expiries, the deadline could be anywhere from two to five hours. Long expiries typically last between two and 24 hours. Many experts believe that longer expiration times can help make predictions easier.
What Are the Underlying Assets of Binary Options?
In order to participate in binary options trading, you must first have ownership of an asset that can be optioned for a fixed amount. The types of assets common in binary options include stocks, indices, commodities, and currencies. Many binary traders chooses to trade with stocks, as this option can allow them to get high returns within a short span of time.
Along with indices and commodities, currencies are another popular binary option vehicle. Since currencies are liquid and often subject to dynamic price fluctuation, many traders choose to analyze their binary options across the complex — and often shifting — global currency market.
A quick aside since we’re talking about forex. Be aware that the forex market is among the most difficult to trade. Why?
Because it’s the biggest and most liquid market in the world. You’re up against the smartest, richest, and often most experienced traders in the world. Personally, I don’t want to compete against that. Plus, the forex markets move so fast on news you don’t have access to, that there’s no edge whatsoever.
And now, a new asset has emerged: cryptocurrency. I don’t trade crypto, either. I’ve traded the random crypto-based stock. But this is a whole niche unto itself and I’m happy with penny stocks. Crypto has its own version of binary options — which is why I’ve included it here.
Led by Bitcoin, this new, digital currency class is intriguing investors around the world who see the digitization of finances as the way of the future.
According to Options Advice, there are two prominent ways you can capitalize on Bitcoin binary options. The first strategy is by trading on what you think the imminent fluctuation of Bitcoin might be, and the second is trading regular options with Bitcoins as your currency.
If you’re interested in taking the cryptocurrency binary options route, I strongly suggest familiarizing yourself as much as possible with the trends dictating the ebbs and flows of the altcoin market.
An entire niche financial industry has been built up around educating consumers and future investors of digital coins and tokens. From resources like Cryptoslate to ICO listing sites like Coinschedule, there are many resources available to help you make the most strategic crypto trading moves possible.
There are also a lot of scams. And strange happenings. Like when a crypto exchange CEO died with the ONLY key to $137 million in crypto. Ouch. More than 100,000 cryptocurrency holders learned a very hard lesson. Back to binary options …
What is a Call and What is a Put?
Two of the most common terms you’ll hear throughout the binary options world are call and put. These two labels represent the market positions of binary options.
You typically choose to call if it looks like the value will rise within the confines of the expiry time.
Options also have a strike price, which is the price at which the security would be bought or sold.
If you choose to call, you’re signifying your confidence that a stock will rise within the time limitations. If the stock valuation moves upward at all, you’ll receive both your initial investment as well as the return.
On the opposite end of the spectrum, a put signifies your confidence that the valuation of a stock will drop within a certain time limitation. So if you predict that a stock valuation will decline before the expiration date, and the stock does dwindle, you will have succeeded at that trade and will receive your initial investment — as well as the trade — back.
What Are Other Types of Binary Options?
Beyond call and put options, there are other distinguishing factors that separate binary options from one another.
This guide from Binary Tribune delves more specifically into binary options types based on the number of interactions a trader must initiate with the trade. The levels include one-touch, no-touch, double one-touch, double no-touch, and paired options.
Let’s take a look one-touch and no-touch options …
Essentially, a one-touch binary option indicates that in order for you to receive a payout, a trigger (or predefined barrier) must be reached. Traders often choose one-touch if they feel confident that a stock will move in a certain direction at a minimum amount.
The option only has to meet the predefined trigger level once (hence the “one-touch” term). However, as indicated by Binary Tribune, this strategy is often accompanied by some risk.
Beyond simply calling or putting, you also must feel confident that a certain valuation threshold will be crossed. However, with greater risk often comes greater reward.
In contrast, a no-touch binary option essentially depends on a trigger level not being reached.
Rather than hedging your bets that the valuation of a stock will rise above or dip below a specified amount, you’re betting that the trade will not dip above or below an amount.
Because you’re making the trade with the intention that a threshold will not be crossed in either direction, it’s referred to as “no-touch.” Like their one-touch counterparts, these trades come with greater reward — and risk — potential.
I liken one-touch and no-touch calls and puts to something like an electronic stop-loss. The problem is, you don’t have control. You’d better be damned sure you’re right. Which is impossible.
What Are the Pros and Cons of Binary Options?
Now that you understand binary options basics and the different factors between them, you might be wondering whether this type of trading aligns with your goals. Let’s weigh the pros and cons.
We’ll start with the benefits …
Low Barrier to Entry. You don’t need a masters in economics to engage in this kind of trading. For this reason, many first-timers enter the trading arena through buying and selling binary options. Comparatively, binary trading is relatively simple. When compared directly to other types of trading, including quantitative or arbitrage, trading binary options is straightforward.
Fast Returns. Many traders are eager to see fast results and liquidate within a specific time frame. Those who play the long game (investors) are typically most concerned with growing their money steadily over long periods of time. Many opt to invest in index funds, IRAs, or bonds. Trading binary options is fast paced.
Thing is … you can get all the speed you need trading penny stocks. So, while binary options might be a fast game, the reward might not be worth the risk.
High Rewards. Binary options trading is touted by those who promote it as high reward. It’s possible to receive up to a 70% return on their investments if your binary trades reach your expiration dates in the money. This high average return is what makes this type of trading vehicle attractive to many novice and expert traders.
As explained by Investopedia, the risk on binary options is capped off, so while the rewards could yield high returns, you can’t lose more than the cost of a trade.
Low Cost. If you’re just getting started with trading, there’s a good chance you don’t have excess capital lying around to snatch up shares of the fastest-rising stocks on the market. Binary trades offer an alternative to other types of investments that require high-capital buy-ins.
In theory, you can experiment with a binary trade for any amount you’d like, whether it’s $5 or $50. Starting small and working your way up to bigger trade amounts incrementally is a great way to learn the lay of the land.
As you familiarize yourself with expirations, strike prices and — if you’re interested in one- and no-touch options — triggers, it’s best to gamble with an expendable amount that won’t derail your entire financial status. Notice I used the word gamble — just sayin’.
Accessibility. Binary trading platforms make it easy to trade on any day and at any time. When it comes to binary options, traders aren’t necessarily beholden to standard market times and broker availability.
Now, let’s explore some of the disadvantages of binary trading …
Scams. Conduct any Google search on binary trades and one of the first things you’ll likely notice are the abundance of hits warning against binary scams and shady binary brokers.
Remember when I said I’d get back to the part about shady companies? Here goes …
… and I say this to protect and warn you.
Like I said, these companies are often based overseas. Places like Cyprus. (I have nothing against Cyprus. It’s a beautiful country with amazing people.) Anyway, these companies are based in places where you can’t sue them if they screw you.
Then you sign away pretty much your entire life in the forms they make you fill out. Your odds of winning are so low the brokers who do it are pretty much laughing at you. They’re laughing that so many people fall for this crap. It’s like going to the casino.
So, if you come across a binary broker that sounds too good to be true, it’s because he or she most likely is. And if you come across a binary broker who doesn’t let you liquidate your investment, run in the other direction.
Short term. Binary trades have expiration dates that are often fairly short windows of time. Given this, it’s impossible to use binary options as mechanisms for long-term investments. Which, of course, I don’t mind because I day-trade and teach day-trading. But if you’re looking for buy-and-hold investing, binary options aren’t the right solution.
Can You Really Make Money with Binary Options?
Short answer: It’s possible, but you MUST know what you’re doing. Like I keep saying. Most traders lose. Doesn’t matter the niche. I would never trade binary options. Ever. Your choice, I’m just tryin’ to keep it real.
If you’re serious about binary trading, start small. By making small trades and working your way up, you give yourself breathing room to assess market trends and develop the necessary skills.
As is the case with many types of trading, history is sometimes the best predictor of the future. Many successful binary options traders experience trading wins and financial growth because they’ve spent time studying and familiarizing themselves with market movements.
Wait. Does this sound familiar? Yep. You guessed it: you can’t cheat your way to success. Doesn’t matter the niche. I don’t trade binary options. I don’t recommend you trade them. But if you decide it’s for you then prepare yourself. Study your ass off.
Learning common candlestick patterns can make it easy to spot recurring trading patterns. If you want to understand candlestick patterns — and you do if you are serious about trading — I recommend you get a copy of the classic “Japanese Candlestick Charting Techniques” by Steve Nison. Doesn’t matter which niche you trade, this book should be on your bookshelf.
Of course, trading patterns are never 100 percent accurate, so don’t fool yourself into thinking of them as absolute stock predictions. However, the more you can learn about patterns and begin to recognize them yourself, the more likely you’ll be comfortable making your own options decisions.
Is it Safe and/or Legal to Trade Binary Options?
Naturally, binary options contain risk. And by now you know my take. I pretty much think they’re scams. But there are differing opinions and some even consider them safe trading routes. I’m not gonna tell you not to trade them. I recommend you don’t. I’ll be interested to hear back from you. When you’re ready to trade the way I teach … apply for the Trading Challenge.
While it’s legal to trade binary options within the United States, they’re only available to trade on Commodity Futures Trading Commission (CFTC) regulated exchanges within the country.
Binary options traded outside the U.S. are structured differently to those traded here. You can learn more in this article on Investopedia: What You Need To Know About Binary Options Outside the U.S.
The Bottom Line
The good: Some traders like binary options because they are traded at fixed costs. You know where you stand.
The bad: Binary investments are too much like flipping a coin, there are too many scams, and your odds of winning are so low you might as well go to the casino.
The bottom line: Educate yourself like crazy. Avoid sketchy brokers. Start small and work your way up. Remain vigilant. Stick with these rules, and someday you might reach your trading goals. Will you do it with binary options? I doubt it. But you might prove me wrong.
Want to Try Binary Options Trading?
At this point, I hope I’ve shed enough light on binary options trading that you don’t do it. But … you might be thinking about giving binary options trading a shot. If you do, study your butt off. Get a mentor. Don’t screw around. The best of the best in every niche work with a mentor.
Trading — any type of trading — can quickly become complicated. Like any other sector of trading, it’s important to seek out an education before you attempt to invest in this way. I can’t help you trade binary options. But I can help you learn to trade penny stocks …
Is the Trading Challenge for You?
As a teacher I want to help my students forge long-term, sustainable careers as traders. The Trading Challenge can help you reach your goals through risk-averse, conservative trading.
Plus, my best students — those who have become millionaires themselves — join me in coaching you.
What do you get?
- Wednesday morning live trading webinar. I show you live trades so you can see how it’s done. And it’s not only wins. These are true live trades. Sometimes I lose. But you’ll see how fast I cut losses and why I get out so fast when things turn against me.
- Wednesday evening live lesson and Q&A. No matter where I am in the world. This is killer stuff.
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- Annual Penny Stocking Silver Membership. You need this. Thousands of hours of video lessons and archived webinars. Immerse yourself. This is how to get good fast.
- PLUS: Two monthly bonus webinars by my top student Tim Grittani. It won’t take long to understand how Tim went from $1,500 to where he is now when you see how meticulous he is about his trades. Learn from a master.
WAIT! There’s more …
I always wanted to write that. Anyway, there is more, but you have to apply for the Trading Challenge to get it. Simple.
Will you be my next success story?
As you’ve now learned, if you study hard, start small, keep your scam radar on high alert, and stay educated, then becoming a successful trader is possible. But it’s not easy. So don’t even think about doing it if you’re not willing to work hard.
As for binary options …
Look, whatever you decide, it’s about how much time and effort you put into learning. I don’t think binary options are a good way to go. Plain and simple. But there are success stories.
If you’d rather learn what I teach, then apply for the Trading Challenge. But no lazy losers allowed. Seriously. Only join the Trading Challenge if you’re willing to work hard.
Are you a trader? Do you trade binary options? Comment below and let your fellow traders know how it works for you. Even if you are brand new, I love to hear from readers. Comment below!
What are Binary Options and How Do They Work?
What is a binary option?
A binary option is a financial instrument based on a simple yes or no question where the payoff is a fixed amount or nothing at all.
This means binary options offer defined risk and clear outcomes on every trade.
Each binary option trade starts with a question – will this market be above this price at this time? If the answer is yes, you can buy the option. If it’s no then you can sell the option.
The price of a binary is always between $0 and $100, and just like in other markets, there is a bid and ask price.
The binary options we offer are always built the same way. Each trade is easy to understand.
If you think about it, binary options reflect the way we think about things in our daily life. Things either happen or they don’t. With a binary option, payouts reflect that and are always all or nothing at expiration. You’ll find we like to keep trading simple.
You can also close a position early to lock in profits or limit losses.
As an active trader, we know you are busy scanning markets each day. You are dealing with complexity all the time. The last thing you need is to be slowed down with more complications and hard to understand details with a brokerage.
When you trade, we know you want to focus on the market and your position, not on a series of unnecessarily complicated products.
So we built an innovative full service exchange to trade binary options that lets you do just that.
How do binary options work?
There are three concepts to learning more about how binary options work; the underlying market, strike price and time to expiration.
Become familiar with those three concepts and you’ll understand the basics of binary options.
Let’s walk through the three parts of each binary option trade:
With binary options the amount you pay is the maximum you can lose. Because of that we say your risk is capped.
Maybe you don’t want to wait until expiration. You can place an order to close your position to limit loss or lock in profit early.
Along with offering clear outcomes and defined risk, we also designed our binary options to work in a way that offers unique leverage that enables opportunities to profit even from small market movements.
1 The first step is to pick the assets or event you want to trade. Each one is based on an underlying market and your trade is based on that underlying markets price movement.
2 Then you want to find a strike price that works for you. The strike is the price level you think the market will be above or below at expiration.
3 When opening a trade you will select an expiration day and time. The expiration is the moment of truth traders live for. This is when trading is over and the value of your binary option is determined.
How risky are binary options?
You always know your binary option risk reward ratio before you enter into a new trade. Your trade is fully paid for up front, which means you will never lose more than you pay. You always know exactly what you have at risk.
Trading also offers the opportunity to profit. Just like you know what you have at risk, you will enter each trade knowing your maximum potential reward.
We’re serious about helping you understand and limit your risk. Our goal is to let you define and understand it clearly and upfront on every trade.
It’s why we’ve worked to design and offer an innovative way to define and cap risk while also providing an affordable way to trade.
You can start with one contract at a time for less than $100, and decide your maximum risk and reward up front when you set up the trade.
Here’s how that works:
If you buy a binary option contract for $30, hoping to have it end at $100, your profit target is $70. This is $100 less your $30 investment. A loss would never be more than $30 no matter how much the market moves.
We think that hard to understand margin requirements, complicated fees and confusing payout structures can make trading riskier than it needs to be.
You can make those things part of your past by trading binary options with us.
How are binary options regulated in the US?
Binary options are legal and available to trade in the US only on a Commodity Futures Trading Commission (CFTC) regulated United States exchange.
We are a full service exchange located in the heart of Chicago’s financial district and we are regulated by the CFTC.
As the leading United States based binary options and spreads exchange, we are proud to say we are designated by the CFTC as a Designated Contract Market and Derivatives Clearing Organization.
What this means for you is we are a well-regulated and leading binary options exchange.
Our role as the leading US based binary options exchange is to match buyers and sellers in a fair, accurate and secure way.
That way you can trade multiple global markets with us from one account knowing your trades are fair and your money is safe.
Binary options trading example.
Let’s walk through a trade on the EUR/USD currency pair.
Here is how the outcomes work at expiration:
- If the market is at or below 1.1600 at 3AM ET the seller will get the $100 payout.
- But if the market is one tick or more above 1.1600, you get the full payout as the buyer.
If you don’t want to wait until expiration, you can close your position at the current market price. Your profit or loss in that case is the difference between your entry and exit prices.
Each binary option reflects a question. In this case, the question is, will EUR/USD be above 1.16?
We show that as EUR/USD > 1.1600
In this example, the option has 4 hours til expiration and it’s 11pm.
If you think EUR/USD is going to be above $1.16 at 3AM, then you would then buy the binary.
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