Binary options are a new, simple and exciting way of speculating on financial markets. You no longer need to be a technical wiz or econ grad to make money trading financial markets. When you trade binary options, you can start with as little as $100, place trades as small as $10 and even learn the ropes on a real-time demo account before risking any real money!
So let's get right into it and talk about what binary options actually are.
A standard binary options contract allows you to speculate on whether a given financial market will finish the contract term (usually 15 minutes) higher or lower. There is no need to worry about how far the market will move - you just need to predict which direction it’s going. This simplifies the trading process dramatically and means you don’t need to have such a thorough understanding of technical or fundamental analysis.
To open a binary options trade all you need to do is select your market (e.g. AUDUSD), select which way you think price will move (Up / down), enter the dollar amount you are prepared to risk and click the buy or sell button.
It really is that simple!
Leveraged trading products like forex and stocks can produce massive gains for traders, but potential losses are essentially unlimited - you can actually lose more than you invested and end up owing your forex broker money.
With binary options on the other hand, risk per trade is predetermined and you can never lose more than you’ve invested! This is due to the binary nature of a binary options contract: the market will either finish the contract term higher or lower and you will win / lose a predetermined amount for each scenario.
In traditional forex trading, profits and losses are determined by how far a market moves (rather than simple direction) and the market can even ‘gap’ against you during news events or at the start of a new day or week, leaving you with a much bigger loss than you planned for, or in the worst cases, a negative balance (broker debt).
When you trade binary options on the other hand, unlimited risk is a thing of the past.
Lots of binary options providers are based in dubious locations like Cyprus or the Cayman Islands, but do you really want to trust your money being held in these jurisdictions? You should only trust binary options providers with an Australian Financial Services license (AFSL), which is required when operating any financial service from within Australia. This means that your binary options broker is regulated by the Australian Securities and Exchange Commission (ASIC) and you know that your money is in safe hands.
Why risk trading with an unregulated, offshore provider when you can trade with a trusted, Australian regulated provider with decades of combined experience in forex and financial markets? Before you make a deposit, make sure to find out if all client funds are held in a segregated account with a bank such as the AA rated National Australia Bank (NAB) who are consistently ranked in the top 20 safest banks in the world.
Don’t leave yourself open to problems due to trading with a broker using untrustworthy regulation or worse, no regulation at all. Trade only with an Australian regulated, transparent binary options broker.
Some binary options providers only pay 50-60% of your investment when you win a trade, but with some of the best binary options brokers, payouts on the most liquid markets are as high as 85%.
This means you win more money per trade and makes it much easier for you to trade profitably in the long run. These top tier binary options brokers even offers some ‘High Yield’ contracts where you can double or even triple your investment in a matter of minutes!
Binary options allow you to not only cap your risk, but keep your reward high!
One of the worst things about traditional speculation in financial markets is the endless fees and charges. Some stock brokers charge exorbitant commissions, upwards of $20 per trade, but when you trade binary options, there are no hidden commission charges.
Forex brokers also charge interest or swap fees for holding positions overnight, this isn’t an issue with binary options, as most contracts are settled in 15 minutes or less. From start to finish, you can speculate and profit on your chosen market without paying any external brokerage, data or execution costs.
Zip. Zero. Zilch!
When you trade binary options with an Australian regulated binary options broker, there is no complicated software to download or learn: the entire platform is simple and web based. The online binary options platforms used by all top brokers is compatible with all the popular web browsers including Chrome, Firefox, Internet Explorer, Opera and Safari. This means you can trade anytime, from anywhere in the world - all you need is your laptop, mobile or tablet and an internet connection.
Imagine relaxing on a sunny beach in Portugal making trades from your mobile between swims. This truly is the dream when it comes to trading binary options for a living.
Trading binary options doesn’t mean you’re stuck with just trading currency marekts, you can also speculate on commodities (eg. Gold, Silver), individual stocks (eg. BHP, Microsoft) or entire markets via indices (eg. S&P 500, ASX 200, FTSE etc).
This means there are literally thousands, if not millions of trading opportunities available to you each day. The possibilities for profit are endless.
As well as standard High / Low contracts, binary options brokers have a range of other contract types designed to unlock your profit making potential. Other contract types include One Touch, Boundary, Short Term Expiry and High Yield. We will discuss each contract type in a little more detail below.
As you can see there are lots of different ways to make money trading binary options and don’t forget you can hone your skills on a free demo account before risking any of your hard earned money. Simply sign up via your binary options broker’s website today.
Some binary options providers have really low investment limits on their binary contracts, but with other binary options brokers, you can invest up to $500 per trade. That means you could make $425 in just a matter of minutes on a standard contract, or over $1000 on one of their High Yield contracts.
You can even place two $500 trades simultaneously if you’d like to invest more. The possibilities for making money trading binary options really are endless.
If a contract expires exactly on your target price, some other binary options providers count this as a loss. But not all do! At the better brokers, they think this is unfair and the trusted, Australian regulated binary options brokers always strive to do what’s right by their clients.
When you’re trading with a trusted binary options broker, if your contract expires exactly on the target price, it is considered to be a “break even” expiry and you will be refunded your original investment.
Fairness and transparency in the binary options trading industry isn’t something you come across very often. When you find these features in a broker, make sure you stick with them.
Things not looking so good after taking a trade? Want to take your profit and run? Don’t worry - some of our binary options contracts allow you to exit the deal early.
How do you know if you can close a trade early? Take a look above the space where you type in your investment amount, you will see a line called ‘Closable’ – and either a ‘Yes’ or ‘No’ next to it. If there is a ‘Yes’ displayed here, it means you may close your position at the price offered prior to expiry.
A designated time period will be made available for you to close your position after you make the option purchase. Once it is too close to the expiry time, you will not be able to close the position.
So if you are thinking of getting out, make sure you get out early!
No. Just like forex trading, binary options are traded over the counter (OTC). There is no central location where all trades are cleared and processed.
This is why it’s extremely important you trade with a trusted, Australian regulated binary broker. You wouldn’t invest with an unregulated forex broker based in the Taxfrei Islands, so why would you take the risk with your binary options provider?
Trading binary options is very similar to trading stocks or forex - you’ve probably heard the old saying ‘Buy Low, Sell High’? This is the central premise behind all successful investing strategies and binary options is no different. What about the ‘The trend is your friend’? Trend following is a time tested and proven method used by many of the world’s most successful traders to make consistent returns. In general, you should be looking to buy (place a High trade) in an up trend and looking to sell (place a Low trade) in a down trend ...
But hold on, didn’t we just tell you to ‘Buy Low, Sell High’? Correct, this is the key to successful trading, you should aim to buy in an uptrend when price is relatively cheap or has pulled back and in a down trend you should look to sell when price has corrected higher.
Okay, but how do you tell an up trend from a down trend? Simple: an up trend is characterized by a series of higher highs and higher lows, conversely a down trend is characterized by a series of lower highs and lower lows. When you notice a series of higher lows and higher highs, you should be looking to invest in a High contract (buy). When you notice a series of lower lows and lower highs on the other hand, you should be looking to invest in a Low contract (Sell).
Familiarize yourself with these basic trading concepts and hone your skills on one of our free real time demo accounts and you will be on your way to making money with binary options in no time!
These are just a few of the reasons you should be trading binary options with an Australian regulated binary options broker. So what are you waiting for? Get started trading global markets today and start perfecting your strategy!