Vir Britse beleggers is handel met binêre opsies ‘n belastingvrye vorm van belegging met baie vinnige resultate – minute eerder as maande of jare. Die woord binêre word gebruik omdat daar net twee moontlike uitkomste is – óf die handel is suksesvol, en die belegger kry ‘n beduidende opbrengs (gewoonlik tussen 75% en 95%) – óf die handel is nie suksesvol nie, en die volle beleggingsbedrag gaan verlore.

 

 

However, during 2020 European regulators banned the sale or promotion of binary and digital options to retail investors in the EEA. This includes the United Kingdom. Only professional clients or professional accounts may now trade binary with regulated firms. A professional trader must meet two of these three criteria:

  1. Open at least 10 trades of ‘significant size’ per quarter (brokers define ‘significant’ differently)
  2. Own a portfolio or trading capital of €500k or more
  3. Have worked in the financial industry for 2 years, or had experience with complex trading instruments.

Unregulated firms may not adhere to the new ESMA rules, and will continue to accept UK traders. This increases the risk for the trader and makes it important to find a reliable broker. However, it is possible to find brokers regulated outside the EU who will accept the EU traders, and who are still regulated by respected bodies.

‘Binaries’ (or ‘digital options’) are therefore a high risk form of investment, but the risk is offset by the potential for very high benefits with minimal waiting time. Most brokers are regulated, giving consumers the kind of protection they would expect when using financial instruments. Proceeds from binary trading are also currently considered tax free by HMRC.

What are binary options?

Binary option means – Binary options are a derivative instrument traded on any asset or market. For example a share price (Twitter, AstraZeneca, etc.), Indices  (FTSE, DAX, Nikkei),  commodity value  (gold, crude oil) or foreign exchange rate (EUR / USD, GBP / USD). Even cryptocurrencies like Bitcoin or Ethereum can be traded.

The main difference between more traditional stockbroker trades, and binaries, is the clear identification of risk and reward before the trade takes place. An investor knows exactly how much is at risk, and also knows the exact value of possible returns. No calculator, formula or math degree is needed to work out profit and loss on a binary option.

This structure of the trades is what has led to the terminology of “all or nothing” or “cash or nothing” being widely used.

The only decision for a trader is if the value of the underlying asset rises or falls. The degree of price change is not important. The trader simply speculates whether the price will be higher or lower than the current price at a specific time in the future.

Short-term price movement can be caused by breaking news or news, quarterly statistics, buyout rumors or even global security fears.

Binary options trading offers a Yes/No proposition. Although there are variations on the High / Low option, this type of investment will always have a black and white, yes / no, binary result. Where trades can be closed, redeemed or sold, the payouts have absolute numbers of 0 and 100 and prices move between market dictates – until closing time.

Expiry dates

Each binary option is offered with an expiration time. This is the point at which the trade will end. So the price at expiration is the price that will decide whether an option has won or lost (‘in the money’, or ‘out of the money’ in binary jargon). These expiration times can vary from as little as 30 seconds or 1 minute (known as ‘turbos’) to a full day (‘end of day’), to even longer in some circumstances – up to a full year.

Generally, however, a binary option is used for short-term trading – usually less than 30 minutes (5 minutes is the most popular). Long-term expiration dates – and the element of fixed risk – make them useful tools for hedging or diversifying other investments.

Payouts change depending on the asset and the expiration time. Differences can be significant, so traders looking to use binary options long-term should shop around to find the best payout for the asset class (or classes) they intend to trade.

Legitimate investment

Although binary trading is in a period of growth, it remains a relatively unknown product. This is likely to change over time. As digital options (as they are also known) offer you a very simple fiscal arrangement. This is a legitimate way to play the financial markets.

Binaries offer a clear trading option, but they are also high risk / high reward. However, there is no exposure to leverage with a binary trade, so the risk and reward ratio is also easy to manage.

 

 

Are binary options safe?

Binary options suffer from a bad reputation. This is basically the result of dishonest and irresponsible marketing and cybercrime, more than a problem with the product itself. With tighter regulation and a better understanding of the general public, these options can and will enter the financial mainstream. This is where they originally developed.

Although FCA regulated agents and firms still have their flaws and mistakes, they are not frauds. The angry email we receive focuses entirely on unregulated brokers who promise ‘easy money’, or a way to get rich quick. Read our section on avoiding scam brokers below.

Advantages of binary trading

Many of the benefits of using binaries are interrelated. Here is a list of the advantages of using this form of investment – not only for the retail investor, but also for the market makers or brokers:

Risk management

Managing risks when trading binary options is clear. The amount of the trade is the full amount at risk. This explains the risk not only for the trader but also for the broker. Their pricing model reflects the accurate knowledge of their liability.

Trading Fees and Distribution

The certainty of risk provides a solid basis for brokers to operate within and manage. This leads to low trade feed, tighter spreads and higher payouts. To further protect themselves, they can use a liquidity provider or hedge their own positions. The expensive brokerage costs of clearance houses become unnecessary.

Lever

Leverage, or leverage, is not commonly available with binary trading. This in turn benefits the broker as it means that all trades must be fully funded. In other words, no trader can trade by default. If things go wrong, there is a real risk that the broker will not be paid. This is a big difference to spot forex or spread betting.

Dealer Selection

Layers of complexity can be added to the standard fixed payout option. From a learning option, to border trading or more advanced ‘nest’ of options to create ‘strange’ etc. – binaries can be used in a wide variety of ways.

A binary trade offers the greatest degree of flexibility. It even provides a mechanism to speculate on a market that remains flat, arbitrage, or take into account the trading volume of the underlying asset.

Robots and car trading

Auto trading robots (‘bots’) often rely on signals and algorithms triggered by price charts. These robots also attract many of the unwanted operators, and the automated nature of the trades further increases the risk. New traders should be especially careful. A large amount of ‘due diligence’ is required in trying to find the right robot service.

An alternative approach is for traders to build their own robots with their own entry points. An increasing number of brokers now offer traders the ability to build their own trading robot or program using simple tools. With these hacks, combinations of technical analysis settings such as moving averages, Bollinger Bands or RSI / MFI patterns can open trades when these criteria are met. It made binary options ‘pro’ robots available to everyone.

Scams

Binary trading itself is legit, and not a scam. However, there are brokers and signal providers that are unreliable and operate scams or fraud.

It is important not to write off the concept of binary trading based only on dishonest brokers. These fraudsters continue to detract from the image of this form of commerce. Regulators and rule makers are starting to get a good handle on these operations and the industry is being cleaned up. Then let us know via our Contact Us page if you want to complain about an operator with our watchdog.

Being aware of the above methods should help those new to binary trading avoid the less responsible brands. Improved regulation and more awareness should hopefully reduce these types of complaints. This in turn may allow binaries to move forward.

Trading Strategy

Our strategy pages feature over 20 known systems, compiled from a variety of forum and club chats, plus expert tips and advice. From high risk Martingales to complicated systems like the Rainbow. We also cover more specialist subjects, such as forex, technical analysis, the best price action indicators, trading signals and winning strategy. All of this is meant to help you profit and win.

Read more about binary options strategy

Signals

Signals are a warning sent to traders. It is designed as a trading tool to help traders spot opportunities. This can be communicated using a variety of methods: email, SMS or from a live signals website or group. Much of the irresponsible marketing associated with binary scams is linked to signals – or robots that trade automatically. There are some very good presenters out there. However, in general, it is a safer way to trade binaries than using signals to compensate for a lack of trading knowledge.

Do signals work?

Sometimes, but rarely in isolation. Some providers deliver a combination of education alongside signals and this represents a good mix. Traders need to be able to fully assess a signal before they can assess its quality. We also highlight some of the best providers on the signals page.

Read more about binary options signals

Brokers and reviews

A binary option can be used in different ways and across a wide variety of commodities and markets. This means that finding the best trader, the best account or the best trading platform really depends on the needs of the individual investor.

For example, some brokers may focus on forex (foreign currency) and trading the Japanese yen, euro or sterling. Others may be good at commodities and only offer a handful of currency markets. Likewise, the returns (or payouts) can vary between asset classes, and when they vary by as much as 25%, it’s easy to see the importance of making the right choice.

List and compare all binary options brokers

Payment Methods

Providers of white label platforms such as SpotOption, Tradologic or TechFinancials also determine what products the host website can offer, so an in-house broker with a tailor-made design may be best. Payment methods deserve some thought – if traders want to use Skrill, Paypal, Neteller or Wire transfer, they should check if the broker offers them.

Dissertation programs

Mobile trading apps offered by brokers or brokers can also vary in quality. Some programs are specific to the functions of specific models, such as iPad or iPhone. Others ensure cross-platform compatibility, catering for Android, Blackberry and Windows tablets and devices. Some dealers may have claims for any handheld app, and others less so.

Limits on trade size may be off-limits to some investors on certain trading accounts or away from them. Some brokers offer a minimum trade of just £1, while others cater to investors willing to invest £200,000 in a single trade. So every investor should consider their own trading style before deciding to open an account. Even working out the ‘cheapest’ broker is not as easy as it sounds.

How to compare the best trading platforms

Our comparison table provides a quick summary of the most important points when comparing brokers. Our detailed reviews then allow potential new users to assess some of the finer points that can confirm their decision. Here is a list of the most important comparison points for brokers;

  • disbursements
  • Over the counter or trade options
  • Minimum deposit (Plus deposit and withdrawal methods)
  • Minimum trade / maximum trade
  • Trading Platform
  • News events feeds
  • Asset lists (extended lists may include ETFs, bonds and trusts)
  • Graphs / mapping tools (graphic types, forecasting tools)
  • Expirations available
  • Regulation (FCA, CySec, CFTC etc)
  • Various options available (Border, Ladder, High Yield, etc.)
  • Welcome Bonuses
  • Complaints / customer feedback
  • Account types and benefits (VIP, Basic, Platinum)
  • Plugging and integration. (Eg MT4 / MetaTrader4 / MetaTrader 5)
  • Promos benefits, contests, tournaments or contest prizes

Some points may be more important to some traders than others. So finding the ‘best’ is an individual choice for each new customer. A speculator taking a position on the monetary policy of the Bank of England or ECB may be best served by one broker, while the person looking to grow on the share price of Apple, Facebook or Vodafone may want another.

 

 

Demo Accounts

Most top brokers offer demo trading accounts. This allows new customers to try the services offered. They can see if the variety of markets and investment scales suit it, and only go to a funded account if they are happy that the right trading account has been found.

Brokers offering physical or virtual balances rely on their trading platform. They are willing to let new traders see it, and try it risk-free. The review of each broker will include whether it offers a demo in the “Key Details” section.

Top 3 demo accounts

The majority of these demo accounts will work on the website as well as the mobile app. Both systems can be checked before making a deposit. The very best demo accounts are not time limited and allow traders to top up the balance if needed. This type of account allows the user to not only test the broker, but also use the demo account to try a new trading strategy, or even test a strategy based on past financial data. All this without risking your own cash or wealth.

Reviews

Our broker reviews are written after real trading on each platform, brand or white label. It contains all aspects of each presenter – good or bad.

The credibility of the reviews is important to us. They are therefore regularly checked and updated and feedback we receive forms part of the overall rating. In order for binary trading to move into the financial mainstream, comparison services need to be open, honest and transparent – and that’s what we try to deliver in our broker reviews.

Regulation

Binary brokers are regulated via a number of bodies. CySec regulates the majority of brokers based in Cyprus and Israel. Operators with equipment in the UK will need a license from the UK Gambling Commission (the concept was originally classified as a ‘bet’ on financial markets – a view that is now changing). However, European regulations allow suppliers to serve UK customers. The MiFID II legislation allows this ‘passport’ of regulatory powers.

However, in the UK there is a stronger layer of consumer protection available if a broker is regulated by the Financial Conduct Authority (FCA). Some firms also register with the FCA – but this is not the same as regulation. This is an important distinction.

In the US, the CFTC has licensed only two brokers to operate there – Nadex and CBOE. In Australia, ASIC (Australian Securities and Investments Commission) supervises brokers. Some firms are also regulated by the Malta Gaming Authority or the Isle of Man GSC.

In Europe, an organization called ESMA (European Securities and Markets Authority) also sets proposed legislation or regulatory guidelines that the majority of domestic regulators adhere to. They recently suggested that retail investors should ban binary options – although this policy is rather ill-conceived and outdated. Such changes will punish honest regulated brokers, and the dishonest scams will continue to perpetuate.

Benefits of using a regulated broker

Regulated brokers offer greater levels of consumer confidence than unregulated firms. They are required to keep trader funds in separate accounts, and not in company accounts. They must provide a dispute process for customers and treat customers fairly and equitably. In addition, regulated firms can only market in a responsible manner, and in regions where trade is permitted. Responsible brokers welcome regulation as a way to increase consumer confidence.

Copy trading

Copy trading is a growing sector of investment. It allows users to copy the trades of others. The copying decides how much they should invest, and whether they should copy some trades that a particular trader or tipster opens.

The traders who are copied also benefit as the broker will often reward these clients through commission or increased income and profits based on the trading volume they generate.

Copy trading (or ‘social trading’) is a useful feature for people without the time or knowledge to trade themselves. However, when copying, the time and effort spent following the right traders will pay dividends. Social commerce is similar, but is more focused on sharing social information style on social media.

Read more about social and copy trading

History

A Brief History: The concept of a binary or ‘digital’ option has been around for many years. They were initially only available to large-scale investors – institutions, wealthy individuals and funds. The options were offered ‘over the counter’. However, in 2008 the US Securities and Exchange Commission allowed these fixed income options to be traded over an exchange.

This enabled the Chicago Board Options Exchange (CBOE) and the US Stock Exchange to offer binary trading on certain underlying assets. Initially, the range of assets was limited, and so was the choice of options. Nadex also began in the US to offer exchange-traded options (matching buyers and sellers) as the market developed.

The demand for digital trades is increasing

However, as popularity and trading grew, the traded assets moved beyond Forex and stocks, and the options types expanded as well. Rapid developments in software and the globalization of commerce have led to a boom in these ‘digital’ options – and the expanding trend continues.

The barriers to entry for potential market makers or brokers are much lower in the binary sector. This, along with the boom in internet commerce over a similar period, has left regulations lagging behind.

However, the growth of binaries is unlikely to slow down. The simplicity, together with the clarity of risks, allows almost anyone to view a specific asset but manage its risks more easily than contracts for differences or stock purchases.

Education

To learn binary options, traders have a wealth of learning opportunities and courses. Every trader is different, the results will change from different methods of learning. Some prefer a pdf file or a spreadsheet on the topic, while others will learn the most from diving in and gaining experience. Here is a selection on learning methods:

  • Seminars and demonstrations
  • e-books / manuals / books
  • Video & Youtube manuals for binary options
  • Hands on demo accounts
  • Knowledge base and FAQ

Learn binary trading via tutorials

Brokers are keen to give traders the confidence to start trading – and many offer some or all of the above for potential new clients to learn about binary options, mostly for free. Some tools are only made available once a trader has registered – it’s just that the broker has contact details for things like trading seminars or web-based demos.

Seminars and demonstrations

A great way to learn binary options is via an online demo or seminar. Some brokers offer weekly seminars, some in a variety of languages. These provide ‘walk through’ style demonstrations which can be really helpful.

Other firms offer one-on-one training, but usually require a deposit in advance. This training follows a basic ‘How to’ format, but can then quickly progress to more advanced subjects.

Ebooks

Some traders benefit from downloading an e-book tutorial and learning about binary options at their own pace. In their education centers, brokers often provide a great ‘manual’ for traders who want to learn the basics. One of the caveats is that each broker will focus on their own trading platform and quote some of the explanations and screenshots.

Brokers want new traders to use their services. The good news is that the look and feel of some trading platforms will differ, but the underlying functions are the same – so the knowledge is easily transferable.

Some independent books have been written, including the popular ‘for dummies’ series. We mention the best here.

 

 

Knowledge base and FAQ

Most brokers will offer an education area or ‘knowledge base’, but the quality varies. Firms are constantly updating their training portfolio, and there is no clear winner in this category.

Brokers want to encourage trading, so they make it easy for traders to learn the basics. More advanced information is available from brokers – but hopefully the strategy and technical analysis pages on this site will help.

Below are some questions and topics we are frequently asked about regarding binary trading online. Hopefully these short paragraphs can provide an answer – but if not, there are a number of links to more in-depth articles detailing each subject area.

Types of Binary Trade

  • The most common type of binary option is the simple up / down or high / low type. This is the prediction in which direction the price is moving. Will the price have gone up or down at the point at which the option expires? Also referred to as classic or standard options.
  • The above / below option is a slight variation on the up / down trade. It follows exactly the same principals, but the strike price is a predetermined level and not the current price. The same logic applies to the price rising or falling based on the value and where it will be when it expires – but the starting point is somewhere above or below the actual market at that moment.
  • Touch / No Touch is a slightly more complicated scenario. Here a value or price is set (sometimes by the investor themselves if their broker offers a function like ‘Option Builder’). If the actual price hits the barrier, or passes through this barrier, the ‘touch’ option will be the payout. If the price never touches the barrier price, ‘No Touch’ will be paid out and any ‘touch’ bets will lose. Also called ‘One Touch’ on occasion.
  • In / out ‘Range’ or ‘Boundary’ trades require two barriers. One is higher, and the other lower. The binary option is then whether the price stays ‘within’ (or between) these two limits. The ‘out’ option will be activated, and therefore the payout, if the price ends up outside one of the barriers or the barriers set.
  • Ladder Options . It works in the same way as an ‘above / below’ option, but the payouts differ depending on how far the strike price is from the current value. There are different levels and different payouts for each. These are the ‘rocks’ of the ladder. Payouts on learning options can be up to 1000% if the price movement is large enough.
  • Pairs is a type of trade where two related assets match each other (eg gold and silver) and traders see which asset rises or falls the most.

Site options and call options

Put and call options are simply the terms given for buying or selling an option. If a trader believes that an asset is going up in value, they open a call. If they expect the value to fall, they place a put trade.

Some binary trading brokers change their trading buttons every few seconds, from Call and Put, to Down and Up to avoid confusion. Others use the arrows in the entirety of the terms they name and name. Icons are always clear, so mistakes are not made.

Questions

How to place a binary trade

 

Steps to open a binary trade;

  1. Identify the underlying asset to trade, for example the price of gold, the Facebook share price or the GBP / USD exchange rate
  2. Set the expiration time (the time the option ends), and calculate the size of the trade or investment
  3. Decide whether the value will rise or fall (Call or Put)

How much can be won?

Generally, binary options pay out within 75% to 95%. This percentage is made clear before the trade takes place. Apart from being higher or lower than the opening price, the closing price does not affect the size of the payout.

As binary trading becomes more sophisticated, so does the amount that can be won. Some brokers now offer trades that do not depend on the size of a price movement. There are also trade types (covered below) where payouts can reach 400%, 500% or even 1000%.

Gambling gambling options?

It all depends on the attitude of the trader. If a trader does not apply any strategy or research, any investment is likely to depend on luck, and the odds are against it. On the other hand, a well thought out trader can ensure that they have done everything in their power not to rely on luck.

Are Binary Options Halal?

Interest or ‘riba’ is prohibited under Sharia law. Binary options, even not longer than long-term, are not charged by overnight or reload fees. Many brokers have developed Islamic trading accounts that comply with Muslim guidance (which offer instant execution of trades and charge no interest). But traders should tread carefully before deciding whether binary options trading is legal, halal or haram. The answer may not be clear. A trader can use binaries without any planning, or strategy – to effectively bet or use them to gamble. This would be forbidden for most Muslims. For this reason, we cannot categorically state whether trading binaries are halal or haram. It depends on the individual.

Binary Option Trading Guide:

  • brokers
  • Demo Accounts
  • Binary Trading Strategies
  • Deposit Match, No Deposit Bonus and Sign Up Offers
  • signals
  • Robots and car dealers