Binary Options Trading Guide

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Binary options and binary options trading has surged in popularity over the last few years with the emergence of several binary options trading platforms allowing aspiring traders to generate hourly returns up to 81% by simply picking the direction (high/low) a specified asset will move before expiration. While we used the word ‘simply’, profitable binary options trading is far from a simple exercise. With very little useful knowledge out there explaining the pros and cons, the ins and outs of binary options, we’ve decided to put together a quick binary options trading guide to help educate aspiring binary options traders on how to approach binary options trading and their individual binary options strategy in an intelligent manner with a strict focus on risk management. The guide below serves as a starting point for binary options traders. We highlight and discuss advanced strategies and hedging tips every week in the Binary Options Trading Course. To receive a FREE subscription to the Binary Options Trading Course, insert your name and email address in the sign-up box immediately to the right. Enjoy the report and Happy Trading!

Selecting A Binary Options Trading Platform

With so many binary options trading platforms on the market, you may get a little overwhelmed by trying to figure out which platform would be best for you. Each platform offers something a little bit different from the others, so whether you prefer stocks to forex, or only want to trade a certain dollar amount per trade, or whether you anticipate making frequent withdrawals from your account, all of these factors will likely play a part in your selection process. We here at the Binary Options Weekly endorse the following platforms for your binary options trading activities:StartOptions, OptionBit, EZTrader, and Anyoption. Rather than sit and decipher now as to which platform you should choose, we recommend registering with all 4 platforms. Now you may be asking yourself why should I sign up with all 4 of these binary options trading platforms? Well to begin it’s free, so there really is no downside in registering. But more importantly, the platforms listed above typically offer significantly higher deposit bonuses than advertised on their sites for registered members. For instance, a few months ago I signed up with EZTrader to test out the platform and get comfortable with the functionality. The stated deposit bonus on the site was $100 for every $500 deposited. 20% is nice, but do you know what is much nicer than 20%……….45%! Within a week of signing up I got an email from my EZTrader account manager offering a $250 deposit bonus for an initial deposit of $550, much higher than the stated bonus on the website. The thing is you are never going to receive these types of deals unless you register, so go ahead and register and wait for an attractive deal before depositing your funds. We provide a summary of the 4 binary options trading platforms with a link to a more detailed review below:

StartOptions: Generous deposit bonuses (see exclusive promotion in the right column of this site) and access to a free practice account.

The Best and Worst Features of the StartOptions Binary Options Trading Platform

OptionBit: The Low Cost Binary Options Trading Platform.

The Best and Worst Features of the OptionBit Binary Options Trading Platform

EZTrader: The Most Popular Platform with Attractive Deposit Bonuses.

The Best and Worst Features of the EZTrader Binary Options Trading Platform

Anyoption: Advanced Functionality and Highest Return for Losing Trades.

The Best and Worst Features of the Anyoption Binary Options Trading Platform

Formulating Your Binary Options Strategy

Binary options trading, and most trading for that matter, all comes down to correctly picking stock/asset direction. So whether you are a fundamental researcher or more of a chart technician, picking the direction of the underlying asset with accuracy in excess of 55% should be the goal. Finding the appropriate tools to help you down that path is a good place to start when formulating a solid binary options strategy. Most of the successful binary options traders we know use some sort of candlestick charting to determine entry points and potential hedges when trading binary options. For those not too familiar with candlestick charting techniques our good friends over at Options University offer a free 82-page e-book entitled “Candlestick Secrets” exploring candlestick charting techniques and explaining how to utilize the techniques to pinpoint market turns — a very useful skill to have when trading binary options. To receive your free copy of Candlestick Secrets along with a set of strategy flash cards and unlimited access to the online Candlesticks web tutorial click the link below:

Free Candlestick Secrets E-book

Another potential resource to add to your binary options strategy playbook is the Striker9 binary options trading system. The Striker9 system is the first system developed exclusively for binary options trading. Striker9 is advertised as producing winning binary options trades at over 80% and up to 90% of the time. There are currently 2 versions of Striker9: a Full Pro version (priced at $1,997) and a Lite version (priced at $197). Check out the Striker9 binary options trading system via the links below:

Striker9 Pro the Full Version Retails for $1,997

Striker9 Lite Retails for $197

Implementing Your Binary Options Strategy

Now that you have registered with a few of the binary options trading platforms and have formulated a solid binary options strategy it is time to get down to the business of implementing your strategy. Before you go and start trading we strongly believe you should keep these philosophies at the core of your binary options strategy:

  1. Focus: Concentrate on a select small group of names and study how they move on a day-to-day basis. Getting to know a few names on a more intimate basis should help you tremendously in recognizing patterns and ultimately predicting direction.
  2. Risk Management: Absolutely key! Don’t risk more than you are willing to lose. The underlying characteristics of binary options trading (~70% gain for winners, ~85% loss for losers) clearly are not stacked in your favor. Thus properly sizing your trades and hedging when possible is of utmost importance when seeking to become a profitable binary options trader.
  3. Trade, Trade, Trade: A lot of new binary options traders look at the 70%/-85% split and convince themselves there is no way to win with those odds. This is a popular belief circulating around the net, but while the odds do lean out of your favor, if you employ some of the strategies we highlight and discuss here and in the Binary Options Weekly report you’re odds of winning improve dramatically. These naysayers are not looking at the big picture. No one says you have to just trade once and then live and die with the result of that one initial trade. On the contrary, we suggest placing 1 or even 2 more trades on the same asset before expiration to construct a payout diagram with much better risk/reward ratios.

The most common hedge trade used in binary options trading is the one in which you first purchase a put or call, then if the stock moves in the correct direction you buy the opposing put or call to lock in a “profit zone”. This “profit zone” is illustrated in the graph below:

Binary Options Strategy Hedge

As can be seen in the graph, we initially purchased an Amazon (AMZN) binary call option with a strike of $125 at 11:10 am. With shares of Amazon looking pretty volatile we decided to buy an Amazon binary put option with a strike of $126 immediately before the “lock-out” time of 11:45. So what does that do to our risk profile? No longer are we constrained by the [+70%, -85%] return profile, we now make 70% with shares of Amazon trading between $125 and $126 and lose 15% with shares of Amazon trading anywhere outside of that range. While the “profit zone” may seem small, the risk of losing big has been significantly reduced.

 

The key to profitably trading binary options is knowing when to be aggressive (letting it ride) and knowing when to cut your losses and live to fight another day (place another trade).

Another alternative binary options strategy would be to buy the complementary put or call using a lot size that is smaller than the original lot size. For instance say you initially purchased the Amazon $125 strike binary call for $100 and it is now 11:44 and shares of Amazon are trading for $126 like in the previous example. Instead of spending $100 to purchase the put hedge, what would spending $50 for the put hedge do to your risk profile? Let’s take a look:

Binary Options Strategy Modified Hedge

As can be seen, the max potential loss has increased in this alternative hedge structure (-33% vs. -15%), though still much lower than the basic one trade option maximum potential loss of -85%. In return for the increased loss potential, the area of profitability has increased significantly to include everything above the initial $125 strike. With shares of Amazon trading between $125 and $126 you would make $105 (70%) and with shares trading above $126 your total return would be $28 (19%). There are many ways to alter your risk profile by changing the lot size of the complementary trade. The goal is to find the profile most appropriate for your risk tolerance.

 

 

Subscribing to the Binary Options Weekly Trading Course

As mentioned previously, we publish a course covering items of importance for binary options traders. The Binary Options Trading Course is a FREE weekly course providing fresh binary options strategy, insightful binary options market commentary, updated binary options trading platform reviews, and key tips to boost your trading returns. A sampling of a few of the lessons is included in the links below. Sign up today by providing your name and email address in the Binary Options Trading Course signup box in the upper right corner.

Strategies For Hedging Your Binary Option Positions

Risk Management For Your Out-of-the-Money Binary Options

Binary Options Strategy: Exploiting Pin Risk For Binary Option Gain

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