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Day Trading With Binary Options
Learn what day trading with binary options is and where you can sign up for the best broker accounts. Compare all the top brokers that cater to day traders and learn which trade types and assets are the most profitable.
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Charts, technical analysis and patterns are vital tools for day traders. This chart is set to show the Bitcoin / USD exchange rate, which is a great market for day traders – there is a lot of volatility and action driven by news releases and trader sentiment.
What is Day Trading?
Day trading is the speculative trading method of buying and selling a security or derivative within the same trading day. Positions are all closed by the close of the markets. It is based on the speculation of a financial instrument going up or down in price. Day trading can be achieved in any marketplace, but in the UK is most commonly practiced with the trading of Foreign Exchange (Forex), Stocks, Options and Futures Contracts.
Now that we know what day trading is, who are the day traders? Well, day trading was once an exclusive practice, reserved for people working in financial firms while considering themselves “professional speculators”, or even classing it a lucrative hobby.
However, nowadays just about anyone can become a day trader.
The rise of electronic trading and margin trading software has become available to individuals from around the world. So, if this trading method is available for everyone, how does a beginner get involved, and are binaries a good starting point?
How to Start Day Trading
Pick a Market
First step for a day trader is to decide which markets you will be trading in, with the most popular being Stocks / Shares (Apple, Facebook, Google etc), Indices (FTSE, DAX, S&P), Forex, and Futures. Commodities such as gold, oil or things like grain prices can also be traded. Bitcoin is a huge market for day traders at present too.
Forex markets are quite popular among beginners due to the low initial minimum deposit accounts of around £250. Binary options deposits can be even lower (from just £10), but are traded without margin.
Futures require more and stocks require the most money to be invested in for day trading. Binary options offer low cost entry for anyone wishing to day trade. Their drawback however, is a lack of leverage. Whether this is a big factor or not will depend on the trader – leverage increase market exposure, so the fixed price element can actually help is terms of managing risk.
Equipment & Software
Once you know your market, as an individual day trader, you need the proper equipment and software to commence day trading. As a novice day trader, you will need a fast and reliable computer, it doesn’t have to be top of the line, but not the cheapest one either. In addition, day traders require a fast internet connection. You want to be sure your tables and charts are updating as quickly as possible.
Along with all this, you need a trading platform and a broker to commence trading. As a trader starting out, you will want something easy to use and not too complicated. We recommend traders try out the demo accounts associated with most day trading platforms to get a feel of which software platform performs best. As for brokers to go with, make sure they are reputable and regulated, along with low fees, tight spreads and maybe even bonuses.
Best Binary Options Broker 2020!
Perfect For Beginners!
Free Demo Account!
Free Trading Education!
Get Your Sign-Up Bonus Now!
Good Choice For Experienced Traders! 2nd place in the ranking!
Learning via virtual accounts is superior to books or courses. Hands on experience introduces trading psychology (though this is increased hugely with a real money account). The same learning curve is difficult to achieve just by flicking through “Day Trading For Dummies” or a hastily written pdf.
Another important aspect to consider before you actually start trading is the time of day and how many hours a day you will be trading. As a day trader it’s important to trade the same hours each day to successfully implement and manage your strategy. The best trading hours are usually around the market opening and closing times.
Forex in particular presents interesting opportunities in terms of trading hours. Currencies are traded around the clock with no central market. This means multiple volume peaks and troughs as new regions wake up or shut down. London markets could be closed – but the GBP/USD pair might still be driven by traders in Indonesia, New Zealand or Hong Kong.
These time zones cycles apply equally to cryptocurrencies. Day trading on Bitcoin or Bitcoin cash will continue around the globe. Lesser known digital currency like Ethereum, Ripple or DASH are also traded 24/7. Cryptocurrency has added a whole new dimension for day traders.
Risk for this type of trading needs to be managed in two ways, trade risk and daily risk. Trade risk is how much you are willing to lose on each trade. An ideal standard is to risk 1% or less of your tradeable capital on each trade. The fixed risk of binary options can help is managing risk as the amount put at risk is known at the outset.
A trader will manage this by choosing an entry point and setting a stop loss. The stop loss will remove you from the trade if you reach a certain level of loss for that trade.
Daily risk is like trade risk in the simple fact that they both limit the total loss amount; only daily risk limits the total losses for a single day. In doing this, bad days are restrained from being too bad and can be recovered by a typical winning day.
There is no clear tax applicable for day trading. It will depend on the trading vehicle used, and also how you class the income. For example, if you trade forex at home, for a living, then the tax rules in the Uk suggest you should pay income tax. If however, you trade using binary options from home – and class it as a hobby – then no tax will be applicable.
So day traders need to decide how they class any profits. For example, whether they earn a salary and do it “full time”, or not. In general, binary options will be superior to other vehicles in terms of tax. They are often considered as more ‘speculative’ than other forms of investment, so income tax is not applicable.
Binary Day Trading Strategy
Day trading can be very complicated and it’s easy to get wrapped up with all the trending strategies and complicated chart analysis. One thing to remember is that you don’t need to know it all. All you need is one strategy to focus on, and implement it over and over again. Try out a strategy on a demo account first to see how it pans out.
Top 3 Day Trading Tips
- Stay Informed, Always look for Opportunity!
Keep track of the latest stock market news and trends in the economy. Do your due diligence and research companies and the markets they serve. If supply is low and there are still enthusiastic buyers, the price may soar. If there is too much supply and dwindling buyers, the price is about to drop. When staying informed and knowledgeable about certain companies and their performance, massive opportunities will arise, resulting in profitable day trading.
- Be a Disciplined and Consistent Day Trader.
Set reasonable trade sizes and manage your trading bank. Most successful day traders risk 1-2% of their trading capital per trade. Follow this rule consistently, as if there were no other way. Trading similar assets, at similar times of day, also provides a quick learning curve that enables you to better spot opportunities or incorrect prices, intuitively.
- Be Realistic and Stay Patient
When you find a proven trading strategy stick with it. It doesn’t have to win all the time, in fact, most strategies only need to payout 60-65% of the time. So the key is to stick with it and stay informed with market news and the companies you’re betting on. As well, sticking with a strategy requires patience. There will be times when the markets take you for an emotional rollercoaster. It’s important to make your decisions based on logic and not emotions, as well as sticking with your plan.
One of the most used and well-known day trading strategies is the “Momentum Trading Strategy”. This strategy relies on market volatility. It can be used alongside other technical indicators and tools that you find on our trading platform as it relies on spotting trends.
In short it’s where a trader analyzes the markets and looks for the best performing assets over a certain period of time. It involves buying these and conversely selling the worse performing assets. Being well informed and knowledgeable of current market moving news is instrumental to the success of this strategy.
News such as a company’s earnings, a new deal or product launch, or some other kind of breaking news relating to the company can force the price to surge. There are many aspects involved with this strategy, and before implementing it in to your routine, learn all about it to become fully aware of its intricacies. Even practice on a demo account first to acquaint yourself without risking your capital.
Day Trading vs Binary Options
Some people view “day trading” as CFD or spread betting. Binary options however, suit intraday trades just as well, if not better. Here is a breakdown of how binaries differ from more traditional trading tools:
- Risk Management. Binaries offer fixed risk. Other tools require the trader to make assumptions about the amount of volatility they face – and judge risk accordingly. While possible, the fixed risk of a binary makes risk management easier.
- Payouts. This can go either way – due to leverage – but a binary option can deliver a payout of 90-95% profit for just a single pip one way or another. Other trades may require significant price move to move into profit, and an even bigger move to show the same level of profit.
- Taxes. Binary profits are not generally liable for income tax due to them being viewed as highly speculative trades. Day trading in other vehicles is likely to be deemed an ‘occupation’ and taxed accordingly. Again, this is not clear cut, but in general binary options are more tax efficient.
- Entry costs. Binaries generally require a lower entry cost to get started. Likewise, trading up, and increasing trade size along with profits – is much easier with binaries as the starting point is much lower.
So, there you have it, all you really need in day trading is consistency with trading hours and times, a set risk level that you unswervingly follow, and a strategy that works most of the time. Binary options can certainly be used within that framework. It’s important to not over complicate these things and stick to a consistent plan with all aspects of day trading, which rules out the emotional factors that can inhibit your trading.
Binary Options Day Trading in Russia 2020
Binary options trading hinges on a simple question – will the underlying asset be above or below a certain price at a specified time? If so, you can make substantial profits with one of the most straightforward financial instruments to trade. But what exactly are binary options, and what are their benefits and drawbacks? This page will answer those questions, as well as detailing how to start day trading binary options, including strategies, tips, and regional differences to be aware of. Use the broker top list to compare the best binary brokers for day trading in Russia 2020.
Binary Brokers in Russia
What Are Binary Options?
Firstly, let’s have a look at how it all works. Put simply, binary options are a derivative that can be traded on any instrument or market. They appeal because they are straightforward. You know precisely how much you could win, or lose before you make the trade. No complex maths and calculator is required. This is why they are also known as ‘all or nothing’ trades.
If you anticipate news announcements, quarterly reviews, or global trends, then you may be able to make an accurate determination as to whether the price is going to increase or decline at a certain point in the future, turning a profit.
There is a whole host of derivatives to choose between. You can trade binary options on commodity value, such as aluminium and crude oil. You can opt for a stock price, such as Amazon and Facebook. There are foreign exchange rate options, including all the major and minor pairs. Even cryptocurrencies such as Bitcoin, Ethereum, and Litecoin are on the menu.
A Brief History
If you want to start trading binary options full-time, a detailed understanding of their origins will help. Binary or ‘digital’ options have been around for decades. Originally though, it was only large institutions and the fabulously wealthy that had access. However, 2008 saw the US Securities and Exchange Commission open the floodgates by allowing binary options to be traded through an exchange.
The internet and technology have since given the whole world access to these ‘digital’ options. As it stands, with low barriers to entry for savvy day traders and a simple to understand preposition, the demand for these digital trades will only increase.
There are a number of different option types to choose from. The most popular types are listed in the brief glossary below.
- Up/Down (High/Low) – The most simple and prevalent binary option. Will the price be higher or lower than the current price when the expiry time comes?
- In/Out (Range or Boundary) – A ‘high’ and ‘low’ figure will be set. You are then making a determination as to whether the price will finish within or outside of these boundaries.
- Touch/No Touch – Levels will be set that are either higher or lower than the current price. You then enter a position as to whether the price will ‘touch’ these levels between the time of trade and expiry. Payout will come as soon as the touch takes place.
- Ladder – These are similar to up/down trades. However, instead of using the current price, the ladder will have pre-determined levels that are staggered up or down. These normally demand a substantial price move. The flip side of this is returns will frequently exceed 100%. Although it is worth noting, both sides of a trade are not always available.
Another important component of binary options is expiry times. This is when the trade will end and the point that determines whether you have won or lost. These times can range from 30 seconds and 1 minute (turbos) to a full day (end of day), and even up to a whole year.
As an intraday trader though, you will be more concerned with trading 5 and 30-minute binary options. Opt for binaries with 1 minute expiry times though and you have the ability to make a high number of trades in a single day.
Is Trading Binary Options Legal?
Despite the somewhat negative reputation, the reality is binary options are legal. The majority of companies operate fairly. Opinions have been split because there are some out there that operate scams.
Regulation in certain regions has meant binaries have been withdrawn from the retail market. In the EU for example. But professional traders can still use them. In regions such as India and Australia, binary are legal – but traders should make sure they use a reputable broker, and read our section below on avoiding scams.
Scams & Frauds
The binary reputation has suffered from dishonest marketing and cybercrime. Too many unregulated brokers promise quick cash, whilst operating frauds. Regulators are on the case and this concern should soon be alleviated.
Binaries themselves are perfectly legitimate, but steer clear of ‘instant money’ promises, brokers that cold call, and celebrity endorsements, plus any claims that you can ‘start trading binary options for free’.
So it isn’t a question good or bad, it’s simply a question of being alert to the dangers and knowing what to look out for. If you’re unsure about a broker, ask the question in a live trading room to check they’re properly regulated.
Binary Options Vs CFD Trading
Although in some ways similar, there remain some crucial differences between binary options and CFDs. With CFDs, you have potentially unlimited risk. If the price of the asset moves significantly, the value of the trade can grow very large, very quickly – for better or worse.
Whereas binary options work slightly differently. Whilst you are still investing without owning the asset in question, the gain and loss rate is fixed. With a call option, it doesn’t matter if the price rockets, you retain the same percentage as if it rose by just a couple of pips.
Likewise, if the price sinks to zero, you’ll only lose what you put in. So, to define the difference – with binary options you get fixed risk.
Having said that, just as if it was binary options versus forex trading, you are restrained in your profit potential.
Why Trade Binary Options?
If you want to profit trading binary options, you need to first understand both their pros and cons. You need to make sure binary options will suit your trading style, risk tolerance, and capital requirements.
There is a whole host of attractive benefits to trading with binary options. The greatest advantages have been outlined below.
- Simplicity – Because you are making a determination on only one factor, direction, your bet is straightforward. The price can only go up or down. You also don’t need to concern yourself with when the trade will end, the expiry time takes care of that. Whereas in other markets, you may need a system to limit your losses, such as a stop-loss.
- Fixed risk – Trade stocks, gold, and crude oil and you’ve got a vast number of factors to contend with, from slippage and margin to news events and price re-quotes. With binaries, your risk is kept to a minimum with far fewer parameters.
- Trade control – Because you know what you may make or lose before you enter the trade, you have greater control from the start. Trade in stocks, for example, and you have no guarantee that your trade will make the entry price.
- Profit potential – Compared to other trading, the returns in binaries are extremely attractive. Some brokerages promise payouts of up to 90% on a single trade. If you’re looking to make simple trades with large profit potential, binaries could well be worth a look in.
- Choice – Rather than being constrained to a specific market, e.g. cryptocurrency or stocks, binary options gift traders the opportunity to trade instruments across virtually all markets, allowing you start currency, indices, and bonds trading if you so wish.
- Accessibility –In the binary options game, it’s always the best trading hours somewhere on the globe. So, you can login at night, or on the weekends and join the groups of avid traders attempting to turn daily profits. Real-time charts are available for every market so if you’ve got the time you can invest 24 hours a day.
Whilst there are plenty of reasons to delve into trading on binary options, there remain several downsides worth highlighting:
- Reduced trading odds – Whilst you can benefit from trades that offer in excess of 80% payouts, these are often when the expiry date is some time away from the trade date. If the odds of your binary trade succeeding are extremely high you may have to make do with reduced payout odds.
- Limited trading tools – Whilst most brokerages offer advanced charting and analysis capabilities, trading tools for binary traders often fall short of the mark. Fortunately, there are other online sources for these graphs and tools, plus brokers are working swiftly to increase their offerings.
- Price of losing – Your odds are tilted in favour of losing trades. Approximately for every 70% profit, the corresponding loss of the same trade would result in an 85% loss. This means you need a win percentage of at least 55% to break-even.
- Risk management – Unlike other markets, brokers often set a trading floor, with minimum accounts a trader needs to enter the market. This means losing capital can happen with ease. Whilst a stocks broker may permit you to open an account with $250, trading micro-lots, most binary brokers won’t allow $50 trades. So, even with $250 in your account, just five trades that don’t go your way could see you sink into the red.
Binary Trading via Mobile App
How Does Trading Binary Options Work?
Trading binary options for beginners is straightforward. Simply follow the steps outlined below.
Step 1 – Find a broker
This is one of the most important decisions you will make. You need a broker that meets all your requirements and who will enhance your trade performance. But with so many options out there, how do you know what to look for?
If you’re high-frequency binary trading each day, the commission fees and costs will quickly rack up. You want to maximise your profits so look for brokers with a competitive and transparent fee structure, and remember, different asset classes pay out different amounts.
One point worth investigating is rules around minimum deposits. Whilst some brokers will offer binary options trading with no minimum deposit, many will expect a deposit of close to $50, and some $100. A broker offering low minimum deposits is ideal if you’re strapped for cash. Trading binary with JC and GCI are good choices if you’re looking for low deposits.
Some brokers will specialise in certain assets. If you’re set on crude oil, it may be worth finding a broker that’s geared towards those binaries. You may benefit from relevant news feeds and the most prudent option choices available. Trading binary stocks with 212, for example, is ideal for those interested in stocks.
With scams out there it’s important you check your broker is properly regulated by the relevant financial body, e.g. FCA, CySec, CFTC. Trading with 247 Binary Options, IQ option, and Binary.com are all safe bets.
Binary options platforms are your gateway to the market and where you’ll spend many hours a day. There are now many online trading platforms, so, make sure it’s easy to use and offers all the charts, patterns and tools you need to make smart and accurate trade decisions. For example, will you be trading binary options with candlesticks or more obscure charts?
Both Keystone and Nadex offer strong binary options trading platforms, as does MT4. Before you buy, conduct a thorough trading platform comparison and check reviews.
Any problem could cost you time, and as an intraday trader, time can cost you serious cash. So, check the broker offers reliable support. Some brokers will offer 24/7 customer support through calls, live chat, and in a number of languages. Binary options trading with Etrade and 24 Option are smart moves if you want top quality support.
A growing number of people use mobile devices and tablets to enhance their trading experience. However, software for trading binary options varies hugely. So, it’s worth checking whether your broker offers cross-platform capabilities. Also, check the charting tools you need will work on your iOS or Android device. Binary options trading with IQ Option, for example, offers fantastic trading apps.
Many brokers will sweeten the deal with some useful add-ons. Some may offer free trading plans, courses, and lessons. So, find out first if they offer free courses online to enhance your trading performance. Some brokers will also offer free binary trading trials so you can try before you buy.
You could also benefit from trading bonuses, tips, the best strategy and trading signals reviews, plus free, practice demo accounts. Not to mention some brokers allow for binary options trading using Paypal. However, don’t be put off by no binary options trading deposit bonus, these can be a sign of potential scams.
For newbies, getting to grips with a demo account first is a sensible idea. Funded with simulated money, you can try numerous assets and options. It’s the perfect place to make mistakes and learn before you put real capital on the line. In addition, you’ll find most free binary options demo accounts require no deposit, so you can start practicing whilst you save that initial capital.
There is no universal best broker, it truly depends on your individual needs. Some brokers offer minimum trades of just a couple of pounds, whilst others require hundreds or even thousands. The solution – do your homework first.
For more guidance on making the right choice, see our brokers page.
Step 2 – Choose An Instrument/Market
You can trade binaries in pretty much everything, including stocks, forex, indices, and commodities. You can bet on anything from the price of natural gas, to the stock price of Google. Opt for an asset you have a good understanding of, that offers promising returns.
Step 3 – Decide On An Expiry Time
As a short-term trader, you’ll probably be more interested in 30 seconds, 1 minute and end of day expiry times. You need to balance binary options trading volume with price movement. Whilst the more trades you make means greater profit potential, it’s better to make fewer and more accurate trades. Also, find a time that compliments your trading style.
Step 4 – Decide On Size
In the binary options game, size does matter. The greater your investment the greater the possible profit. On the flip side, remember the entirety of your investment is on the line. You need an effective money management system that will enable you to make sufficient trades whilst still protecting you from blowing all your capital.
Step 5 – Choose An Option
You will have any number of the options outlined above to choose from. Think carefully about how confident you are in your determination. Consider factors that will jeopardise your investment, and select an option that gives you the best chance of succeeding. Don’t automatically select a ladder trade because you want huge returns, consider which options are the relatively safe bets.
Once you’ve made that decision, check and confirm your trade. Then you can sit back and wait for the trade payout.
Below is a video explaining how to trade binary options on the platform of a leading provider:
Binary trading strategies will differ from trade to trade. What may work for a ladder option in forex, may prove useless in a range option on gold. Having said that, there are two reasons you must have a strategy.
Firstly, a strategy prevents emotions interfering in trade decisions. Fear, greed, and ambition can all lead to errors. A strategy allows you to focus on the maths and data.
Secondly, a strategy allows you to repeat profitable trade decisions. Once you’ve found out how and why that binary option worked, you can replicate it to create consistent profits.
Building A Strategy
There are two crucial elements to your binary options trading method, creating a signal, and deciding how much to trade. The second is essentially money management. How do you go about determining these two steps then?
Step 1 – Creating A Signal
The signal will tell you in which direction the price is going to go, allowing you to make a prediction ahead of time. The two main ways to create signals are to use technical analysis, and the news.
Charts, Patterns & Indicators
If you can identify patterns in your charts, you may be able to predict future price movements. They rest on the idea that ‘history repeats itself’. You can start trading binary options using Heiken-ashi, other candlesticks, and line charts. Armed with charts and patterns, successful traders will build a strategy around their findings.
You can then build indicators into your strategy, telling you when to make a binary option, and which binary option you should go for. These technical tools can prove invaluable, so make sure your broker offers the features available to conduct thorough market analysis.
One of the great things about trading binary is you can use any number of your normal indicators, patterns, and tools to help predict future binary options movements. So, you can start trading with/using:
- Support and resistance levels
- Price action
- Stochastic oscillators
- MACD indicators
- Options close to expiry
For more detailed guidance, see our charts and patterns pages.
You can trade binary options without technical indicators and rely on the news. The benefit of the news is that it’s relatively straightforward to understand and use. You’ll need to look for company announcements, such as the release of financial reports. Alternatively, look for more global news that could impact an entire market, such as a move away from fossil fuels. Small announcements can send prices rocketing or plummeting.
If you can stay in the know you can trade your binary options before the rest of the market catches on. To do that you’ll need to be tuned into a range of news sources. You can browse online and have the TV or radio on in the background. Some of the most useful news sources in terms of trading information are:
- Yahoo Finance
- Business Insider
- Financial Times
Step 2 – How Much You Should Trade
If you’re just starting off it’s often best to keep things simple. Trading the same amount on each trade until you find your feet is sensible. Below are 3 binary options trading strategies for both beginners and experienced traders.
Binary options using the martingale trading strategy aim to recover losses as quickly as possible. To do this you’d trade larger amounts of money in the trades following a loss. So, you’d set an amount that you trade each time, say $250. However, if you lose on that $250, you’d bet $500 on the next trade. If the trade wins, you’ll already be back in the black, rather than being stuck around the break-even mark.
The problem with this strategy is that if you go on a losing streak you can lose a serious amount of capital in a short space of time. So, only use this strategy if you’ve got a relatively accurate means of making trade decisions. If you’re still in the trial and error stage, consider a different approach.
A percentage based system is popular amongst both binary options traders and other traders. The idea is you specify a percentage you’re willing to risk. Between 1-2% is common. So, if you’ve got $10,000 in your account, and your risk value was 2%, you could trade $200 on a single trade.
If you have a greater risk tolerance and consistent results you may want to increase that risk margin to 5%. The benefit of this system is that you should never lose more than you can afford. This makes it an ideal approach to take if you’re new to trading on binary options.
This example is best employed during periods of high volatility and just before the break of important news announcements. This technique can be utilised by traders of all experience levels. It gives you the capability to avoid the call and put option selection, and instead allows putting both on a specified instrument.
You aim to utilise put when the value of the instrument has risen, yet you think that it’s going to decrease soon. Once the descent has begun, place a call option on it, anticipating it to bounce back swiftly. You can also do it in the reverse direction. Simply place a call on the assets prices low and put on the rising asset value.
This significantly increases the chance of at least one of the trade options producing a profitable result. If you’re in a volatile market, this simple system could you see turn handsome profits. This works well as a binary options trading 60 seconds strategy, and will also cover expiry times of up to one day.
Bots & Algorithmic Trading
Once you have honed a strategy that turns you consistent profits, you may want to consider using an automated system to apply it. These robots usually rely on signals and algorithms that can be pre-programmed.
The bots then do all the leg work, trading options on your behalf. The plus side is they can make far more trades than you can do manually, increasing your potential profit margin. They can also trade across different assets and markets.
It’s worth investigating your brokers offering when it comes to auto trading and checking for robot reviews. Many allow you to build a program with relative ease. You can use your own entry points that rely on Bollinger bands, RSI/MFI patterns, and moving averages.
However, even when you’ve got your system up and running, you can’t go into trading binary options on autopilot, you need to stay tuned in. If any mistakes take place, you need to be there to remedy the problem. Technical crashes and unpredictable market changes can all cause issues, so stay vigilant.
Many binary option strategies pdfs fail to sufficiently consider time variables. Certain strategies will perform better with specific time options. You may want to look specifically for a 5-minute binary options strategy. Alternatively, trading 15-minute binary options may better suit your needs. So, whichever strategy above you opt for, ensure you take time into account.
Summing Up Strategy
Trading binary options with success rests on finding a strategy that compliments your trading style. So, consider the instrument you’re going to be trading. Then, employ an effective money management system and use charts and patterns to create telling indicators. Also, utilise news announcements to your advantage.
If you’re trying a new fence, gap, hedging, or any other binary strategy for the first time, why not try it on a trading practice account first? This will allow you to address any issues before you invest your own money.
For more detailed guidance, see our strategies page.
Binary options trading 101; immerse yourself in educational resources. As Benjamin Franklin asserted, ‘an investment in knowledge pays the best interest’. The top traders never stop learning. The markets change and you need to change along with them.
To do that, utilise some of the resources detailed below.
- Books & eBooks – There is a whole host of books and ebooks out there that can impart invaluable information on day trading binary options. You can benefit from the binary options trading knowledge of experts with decades of experience. The good thing about a book it is allows you to learn at a pace that suits you. One book that has made binary options trading easy is ‘Trading Binary For Dummies’, by Joe Duarte.
- Video tutorials & seminars – Engaging and easy to follow. There are numerous online video tutorials out there that can walk you through making a trade. With seminars, you’ll also be able to have questions answered and the binary options trading basics explained, plus some brokers offer weekly seminars to keep you up to date with market developments.
- PDFs & instruction guides – These will give you a clear breakdown of steps that you can follow and apply. The best part is you can find plenty online that are totally free and easy to download, whether you’re using Android, Windows, or iOS. The trading binary options ‘Abe Cofnas’ pdf is particularly popular.
- Forums & chat rooms – This is the perfect place to brainstorm ideas with binary options gurus. You can benefit from recommendations and learn in real-time whilst investing in your binary options. You can also swap live chart screen grabs to get a feel for other binary methods and tactics.
- Newsletters & blogs – These are brilliant for keeping up to date with upcoming developments that may affect your markets. Plus, you could hear about binary options competitions (yes, they really do exist).
- Copy trading – This is when social trading networks/platforms are combined with binary trading tools. You can follow experienced traders, analyse their strategies, and then replicate their trades. Check out copy trading reviews before you sign up.
All of the above will play a key part in your binary options trading training. Free trading videos and examples will help give you an edge over the rest of the market, so utilise them as much as possible.
There currently exists no binary options university. So, explanations as to why that option didn’t work can be hard to come by. Keeping a journal with all your binary option trading results in could solve that issue. A detailed record of each trade, date, and price will help you hone your strategy and increase future profits.
Whether you keep it an excel document or you use tailor-made software, it could well help you avoid future dangers. As an added bonus, it can make filling in tax returns at the end of the year considerably easier. A journal is one of the best-kept secrets in binary options, so now you know, use one.
Trading binary options successfully isn’t just about having the right strategy. If you can’t control your emotions you will make costly mistakes. As Robert Arnott stated, ‘what is comfortable is rarely profitable’. When the pressure kicks in, fear and greed can distract you from the numbers.
You need to accept that losses are part of trading and stick to your strategy anyway. If it’s based on accurate maths and careful technical analysis then you have to keep your faith. As soon as you start acting inconsistently your profits will suffer.
As the popularity of binary options grows across the world, regulatory bodies are rushing to instill order. That means where you trade and the markets you break into can all be governed by different rules and limitations.
If you’re day trading binary options in the UK, for example, you will require a license from the UK gambling commission. If you opt for a broker regulated by the Financial Conduct Authority (FCA), you’ll be guaranteed an extra level of protection. Beware some brokerages register with the FCA, but this is not the same as regulation.
Brexit has brought with it complications to trading regulations. The MiFID II guidelines were set to be implemented across Europe enforcing rules around binaries, however, the UK may not now implement the guidelines. This means the UK is no longer under pressure from Europe to reclassify binaries as financial instruments.
Binary options trading for US citizens is limited by a choice of just two brokers. Nadex and CBOE are the only two licensed options. Fortunately, they are both huge firms offering competitive prices and a range of different assets to trade binaries on.
Rest Of World
In Australia, the Australian Securities and Investments Commission (ASIC) runs the show. If you’re interested in brokers based in Cyprus and Israel, then check they are regulated by CySec. In Dubai and the rest of the UAE, binary options are regulated by the Dubai International Financial Centre (DIFC).
You can also start day trading binary options in Canada, India, Pakistan, South Africa, Malaysia, Kenya, New Zealand, Nigeria, Vietnam, Indonesia, and the Philippines. Each has their own regulatory bodies and different requirements.
So, if you want protection, ensure you do your research before you sign up for a binary broker on the other side of the world.
Another important regional distinction comes in the form of taxes. Some countries consider binary options as a form of gambling, such as the UK. This comes with notable benefits. The HMRC will not charge you any taxes on profits made through binary options. However, in the future binaries may fall under the umbrella of financial derivatives and incur tax obligations.
Having said that, if day trading binaries are your only form of income and you consider yourself a full-time trader, then you may be liable to pay income tax. Whilst you are probably still exempt, it is worth seeking clarification.
Outside the UK, tax regulation differs hugely. Binary options in Japan and Germany come with vastly different tax obligations, for example. So, before you start trading seek advice to ascertain whether you’ll be exempt from tax. If not, will you pay income tax, capital gains tax, business tax, and/or any other form of tax?
For more detailed information, see our taxes page.
Can Trading Binary Options Make You Rich?
Although exciting and dynamic, to make a living trading binary options you’ll need to use this page and other sources as guides. Can trading binary options make you rich then? Done correctly, yes it can. There is no question of binary options potential profitably, this is evidenced by numerous millionaires. To get there though, you’ll need the right broker, an effective strategy, and you’ll need to invest in your trading education, by utilising the resources outlined above.
Are binary options legal?
Yes, but regional regulation varies.
In India and Australia for example, binary options are legal.
In the US, binaries are available via Nadex, and perfectly legal.
In the EU, binaries have been withdrawn for retail investors, but it is still possible to trade binary options legally, by professional traders. Certain criteria need to be met in order to be classed as ‘professional’.
Can you trade at weekends?
Yes. There are two ways to trade at weekends. Firstly, forex markets are still open in some parts of the world during the “weekend” in other parts. Binaries can be traded on forex during these times.
There are also ‘synthetic’ markets with some brokers (such as binary.com) but traders should note there is no underlying market with these options. They are ‘virtual’ markets created solely to cater for traders looking to trade anything at all. They are not for sophisticated traders.
Are binary options banned in Europe?
Binary options have been withdrawn for retail traders by the European regulator, ESMA. Brokers not regulated in Europe may still offer binaries to EU clients.
It is also possible for EU traders to nominate themselves as professional traders. This waives their rights to regulatory protection, and means binaries are free to be used again.
Some synthetic markets can also be traded by EU traders, and while the product works exactly as a binary options, they are referred to slightly differently.
Do binary options work on MT4 or MT5?
There are no binary options brokers offering Metatrader integration. It is however, possible to perform technical analysis in MT4 and place trades on a separate trading platform.
Can you use binary options on cryptocurrency?
Yes. The leading binary options brokers will all offer binaries on Cryptocurrencies including Bitcoin, Ethereum and Litecoin. As a derivative, traders will not “own” any cryptocurrency, they will purely be speculating on the price. This does mean however, there is no need for a Crypto wallet or crypto account.
Which markets and assets best suit day trading? We explore the importance of volume, volatility and liquidity when choosing the right underlying markets to day trade. From forex, to stocks or cryptocurrency, we help you find the right trading market for you.
Before you start day trading in the financial markets you will have to decide where to focus your energy. Fortunately, advancements in technology have resulted in a diverse range of trading instruments now being available. This page will break down the main day trading markets, including forex, futures, options, and the stock market. It will cover their benefits and drawbacks, as well as look at which is the best day trading market for beginners. The information will help you decide which market best suits your individual circumstances, from lifestyle constraints to financial goals.
The stock market remains one of the most popular types of online markets for day traders. Quite simply, you buy and sell shares of a company.
The allure is obvious, a straightforward trading vehicle and the chance to profit from some of the world’s most famous companies, from Amazon and Google to Shell and BP.
Plus, if you do opt for day trading the stock market, you have a number of huge indices to choose from, including:
- FTSE 100 – This contains one hundred of the largest companies listed on the London Stock Exchange.
- Dax 30 – This blue chip stock market index is formed of thirty major German companies listed on the Frankfurt Stock Exchange.
- Hang-Seng – The 50 constituent companies are ranked by market capitalisation and are listed on the Hong Kong Stock Exchange.
- NASDAQ Composite – Here you will find some of the world’s technology titans.
- S&P 500 – This lists five hundred of the most widely traded stocks in the US.
- Dow Jones Industrial Average – This index contains thirty of the largest and most influential companies in the US.
Due to its popularity, you can also now find a wealth of stock market trading courses and other resources online, from books and PDFs to stock market forums, blogs, and live screeners.
Despite plenty of opportunities and trading with market statistics on your side, there is fierce competition in the major stock markets. In addition, if you were to trade in the US, for example, you could be required to hold a minimum of $25,000 in your trading account.
So, trading the stock market may not be the right choice for beginners with limited capital. Instead, you may be better off turning your attention to one of the different markets below.
However, if you want further guidance on day trading the stock market, see our stocks page.
Futures are another one of the popular markets for day trading from home. A futures contract is an agreement between a buyer and a seller to conduct a particular trade at a specific date and price in the future.
As a day trader, you look to profit from price fluctuations between when the buy/sell contract is made and when the position is closed.
Often, futures contracts will centre around commodities, from precious metals, such as steel and aluminium to fats, foods, and oils.
The purpose of futures contracts is to mitigate unpredictability and risk. For example, if you knew you were going to produce one thousand litres of milk in a year’s time, you could sell it at the then market price. However, perhaps dairy-free milk will continue to surge in popularity over the next year and market price will fall. The solution – agree to sell the milk now at a pre-determined price so you can guarantee a certain degree of profit.
Trading in the financial futures market operates in a similar way. You are betting a particular index will hit a specific level at a certain point in the future.
However, before you decide day trading the futures market is for you, there are some important factors to take into account:
- Capital – Although it requires less capital than trading stock markets, a few thousand dollars is still recommended as minimum starting capital. Although that will vary depending on the futures contracts you decide to trade. The S&P500, for example, will require between $3,500 to $5,000.
- Flexibility – Trading in the futures markets does promise some flexibility. However, official markets change dependant on the futures contract in question. So, you will need to ensure you are out of any positions before the close of trading for your particular contract. Premarket and post-market trading is available in the futures market though, as there is plenty of volume and volatility in the European, Asian, and US trading sessions.
- Narrow – Trading the stock market game promises a vast array of trading opportunities on numerous stocks. However, whilst some day traders follow volume and volatility, many trading in the futures market focus on one particular futures contract. So, if you want a diverse day trading experience, you may want to consider trading on different markets.
Overall, if you want to start trading in oil, energy and commodity markets, then futures may well appeal. Having said that, you will still need a reasonable amount of capital and to be prepared to possibly narrow your focus to just one or two particular futures contracts.
For further guidance, including strategy and top tips, see our futures page.
The popularity of trading the currency markets has grown significantly in recent years. It is now the largest market in the world. Decide to delve into the forex space and you will attempt to turn a profit from price fluctuations in exchange rates. You will buy and sell currencies when you believe they will move either higher or lower in relation to other currencies.
Currencies are always traded in pairs. But despite a number of options, only some posses the liquidity and other characteristics you need to generate intraday profits.
There are several attractive features to day trading in the forex market:
- Time – No need to worry about market opening hours, or trading when the market is closed, forex trading hours run 24/7. This makes it ideal for those looking to fit their trade activities around other commitments, or those who can only trade on the weekends.
- Minimal investment – Whilst the stock market can require tens of thousands of dollars, you can get involved in the currency markets with as little as $100-$1000.
- No commissions – With forex trading, you don’t normally pay a commission. Instead, brokers make their money through market trading quotes where you pay the spread.
However, currency markets do come with certain drawbacks:
- Trading on market volatility – Plenty are lured in by the flexibility of forex trading. The problem is, to generate substantial profits you are often still restricted to periods of high volatility and volume. Although dependant on the pair, the best time to trade the GBP/USD and EUR/USD, for example, is between 03:00 and 12:00 EST.
- Difficulty – It is a crowded marketplace with plenty of false market trading signals. Beginners are often recommended to stick to the GBP/USD or EUR/USD currency pairs. Both promise sufficient daily volume and price action.
- Leverage – Due to price fluctuations in the forex market being small, many traders turn to leverage to maximise profits. Whilst this can indeed bolster takings, it can also amplify losses.
Today the forex market is the most accessible market. It promises low barriers to entry, trading outside of US market hours, plus minimal initial investment. You can also benefit from free strategies, technicals, blogs, forums, videos and reviews, by simply heading online.
For further guidance on day trading in the currency markets, see our forex page.
Day trading today’s market is very different from just a decade ago. There is now a number of markets for cryptocurrency traders. But whilst rules, regulations and thorough risks assessments are yet to be completed, the popularity of the cryptocurrency day trade is undoubtedly on the rise.
These internet alt-coins promise high levels of volatility, making them ideal for intraday traders. There was a time when bitcoins were traded for pennies on the dollar. Now, however, each coin is traded at thousands of dollars.
It isn’t just the bitcoin market that offers day traders opportunities for profit. You can also day trade in the following popular digital currencies:
But with well-established markets, such as stocks, why should you start day trading in the cryptocurrency market?
- Low cost – Whilst to trade on stocks can require thousands of dollars, you can get into the cryptocurrency markets with minimal capital. To start with, you can even get your hands on free bitcoin and litecoin. You also don’t have to pay to be a member of a platform, which can be the case with forex and futures markets.
- Volatility – Cryptocurrency markets are developing a reputation for huge price swings. There are ample opportunities to generate profits. However, these fluctuations also mean an increased risk of large losses.
- Accessibility – As market breadth increases, so does the software and equipment available for crypto day traders. Head online and you will find tutorial videos and a range of other educational resources to assist you. Also, you don’t need to worry about opening times or market holidays, you can day trade 24/7.
- Exchange risk – There is currently no clear market risk definition. However, if your exchange goes bust you could lose all of your capital. Often deposits held on exchanges are uninsured.
- Regulation – Whilst the world scrambles to regulate these emerging markets, there is a risk of falling victim to scam brokers. Not to mention unregulated markets can be manipulated with pumps and dumps, wash trading, plus spoofs.
If you are interested in technology and have an appetite for risk, then cryptocurrency markets may well be for you.
For guidance on charts, patterns, strategy, and brokers, see our cryptocurrency page.
Many platforms now offer trading in options markets. An option is a straightforward financial derivative. The contract gives you the right to buy or sell an asset during or within a pre-determined date (exercise date). As the seller, you have a legal obligation to meet the terms of the transaction. These will usually be to either sell or buy or if the buyer chooses to ‘exercise’ the option prior to the expiration date.
The advantage of options trading is that you do not have to own the underlying asset, which can often be far more expensive than a stock, for example.
Despite having a reputation for being a risky instrument, there exist just two main classes of options:
- Put – This sell option enables you to sell at a certain price.
- Call – The buy option allows you to purchase at a particular price.
On top of that, there exist a long list of different capital, global, and emerging markets you can trade options in, although not all are appropriate for the day trade. These include:
- Stock options
- Index option
- Mini options
- Mini Index options
- Options on futures
- Weekly SPY options
- OEX options
- ETF options
- S&P 500 options
- Crude oil options
For further guidance on how to start day trading in the options market, see our options page.
Another interesting market comes in the form of binary options. Your job is to decide whether the underlying asset will finish above or below a particular price at a certain time.
These straightforward derivatives can now be traded on virtually any instrument or market. For example, you can trade binary options on commodity values, such as crude oil and aluminium. Alternatively, if you want to take a position on world-famous stocks, you can get binary options on Google, Tesla, and BP. Even forex markets and cryptocurrencies are on the binary options menu.
They appeal because they are an all or nothing trade. You know how much you will win or lose before you place the trade. So, if you want a straightforward market and instrument, plus access to global stocks with minimal capital, then binary options could be worth exploring.
For further information, including strategy, brokers, and top tips, see our binary options page.
Despite being less well known in the list of trading markets, contracts for difference (CFDs) are an interesting proposition.
The straightforward definition – A CFD allows you to buy and sell on the rise and fall of a particular instrument. Where you entered and exited a trade is the actual contract for difference. This derivative based product is based on an underlying asset and your contract is with your broker.
But with so many domestic and foreign trading markets and financial instruments available, why do CFDs warrant your attention?
- Diversity – There are over 10,000 instruments to choose from with CFD investing, including currencies and commodities. Plus, it’s a growing industry, meaning market diversity will increase.
- Leverage – This could help you capitalise on opportunities, bolstering profits. However, there is also the risk of increased losses, so caution must be taken when using leverage.
- Flexibility – CFDs often have no expiry date, premium, or commission (dependant on your broker). On the downside though, you will often pay a larger bid/ask spread than in the physical market.
For more information on how investing in the markets with CFDs works, see our CFD page.
Choosing A Day Trading Market
Day trading the markets for a living is no easy feat, despite direct access to many markets with just an internet connection. The problem is, market structure, quality and characteristics vary hugely. So, the market you choose must depend on your individual circumstances, from financial resources and appetite for risk to availability and market knowledge.
There are also a few important factors to consider when you’re deciding on a trading market. These are:
Day trading a volatile market is essential. Volatility is a measure of how much price will vary over a given time. The more price fluctuates, the more opportunity there is for you to profit from intraday movements.
Liquidity is concerned with your ability to buy and sell an instrument without affecting price levels. Markets with high liquidity mean you can trade numerous times a day, with ease.
If you don’t have an in-depth understanding of your market, then you need to consider the availability of resources. Where will you be able to go for market updates and to gauge day trading market sentiment?
Is trading data easily accessible online? If not, it is worth exploring what your broker can offer, trading volume charts, for example, can often prove useful.
Also, does the market your interested in have an array of day trading market news sources you can turn to? Let’s say you’re interested in commodities, does your broker have a gold trading market news feed where important daily moves will be explained?
Narrow Your Focus
Another common mistake some individuals make is to try their hand at a number of different markets at the same time. Each market has their own nuances and complexities that require significant attention. So, you should focus on one market and master it. Then if you can generate consistent profits and you want to explore others markets, you can do.
So, don’t just start trading random overseas markets. A careful and calculated decision will often benefit you in the long run.
Whichever market you opt for, start day trading with a demo account first. This will enable you to get some invaluable practice before you put real capital on the line. You can get to grips with analytics, practice trading in bearish markets, choppy markets, and learn all the basics. It’s also an effective way to test drive a broker.
You may also want to consider whether you will be able to employ automated algorithmic trading to increase market efficiency and capitalise on volatility. A constantly profitable strategy can often be programmed into an automated trading system.
These algorithms can be used for trading ranging markets, with market internals and capitalising on market cycles. You simply enter your parameters and then let your trading bot do the heavy lifting.
Above some of the best day trading markets have been broken down. As you can see, today you have a wide range to choose from. This means if you cannot generate profits in one of these markets, you can always try another.
However, before you decide, consider your financial circumstances, market knowledge, availability, and your risk tolerance. This will help you decide which of the above markets you would be best suited to. Also, utilise the array of online market trading guides, resources and websites available. All may enhance your overall performance.
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