Flip Sides Of Booking Binary Options Trade

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  • Binarium
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    Best Binary Options Broker 2020!
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  • Binomo
    Binomo

    Good Choice For Experienced Traders! 2nd place in the ranking!

A Guide to Trading Binary Options in the U.S.

Binary options are financial options that come with one of two payoff options: a fixed amount or nothing at all. That’s why they’re called binary options—because there is no other settlement possible. The premise behind a binary option is a simple yes or no proposition: Will an underlying asset be above a certain price at a certain time?

Traders place trades based on whether they believe the answer is yes or no, making it one of the simplest financial assets to trade. This simplicity has resulted in broad appeal among traders and newcomers to the financial markets. As simple as it may seem, traders should fully understand how binary options work, what markets and time frames they can trade with binary options, advantages, and disadvantages of these products, and which companies are legally authorized to provide binary options to U.S. residents.

Binary options traded outside the U.S. are typically structured differently than binaries available on U.S. exchanges. When considering speculating or hedging, binary options are an alternative—but only if the trader fully understands the two potential outcomes of these exotic options.

Now that you know some of the basics, read on to find out more about binary options, how they operate, and how you can trade them in the United States.

U.S. Binary Options Explained

Binary options provide a way to trade markets with capped risk and capped profit potential, based on a yes or no proposition.

Let’s take the following question as an example: Will the price of gold be above $1,250 at 1:30 p.m. today?

If you believe it will be, you buy the binary option. If you think gold will be below $1,250 at 1:30 p.m., then you sell this binary option. The price of a binary option is always between $0 and $100, and just like other financial markets, there is a bid and ask price.

The above binary may be trading at $42.50 (bid) and $44.50 (offer) at 1 p.m. If you buy the binary option right then, you will pay $44.50. If you decide to sell right then, you’ll sell at $42.50.

Let’s assume you decide to buy at $44.50. If at 1:30 p.m. the price of gold is above $1,250, your option expires and it becomes worth $100. You make a profit of $100—$44.50 = $55.50 (minus fees). This is called being in the money. But if the price of gold is below $1,250 at 1:30 p.m., the option expires at $0. Therefore you lose the $44.50 invested. This called out of the money.

The bid and offer fluctuate until the option expires. You can close your position at any time before expiry to lock in a profit or a reduce a loss, compared to letting it expire out of the money.

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  • Binarium
    Binarium

    Best Binary Options Broker 2020!
    Perfect For Beginners!
    Free Demo Account!
    Free Trading Education!
    Get Your Sign-Up Bonus Now!

  • Binomo
    Binomo

    Good Choice For Experienced Traders! 2nd place in the ranking!

A Zero-Sum Game

Eventually, every option settles at $100 or $0—$100 if the binary option proposition is true and $0 if it turns out to be false. Thus, each binary option has a total value potential of $100, and it is a zero-sum game—what you make, someone else loses, and what you lose, someone else makes.

Each trader must put up the capital for their side of the trade. In the examples above, you purchased an option at $44.50, and someone sold you that option. Your maximum risk is $44.50 if the option settles at $0, and so the trade costs you $44.50. The person who sold to you has a maximum risk of $55.50 if the option settles at $100—$100 – $44.50 = $55.50.

A trader may purchase multiple contracts if desired. Here’s another example:

  • NASDAQ US Tech 100 index > $3,784 (11 a.m.).

The current bid and offer are $74.00 and $80.00, respectively. If you think the index will be above $3,784 at 11 a.m., you buy the binary option at $80, or place a bid at a lower price and hope someone sells to you at that price. If you think the index will be below $3,784 at that time, you sell at $74.00, or place an offer above that price and hope someone buys it from you.

You decide to sell at $74.00, believing the index is going to fall below $3,784 (called the strike price) by 11 a.m. And if you really like the trade, you can sell (or buy) multiple contracts.

Figure 1 shows a trade to sell five contracts (size) at $74.00. The Nadex platform automatically calculates your maximum loss and gain when you create an order, called a ticket.

Nadex Trade Ticket with Max Profit and Max Loss (Figure 1)

7 Binary Options

The Basic Tools for Successful Binary Trading

Binary options are complex, exotic trade options, but these are particularly simple to utilize and understand the way they work. The most familiar type of binary option it the high-low option and it’s relatively simple to comprehend. This technique is also referred to as the fixed-return option and provides access to commodities and foreign exchange, indices and stocks.

Trading with binary options is easy, and you do not need any previous experience. Below are some basic guidelines that we have compiled to help you start trading in a few minutes.

  1. To be a successful binary options trader, you need to use more than one broker. Choose one or more from our compiled list of brokers.
  2. Register with your chosen trading platform and deposit money to start trading. The minimum deposit for some trading platforms or binary options robots is only $ 100.
  3. Select the asset to trade. Trading platforms have assets such as currencies, indices, commodities, and stocks. You can choose to trade in currencies, the popular one being EUR/USD.
  4. Decide on the amount to invest. When investing in an asset, you will see the payout or the returns for the asset, which can go up to 91%. Make your prediction on the movement of the price of the asset. If you predict the price of the asset to rise, select Call (up). If your prediction is that the price will fall, select Put (Down).
  5. When the trading closes after the given time, for example after 60 seconds, if it is a 60 seconds investment and you have made the correct prediction, then you win. An investment of $ 100 with a 90% payout means that you will have made 90 dollars in a few minutes.

TradersRoom Review

TradersRoom

Broker TradersRoom
US Traders Accepted
Company Name TradersRoom Ltd.
Headquarters Nicosia, Cyprus
Regulation No
Bonus Type Match bonus
Max Payout 75%
Out-of-Money Reward 10%
Trading Platform SpotOption
Deposit Options Credit/debit cards, wire transfer, Western Union, WebMoney
Deposit Currencies USD or EUR
Minimum Deposit $250
Minimum Trade $5
Maximum Trade $1,500
Online Since 2020
Trading Instruments Currencies, Commodities, Stocks, Indices
Number of Trading Instruments 48
Binary Option Types Call/Put (listed under “One Touch” for some reason), 60 Seconds
Customer Support Types Phone, contact form (email), or live chat
Education Offered Glossary
Tools Offered Daily and weekly market review, tips from analysts (completely out of date, all of them). Under Silver and Gold accounts, breaking financial news and regular chats with experts are provided.
Commission $10 for withdrawals of under $50 or for check withdrawals. No fees for wire transfers.
Languages English, Portuguese, Spanish, Russian
Demo Account No

TradersRoom is one of the few binary options brokers on the internet that accept traders from the US and also takes customers from countries around the globe. The site is operated by Cyprus-based TradersRoom Ltd., though there is not a lot of information available on this company, and it is probably not regulated. TradersRoom’s main advantage is that it does offer services to US clients, but otherwise there is not a whole lot to make it an appealing choice. We’re not impressed with the website’s general lack of information, the inconsistencies we found in the trading platform, or the vague nature of the company.

Getting Started with TradersRoom

To get started with TradersRoom, it only takes a few minutes to register. You don’t even need to provide the name of the country you’re located in. You are then prompted to deposit money so you can start trading. You can trade in either USD or in EUR, and you can make your deposit using credit card, wire transfer, Western Union, or WebMoney. The minimum deposit is 250 USD or EUR, which is quite standard. One nice thing about TradersRoom is that there is no withdrawal fee if you withdraw the minimum amount of money (more than 50 USD or EUR), even with a wire transfer. Unfortunately there are a lot of reviews online that point toward withdrawal problems with TradersRoom. These complaints make us leery because being able to withdraw your money quickly and easily is one of the most important features of any trustworthy broker.

The TradersRoom platform is powered by SpotOption, which is one of the most popular trading platforms out there. Traders who have used SpotOption-based platforms elsewhere will already be familiar with the way that trading is presented on the TradersRoom site. TradersRoom has a unique feature where you can choose two different formats for the trading platform. One is a simplified version of the other, although both are quite basic and easy to understand. Note that TradersRoom offers no demo platform of any sort, so you will need to demo test somewhere else before you trade live.

One weird issue with TradersRoom concerns the way that types of binary options trades are labeled in their platform. There are two types of trades available, Call/Put and 60 Seconds trades. For some reason though, Call/Put are labeled as “One Touch” on the platform. When you select “One Touch,” you just get the Call/Put trade type. This is just a simple mislabeling, though it’s a bit misleading. You can trade indices, stocks, currencies and commodities, and there are around 48 trading instruments available.

The minimum amount you can trade is $5 on a 60 Second trade. The maximum amount is $1,500. The average out-of-money reward isn’t too bad; it appears to be a minimum of 10% (not an average, an actual minimum, meaning you always get something back if you lose). The average winning payout percentage is just 70-75%, which is lower than we’re used to seeing.

TradersRoom offers match bonuses when you deposit as well as several tiers of accounts. The match bonuses are leverage-type bonuses; you need to turnover the amount of the bonus 15 times in order to claim it for your own. This is a pretty low turnover requirement; many brokers require twice that turnover. There are also bonuses for loyal customers who trade a large volume. The three tiers of accounts are Bronze, Silver, and Gold. All three include an account manager and a monthly call. If you deposit $5,000 or more, you can get a daily call from your manager. All three tiers come with daily and weekly market review. The top two include breaking financial news and special bonuses. Gold account members qualify for faster withdrawals.

Customer Service and Trading Resources

TradersRoom has links at the bottom of their page to daily and weekly market reviews, but they haven’t been updated in a couple of years. There are also expert tips, but when you click on that link, you see only one tip, dated 2009. So these resources are either unavailable or they are only available as part of a paid service (i.e., you can access them if you are a Silver or Gold account member). Otherwise there is nothing in the way of educational materials, so that’s not so great.

Customer service can be accessed via telephone (there’s one number for the US and another for the rest of the world), live chat or web form. On a weekday during standard business hours we attempted to speak to an agent via the live chat and were unable to reach anyone. After waiting for fifteen minutes we were prompted to send an email instead. So we don’t know how often the help desk is actually staffed. Sadly this seems to be a plague among binary options brokers. We suggest you call up the customer service department before you make any decisions about trading with this broker.

Conclusion

There really isn’t a whole lot which impresses us about TradersRoom. We like that there isn’t a withdrawal fee for wire transfers—that’s pretty unique. But we’re bothered by the customer reviews we’ve seen online which say it’s hard to withdraw your money from this broker. It’s your money and you should have no problem getting it, even if there is a standard delay between your request and your receipt of the money. You have a right to expect timely and clear communication about your funds and to be able to swiftly withdraw them within a specified timeframe.

It also seems like there are a number of inconsistencies on the site that need to be remedied, including some inconsistencies in the presentation of the trading platform. The fact that there are no trading resources available directly on the page is less than impressive; the outdated information in the weekly and daily reviews makes us wonder whether the packages which include resources really do include them. We also would have liked to be able to reach customer service more easily during standard business hours. Overall, we wouldn’t readily advise you to trade with this broker.

Best Binary Options Brokers 2020:
  • Binarium
    Binarium

    Best Binary Options Broker 2020!
    Perfect For Beginners!
    Free Demo Account!
    Free Trading Education!
    Get Your Sign-Up Bonus Now!

  • Binomo
    Binomo

    Good Choice For Experienced Traders! 2nd place in the ranking!

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Guide How To Become Binary Options Trader
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