How to trade binary options with IQ Option in Nigeria Year 2020

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Contents

How to trade binary options with IQ Option in Nigeria. Is it Legal?

As we all know, binary options are financial instruments that are designed to allow the buyer to get a high payout or deduction on their investment, depending on if the option expires in the money or not. binary options are known as a relatively easy way, how to make money online. But, be careful. It’s not that easy as it may look like.

There’s been an upsurge in interest within the online trading community in Nigeria towards binary options and this trend has seen the Nigerian traders seeking answers to numerous questions. Top on that list are questions bothering around the legality of binary options, the credibility of brokers, withdrawal options, and lots of others.

We hope, that this article will answer all your questions bothering around binary options trading in Nigeria, and we hope you’ll find be successful in trading. Let’s go!

Is it possible to make money trading binary options in Nigeria?

I should start by saying that making money trading binary options in Nigeria is legal and there is an interesting opportunity for anyone with the right know-how. But, it’s very important to understand, that there are many fraudulent projects around binary options, so you should always be aware of these scams.

Most common are online frauds perpetrated by fake and unregulated binary options brokers is a major threat for Nigerians, so it is advisable to only do business with an honest, tested and regulated brokers like the IQ Option broker is.

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It is important understanding that Nigeria has no binary options brokers registered in the country, those who do, rely on the services of overseas/offshore brokers. IQ Option is one such online trading platform that operates in Nigeria and offers traders an amazing trading experience.

With IQ Option broker, understanding trading binary options becomes easier, largely as a result of its easy-to-use trading platform, which is really amazing and I dare to say, it’s one of the best trading platforms in the market. In my life, I tested more than 30+ trading platforms and this is definitely the best one. A minimum deposit for trading is an amount of $10, and you can kick start trading with as little as $1. Isn’t it amazing?

Now you know, that you are able to trading binary options in Nigeria. With mentioned IQ Option broker, but it’s legal? Is it allowed?

We’ve got good news for you! Currently, there are no rules forbidding binary Options trading or even banning its outright trading in Nigeria. Seemingly, it is the Central Bank of Nigeria (CBN) and the Securities and Exchange Commission (SEC) that have the power to set up a regulatory framework for trading binary options.

At the moment, the absence of rules overseeing online binary options trading in Nigeria does not make it an illegal business. Traders in Nigeria can be sure, that they are not breaking any law.

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The Central Bank of Nigeria has in place some restrictions that are meant to protect the local currency from its fixed exchange rate policy. There’s a ban on transfers that exceed $10,000 per transaction, while withdrawals that exceed $10,000 can be flagged and withheld by the receiving Nigerian bank until satisfying proof of source of funding is provided. binary options traders in Nigeria should take note of this.

Do brokers in Nigeria need any license?

No – they don’t. As we mentioned about, there are no binary options brokers registered in Nigeria, however, the country has a welcoming market for it. Nigerian traders with offshore brokers that are licensed/regulated overseas. So you don’t need to look for a broker with Nigerian trading license, or something like that.

Investors can set up a binary options trading account by just completing the very basic registration required and account verification, which is a matter of a couple of minutes.

Why are binary options good?

Binary options are a really interesting financial instrument, that low-skilled trader can understand quickly.

Interestingly, you get to know the risk and reward before entering a trade, which is obviously a huge advantage. There can only be two outcomes with binary options: Gain or lose. Traders just need to make a decision if an asset (shares, commodity, forex, crypto) going up or comes down?

You can choose from many and many assets for trading and also from many ways, how you can trade. Do you want to trade forex? Forex options? Or cryptocurrencies? With mentioned IQ Option broker the possibilities are unlimited.

How to start trading with IQ Option in Nigeria?

As mentioned above, IQ Option gives traders access to a wide range of assets such as CFDs, ETFs, Stocks, Forex and Cryptocurrencies, asides Binary Options. With over 20 million account holders from across different countries, IQ Option is regulated by the Cyprus Securities and Exchange Commission (CySec), therefore they’re one of the best choices for would-be traders.

To trade Binary Options with IQ Option, you need to start by signing up an account, which can be done via Facebook, Google or by simply registering using an email address. Then you need to verify your account, and that’s it.

Right after registration (without verification), you can use their demo account with a free $10000 demo money, where you can get to know the platform or test some of your strategies. Or you can just fund your real account and start live trading with as little as $1. It’s very easy, isn’t it? More info about the registration process you will find our iqoption review.

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How to deposit and withdraw money with IQOption?

To make a deposit or withdraw money from IQ Option is a matter of a few clicks. Really. For depositing or withdrawing the money you can use these methods:

  • Visa/Master Card (debit or Credit card)
  • Bitcoin
  • Neteller
  • Skill
  • WebMoney
  • Bank Wire

As we mentioned above, the minimum deposit amount is $10.

To withdraw your money, you first need to make a verification of documents i.e. driver’s license, national ID or a passport.

Available withdrawal/deposit methods for traders in Nigeria are cards issued by MasterCard and VISA, wire transfers, while digital wallets such as Skrill, Neteller, cryptocurrencies and Payza are also available to Nigerian binary options traders with some form of restrictions.

For actual and updated information you can just log in to the IQ Option platform and check available deposit and withdraw methods or you can read our iqoption review.

Can I trust IQ Option?

We can’t say that the IQ broker is 100% safe, because some people have a bad experience with this broker, and some have an amazing experience, so we don’t wanna talk for all the people. But we trust IQ Option and we are trading there for a couple of years.

For us, the broker is good because:

  • They are licensed in the European Union.
  • They’ve been around since 2020 (long term company)
  • Looking around the internet you’ll find a small number of complaints about them scamming anyone.
  • IQ Option is an official partner with Aton Martin Racing since 2020.
  • IQ Option has received 14 awards of excellence from reputable bodies.
  • There are more than 20 million registered traders. That’s a quite big number.

Conclusion

IQ Option is a good broker for any Nigerian binary options traders who want to earn money by online stock trading. It’s a platform that allows users to engage the market with confidence by adding great features that are highly enhanced to offer some of the best trading experience.

At this point, I would like also to mention IQOption mobile app, which gives users greater flexibility when trading on-the-go. The app has a clean graphical interface, with charting options that are same with those found on standard platforms, and you’ll also get a push notification on top of this. There are no exemptions, as both Android and IOS users can enjoy the same feel.

Are you not impressed by the IQ Option broker? What about to try Olymp Trade broker? Find out more about this broker in our article – How to Trade Binary Options in Nigeria with Olymptrade.

If you have any questions about trading binary options in Nigeria or about the IQ Option broker, let us know below in comments. Thank you.

More information about IQ Option broker:

Author

More about the author J. Pro

Unlike Stephen (the other author) I have been thinking mainly about online business lately. I wasn’t very successfull with dropshipping on Amazon and other ways of making money online, and I’d only earn a few hundreds of dollars in years. But then binary options caught my attention with it’s simplicity. Now I’m glad it did because it really is worth it. More posts by this author

4 Responses to “How to trade binary options with IQ Option in Nigeria. Is it Legal?”

I have tried using my master card yo make a deposit but it not working why
I’m in nigeria

I have tried using my Visa or MasterCard card to make a deposit but not successful. I made a mistake signing in netteller account. So what will I do to make a payment in iq option

l am happy to discover lQ Option broker. l want to get linked with its registration . l want to invest with lQ Option. How do l get registered ?

Morning , very good write up u have here. Please i neef a contact of any nigeria trader living in lagos to train me up

Guide to Binary Options trading in Nigeria

Welcome to the Binary Options website which is dedicated to presenting to all of our Nigeria based website visitors a range of the very best Binary Options sites, all of which are going to give you the very highest levels of service, the most generous trading bonuses and access to the largest range of trading opportunities.

We have ensured that every single Binary Options Broker we list and review throughout this website has a solid and dependable track record in giving all of their clients a first class trading experience, and can be relied on to pay all winning traders rapidly no matter where in Nigeria they live. If you not from Nigeria and looking to trade Binary Option have a look at top10binary.net to learn about binary options trading and brokers.

* Amount to be credited to account for a successful trade

Be aware that each of our showcased and rated Binary Options trading sites are fully licensed and regulated, but you will need to be over the age of 18 to access our website and also you will need to be over the age of 18 to utilize and of the many different trading platforms on offer at each of our listed Binary Options Brokers.

Nigeria Binary Options Trading Guides

If you are new to the world of online and mobile Binary Options trading and you are looking to amass as much information as you can before you start to trade, then we cordially invite you to have a good look around his website for we have put together a very wide and very diverse range of trading guides to allow everyone to understand what is involved in the Binary Options trading environment.

We also have lots of question and answers related articles that are going to allow you to very quickly and seamlessly find the answers to all of the most common and some not so frequently asked question regarding trading Binary Options.

If you are interested in becoming a Binary Options trader then now is a good time to do just that for you are going to be able to utilize the demo trading platforms at each of our Nigerian trader friendly Binary Options Brokers and when you are good and ready to start trading for real money each site is going o offer you a generous and true valued sign up welcome bonuses to give you an increased chance of making a profit on your initial trading sessions.

Nigerian Binary Options News Stories

We always like to keep our finger on the pulse in regards to what is happening in the world of online and mobile Binary Options trading, and whilst there are many daily news stories from within Nigeria that may have an instant impact of the value of the share price of many home grown companies, there are also lots of worldwide events that are going to make the value of the share price on many companies located elsewhere move quite violently in one direction or another.

This is why in addition to all of our Binary Options trading guides and Binary Options Brokers reviews you will also find plenty of up to date news stories and as such please do have a good look around for when you are a Binary Options trader you really do have to keep abreast with everything that could affect the share price of one of more companies and be able to react immediately.

With the recent devaluing of the Naira then you may be urgently seeking new ways of investing your funds, and Binary Options trading is certainly going to enable you to have a plethora of different ways of investing those funds on a wide range of different trading opportunities.

Make sure you spend as much time as is needed researching the world of Binary Options trading, for whilst it may not be suitable to all investors there is no getting away from the fact that there can be and are some huge potential profits to be made 24 hours a day, and with if you are seeking a steady source of additional income it is worth researching whether Binary Options trading is going to be appealing and attractive to you.

You can of course open a demo trading account at any of our Nigerian trader friendly Binary Options Brokers, and by opening up an account you will be able to see for yourself in real time, whether Binary Options trading is something you would like to do at a later time in a real money trading environment, and if so then you will have no problems when out sign up and become a real money trader at any of our reviewed and approved Binary Options Brokers.

How to Succeed with Binary Options Trading 2020

Welcome to the largest expert guide to binary options and binary trading online. BinaryOptions.net has educated traders globally since 2020 and all our articles are written by professionals who make a living in the finance industry and online trading. We have close to a thousand articles and reviews to guide you to be a more profitable trader in 2020 no matter what your current experience level is. If you wish to discuss trading or brokers with other traders, we also have the world’s largest forum with over 20 000 members and lots of daily activity. Read on to get started trading today!

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What is a Binary Option and How Do You Make Money?

A binary option is a fast and extremely simple financial instrument which allows investors to speculate on whether the price of an asset will go up or down in the future, for example the stock price of Google, the price of Bitcoin, the USD/GBP exchange rate, or the price of gold. The time span can be as little as 60 seconds, making it possible to trade hundreds of times per day across any global market.

Before you place a trade you know exactly how much you stand to gain if your prediction is correct, usually 70-95% – if you invest $100 you will receive a credit of $170 – $195 on a successful trade. This makes risk management and trading decisions much more simple. The outcome is always a Yes or No answer – you either win it all or you lose it all – hence it being a “binary” option. The risk and reward is known in advance and this structured payoff is one of the attractions.

Exchange traded binaries are also now available, meaning traders are not trading against the broker.

To get started trading you first need a regulated broker account (or licensed). Pick one from the recommended brokers list, where only brokers that have shown themselves to be trustworthy are included. The top broker has been selected as the best choice for most traders.

If you are completely new to binary options you can open a demo account with most brokers, to try out their platform and see what it’s like to trade before you deposit real money.

Introduction Video – How to Trade Binary Options

These videos will introduce you to the concept of binary options and how trading works. If you want to know even more details, please read this whole page and follow the links to all the more in-depth articles. Binary trading does not have to be complicated, but as with any topic you can educate yourself to be an expert and perfect your skills.

Option Types

The most common type of binary option is the simple “Up/Down” trade. There are however, different types of option. The one common factor, is that the outcome will have a “binary” result (Yes or No). Here are some of the types available:

  • Up/Down or High/Low – The basic and most common binary option. Will a price finish higher or lower than the current price a the time of expiry.
  • In/Out, Range or Boundary – This option sets a “high” figure and “low” figure. Traders predict whether the price will finish within, or outside, of these levels (or ‘boundaries’).
  • Touch/No Touch – These have set levels, higher or lower than the current price. The trader has to predict whether the actual price will ‘touch’ those levels at any point between the time of the trade an expiry.
    Note with a touch option, that the trade can close before the expiry time – if the price level is touched before the option expires, then the “Touch” option will payout immediately, regardless of whether the price moves away from the touch level afterwards.
  • Ladder – These options behave like a normal Up/Down trade, but rather than using the current strike price, the ladder will have preset price levels (‘laddered’ progressively up or down).These can often be some way from the current strike price.As these options generally need a significant price move, payouts will often go beyond 100% – but both sides of the trade may not be available.

How to Trade – Step by Step Guide

Below is a step by step guide to placing a binary trade:

  1. Choose a broker – Use our broker reviews and comparison tools to find the best binary trading site for you.
  2. Select the asset or market to trade – Assets lists are huge, and cover Commodities, Stocks, Cryptocurrency, Forex or Indices. The price of oil, or the Apple stock price, for example.
  3. Select the expiry time – Options can expire anywhere between 30 seconds up to a year.
  4. Set the size of the trade – Remember 100% of the investment is at risk so consider the trade amount carefully.
  5. Click Call / Put or Buy / Sell – Will the asset value rise or fall? Some broker label buttons differently.
  6. Check and confirm the trade – Many brokers give traders a chance to ensure the details are correct before confirming the trade.

Choose a Broker

Options fraud has been a significant problem in the past. Fraudulent and unlicensed operators exploited binary options as a new exotic derivative. These firms are thankfully disappearing as regulators have finally begun to act, but traders still need to look for regulated brokers.

Note! Don’t EVER trade with a broker or use a service that’s on our blacklist and scams page, stick with the ones we recommend here on the site. Here are some shortcuts to pages that can help you determine which broker is right for you:

  • Compare all brokers – if you want to compare the features and offers of all recommended brokers.
  • Bonuses and Offers – if you want to make sure you get extra money to trade with, or other promotions and offers.
  • Low minimum deposit brokers – if you want to trade for real without having to deposit large sums of money.
  • Demo Accounts – if you want to try a trading platform “for real” without depositing money at all.
  • Halal Brokers – if you are one of the growing number of Muslim traders.

Asset Lists

The number and diversity of assets you can trade varies from broker to broker. Most brokers provide options on popular assets such as major forex pairs including the EUR/USD, USD/JPY and GBP/USD, as well as major stock indices such as the FTSE, S&P 500 or Dow Jones Industrial. Commodities including gold, silver, oil are also generally offered.

Individual stocks and equities are also tradable through many binary brokers. Not every stock will be available though, but generally you can choose from about 25 to 100 popular stocks, such as Google and Apple. These lists are growing all the time as demand dictates.

The asset lists are always listed clearly on every trading platform, and most brokers make their full asset lists available on their website. This information is also available within our reviews, including currency pairs.

Expiry Times

The expiry time is the point at which a trade is closed and settled. The only exception is where a ‘Touch’ option has hit a preset level prior to expiry. The expiry for any given trade can range from 30 seconds, up to a year. While binaries initially started with very short expiries, demand has ensured there is now a broad range of expiry times available. Some brokers even give traders the flexibility to set their own specific expiry time.

Expiries are generally grouped into three categories:

  • Short Term / Turbo – These are normally classed as any expiry under 5 minutes
  • Normal – These would range from 5 minutes, up to ‘end of day’ expiries which expire when the local market for that asset closes.
  • Long term – Any expiry beyond the end of the day would be considered long term. The longest expiry might be 12 months.

Regulation

While slow to react to binary options initially, regulators around the world are now starting to regulate the industry and make their presence felt. The major regulators currently include:

  • Financial Conduct Authority (FCA) – UK regulator
  • Cyprus Securities and Exchange Commission (CySec) – Cyprus Regulator, often ‘passported’ throughout the EU, under MiFID
  • Commodity Futures Trading Commission (CFTC) – US regulator
  • Australian Securities and Investments Commission (ASIC)

There are also regulators operating in Malta and the Isle of Man. Many other authorities are now taking a keen a interest in binaries specifically, notably in Europe where domestic regulators are keen to bolster the CySec regulation.

Unregulated brokers still operate, and while some are trustworthy, a lack of regulation is a clear warning sign for potential new customers.

Recently, ESMA (European Securities and Markets Authority) moved to ban the sale and marketing of binary options in the EU. The ban however, only applies to brokers regulated in the EU. This leaves traders two choices to keep trading: Firstly, they can trade with an unregulated firm – this is extremely high risk and not advisable. Some unregulated firms are responsible and honest, but many are not.

The second choice is to use a firm regulated by bodies outside of the EU. ASIC in Australia are a strong regulator – but they will not be implementing a ban. This means ASIC regulated firms can still accept EU traders. See our broker lists for regulated or trusted brokers in your region.

There is also a third option. Traders who register as ‘professional’ are exempt from the new ban. The ban is only designed to protect ‘retail’ investors. A professional trader can continue trading at EU regulated brokers such as IQ Option. To be classed as professional, an account holder must meet two of these three criteria:

  1. Open 10 or more trades per quarter, of €150 or more.
  2. Have assets of €500,000 or more
  3. Have worked for two years in a financial firm and have experience of financial products.

Strategies and Guides

We have a lot of detailed guides and strategy articles for both general education and specialized trading techniques. Below are a few to get you started if you want to learn the basic before you start trading. From Martingale to Rainbow, you can find plenty more on the strategy page.

Signals and Other Services

For further reading on signals and reviews of different services go to the signals page.

Beginners Guides

If you are totally new to the trading scene then watch this great video by Professor Shiller of Yale University who introduces the main ideas of options:

Education for beginners:

Types of Trades

How to Set Up a Trade

The ability to trade the different types of binary options can be achieved by understanding certain concepts such as strike price or price barrier, settlement, and expiration date. All trades have dates at which they expire.

When the trade expires, the behaviour of the price action according to the type selected will determine if it’s in profit (in the money) or in a loss position (out-of-the-money). In addition, the price targets are key levels that the trader sets as benchmarks to determine outcomes. We will see the application of price targets when we explain the different types.

There are three types of trades. Each of these has different variations. These are:

Let us take them one after the other.

High/Low

Also called the Up/Down binary trade, the essence is to predict if the market price of the asset will end up higher or lower than the strike price (the selected target price) before the expiration. If the trader expects the price to go up (the “Up” or “High” trade), he purchases a call option. If he expects the price to head downwards (“Low” or “Down”), he purchases a put option. Expiry times can be as low as 5 minutes.

Please note: some brokers classify Up/Down as a different types, where a trader purchases a call option if he expects the price to rise beyond the current price, or purchases a put option if he expects the price to fall below current prices. You may see this as a Rise/Fall type on some trading platforms.

In/Out

The In/Out type, also called the “tunnel trade” or the “boundary trade”, is used to trade price consolidations (“in”) and breakouts (“out”). How does it work? First, the trader sets two price targets to form a price range. He then purchases an option to predict if the price will stay within the price range/tunnel until expiration (In) or if the price will breakout of the price range in either direction (Out).

The best way to use the tunnel binaries is to use the pivot points of the asset. If you are familiar with pivot points in forex, then you should be able to trade this type.

Touch/No Touch

This type is predicated on the price action touching a price barrier or not. A “Touch” option is a type where the trader purchases a contract that will deliver profit if the market price of the asset purchased touches the set target price at least once before expiry. If the price action does not touch the price target (the strike price) before expiry, the trade will end up as a loss.

A “No Touch” is the exact opposite of the Touch. Here you are betting on the price action of the underlying asset not touching the strike price before the expiration.

There are variations of this type where we have the Double Touch and Double No Touch. Here the trader can set two price targets and purchase a contract that bets on the price touching both targets before expiration (Double Touch) or not touching both targets before expiration (Double No Touch). Normally you would only employ the Double Touch trade when there is intense market volatility and prices are expected to take out several price levels.

Some brokers offer all three types, while others offer two, and there are those that offer only one variety. In addition, some brokers also put restrictions on how expiration dates are set. In order to get the best of the different types, traders are advised to shop around for brokers who will give them maximum flexibility in terms of types and expiration times that can be set.

Mobile Apps

Trading via your mobile has been made very easy as all major brokers provide fully developed mobile trading apps. Most trading platforms have been designed with mobile device users in mind. So the mobile version will be very similar, if not the same, as the full web version on the traditional websites.

Brokers will cater for both iOS and Android devices, and produce versions for each. Downloads are quick, and traders can sign up via the mobile site as well. Our reviews contain more detail about each brokers mobile app, but most are fully aware that this is a growing area of trading. Traders want to react immediately to news events and market updates, so brokers provide the tools for clients to trade wherever they are.

Trading FAQ

What Does Binary Options Mean?

“Binary options” means, put very simply, a trade where the outcome is a ‘binary’ Yes/No answer. These options pay a fixed amount if they win (known as “in the money”), but the entire investment is lost, if the binary trade loses. So, in short, they are a form of fixed return financial options.

How Does a Stock Trade Work?

Steps to trade a stock via a binary option;

  1. Select the stock or equity.
  2. Identify the desired expiry time (The time the option will end).
  3. Enter the size of the trade or investment
  4. Decide if the value will rise or fall and place a put or call

The steps above will be the same at every single broker. More layers of complexity can be added, but when trading equities the simple Up/Down trade type remains the most popular.

Put and Call Options

Call and Put are simply the terms given to buying or selling an option. If a trader thinks the underlying price will go up in value, they can open a call. But where they expect the price to go down, they can place a put trade.

Different trading platforms label their trading buttons different, some even switch between Buy/Sell and Call/Put. Others drop the phrases put and call altogether. Almost every trading platform will make it absolutely clear which direction a trader is opening an option in.

Are Binary Options a Scam?

As a financial investment tool they in themselves not a scam, but there are brokers, trading robots and signal providers that are untrustworthy and dishonest.

The point is not to write off the concept of binary options, based solely on a handful of dishonest brokers. The image of these financial instruments has suffered as a result of these operators, but regulators are slowly starting to prosecute and fine the offenders and the industry is being cleaned up. Our forum is a great place to raise awareness of any wrongdoing.

These simple checks can help anyone avoid the scams:

  • Marketing promising huge returns. This is clear warning sign. Binaries are a high risk / high reward tool – they are not a “make money online” scheme and should not be sold as such. Operators making such claims are very likely to be untrustworthy.
  • Know the broker. Some operators will ‘funnel’ new customer to a broker they partner with, so the person has no idea who their account is with. A trader should know the broker they are going to trade with! These funnels often fall into the “get rich quick” marketing discussed earlier.
  • Cold Calls. Professional brokers will not make cold calls – they do not market themselves in that way. Cold calls will often be from unregulated brokers interested only in getting an initial deposit. Proceed extremely carefully if joining a company that got in contact this way. This would include email contact as well – any form of contact out of the blue.
  • Terms and Conditions. When taking a bonus or offer, read the full terms and conditions. Some will include locking in an initial deposit (in addition to the bonus funds) until a high volume of trades have been made. The first deposit is the trader’s cash – legitimate brokers would not claim it as theirs before any trading. Some brokers also offer the option of cancelling a bonus if it does not fit the needs of the trader.
  • Do not let anyone trade for you. Avoid allowing any “account manager” to trade for you. There is a clear conflict of interest, but these employees of the broker will encourage traders to make large deposits, and take greater risks . Traders should not let anyone trade on their behalf.

Which Are The Best Trading Strategies?

Binary trading strategies are unique to each trade. We have a strategy section, and there are ideas that traders can experiment with. Technical analysis is of use to some traders, combined with charts, indicators and price action research. Money management is essential to ensure risk management is applied to all trading. Different styles will suit different traders and strategies will also evolve and change.

There is no single “best” strategy. Traders need to ask questions of their investing aims and risk appetite and then learn what works for them.

Are Binary Options Gambling?

This will depend entirely on the habits of the trader. With no strategy or research, then any short term investment is going to win or lose based only on luck. Conversely, a trader making a well researched trade will ensure they have done all they can to avoid relying on good fortune.

Binary options can be used to gamble, but they can also be used to make trades based on value and expected profits. So the answer to the question will come down to the trader.

Advantages of Binary Trading

The main benefit of binaries is the clarity of risk and reward and the structure of the trade.

Minimal Financial Risk

If you have traded forex or its more volatile cousins, crude oil or spot metals such as gold or silver, you will have probably learnt one thing: these markets carry a lot of risk and it is very easy to be blown off the market. Things like leverage and margin, news events, slippages and price re-quotes, etc can all affect a trade negatively. The situation is different in binary options trading. There is no leverage to contend with, and phenomena such as slippage and price re-quotes have no effect on binary option trade outcomes. This reduces the risk in binary option trading to the barest minimum.

Flexibility

The binary options market allows traders to trade financial instruments spread across the currency and commodity markets as well as indices and bonds. This flexibility is unparalleled, and gives traders with the knowledge of how to trade these markets, a one-stop shop to trade all these instruments.

Simplicity

A binary trade outcome is based on just one parameter: direction. The trader is essentially betting on whether a financial asset will end up in a particular direction. In addition, the trader is at liberty to determine when the trade ends, by setting an expiry date. This gives a trade that initially started badly the opportunity to end well. This is not the case with other markets. For example, control of losses can only be achieved using a stop loss. Otherwise, a trader has to endure a drawdown if a trade takes an adverse turn in order to give it room to turn profitable. The simple point being made here is that in binary options, the trader has less to worry about than if he were to trade other markets.

Greater Control of Trades

Traders have better control of trades in binaries. For example, if a trader wants to buy a contract, he knows in advance, what he stands to gain and what he will lose if the trade is out-of-the-money. This is not the case with other markets. For example, when a trader sets a pending order in the forex market to trade a high-impact news event, there is no assurance that his trade will be filled at the entry price or that a losing trade will be closed out at the exit stop loss.

Higher Payouts

The payouts per trade are usually higher in binaries than with other forms of trading. Some brokers offer payouts of up to 80% on a trade. This is achievable without jeopardising the account. In other markets, such payouts can only occur if a trader disregards all rules of money management and exposes a large amount of trading capital to the market, hoping for one big payout (which never occurs in most cases).

Accessibility

In order to trade the highly volatile forex or commodities markets, a trader has to have a reasonable amount of money as trading capital. For instance, trading gold, a commodity with an intra-day volatility of up to 10,000 pips in times of high volatility, requires trading capital in tens of thousands of dollars. However, binary options has much lower entry requirements, as some brokers allow people to start trading with as low as $10.

Disadvantages of Binary Trading

Reduced Trading Odds for Sure-Banker Trades

The payouts for binary options trades are drastically reduced when the odds for that trade succeeding are very high. While it is true that some trades offer as much as 85% payouts per trade, such high payouts are possible only when a trade is made with the expiry date set at some distance away from the date of the trade. Of course in such situations, the trades are more unpredictable.

Lack of Good Trading Tools

Some brokers do not offer truly helpful trading tools such as charts and features for technical analysis to their clients. Experienced traders can get around this by sourcing for these tools elsewhere; inexperienced traders who are new to the market are not as fortunate. This is changing for the better though, as operators mature and become aware of the need for these tools to attract traders.

Limitations on Risk Management

Unlike in forex where traders can get accounts that allow them to trade mini- and micro-lots on small account sizes, many binary option brokers set a trading floor; minimum amounts which a trader can trade in the market. This makes it easier to lose too much capital when trading binaries. As an illustration, a forex broker may allow you to open an account with $200 and trade micro-lots, which allows a trader to expose only acceptable amounts of his capital to the market. However, you will be hard put finding many binary brokers that will allow you to trade below $50, even with a $200 account. In this situation, four losing trades will blow the account.

Cost of Losing Trades

Unlike in other markets where the risk/reward ratio can be controlled and set to give an edge to winning trades, the odds of binary options tilt the risk-reward ratio in favour of losing trades.

Trade Corrections

When trading a market like the forex or commodities market, it is possible to close a trade with minimal losses and open another profitable one, if a repeat analysis of the trade reveals the first trade to have been a mistake. Where binaries are traded on an exchange, this is mitigated however.

Spot Forex vs Binary Trading

These are two different alternatives, traded with two different psychologies, but both can make sense as investment tools. One is more TIME centric and the other is more PRICE centric. They both work in time/price but the focus you will find from one to the other is an interesting split. Spot forex traders might overlook time as a factor in their trading which is a very very big mistake. The successful binary trader has a more balanced view of time/price, which simply makes him a more well rounded trader. Binaries by their nature force one to exit a position within a given time frame win or lose which instills a greater focus on discipline and risk management. In forex trading this lack of discipline is the #1 cause for failure to most traders as they will simply hold losing positions for longer periods of time and cut winning positions in shorter periods of time. In binary options that is not possible as time expires your trade ends win or lose. Below are some examples of how this works.

Above is a trade made on the EUR/USD buying in an under 10 minute window of price and time. As a binary trader this focus will naturally make you better than the below example, where a spot forex trader who focuses on price while ignoring the time element ends up in trouble. This psychology of being able to focus on limits and the dual axis will aid you in becoming a better trader overall.

The very advantage of spot trading is its very same failure – the expansion of profits exponentially from 1 point in price. This is to say that if you enter a position that you believe will increase in value and the price does not increase yet accelerates to the downside, the normal tendency for most spot traders is to wait it out or worse add to the losing positions as they figure it will come back. The acceleration in time to the opposite desired direction causes most spot traders to be trapped in unfavourable positions, all because they do not plan time into their reasoning, and this leads to a complete lack of trading discipline.

The nature of binary options force one to have a more complete mindset of trading off both Y = Price Range and X = Time Range as limits are applied. They will simply make you a better overall trader from the start. Conversely on the flip side, they by their nature require a greater win rate as each bet means a 70-90% gain vs a 100% loss. So your win rate needs to be on average 54%-58% to break even. This imbalance causes many traders to overtrade or revenge trade which is just as bad as holding/adding to losing positions as a spot forex trader. To successfully trade you need to practice money management and emotional control.

In conclusion, when starting out as a trader, binaries might offer a better foundation to learn trading. The simple reasoning is that the focus on TIME/PRICE combined is like looking both ways when crossing the street. The average spot forex trader only looks at price, which means he is only looking in one direction before crossing the street. Learning to trade taking both time and price into consideration should aid in making one a much overall trader.

Best Binary Options Brokers 2020:
  • Binarium
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  • 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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