What are Binary Options?
Binary options are financial instruments whose payout is a fixed amount or nothing. A binary trade can result in win or lose after the option expires.
What is ActionBinary?
ActionBinary aims to provide a complete expert review of binary options trading as well as to give traders the freedom to share their comments on each broker, trading strategies and more. We listed the best binary options brokers and provided detailed reviews including broker methods of deposit and withdrawals, minimum account requirements and trade size, video presentation of their platform and many more.
Example of a Binary Options Trade
Suppose you want to trade EUR/USD via binary options. Before you place the order you are given the rules: Exact return in percentage if the price is above or below certain level at a predefined moment in the future. In the case shown on the picture below, the trader placed EUR 300 predicting that the price of EUR/USD will be below 1.30729 at 17.15 h. If the option expires below that price, the return will be fixed EUR 240, so in total their account will have EUR 540. Otherwise the investment (EUR 300) will be lost.
The green area on the picture above indicates the “win zone” of the chart which is called “In the Money”. As the name suggests, if the binary option expires in the money, the trader will simply get the money. If the price finishes outside this zone, the investment is lost. This type of binary options trade is one of the most simple and straight-forward. There are plenty of other trade types suitable for more experienced traders.
Why Trading Binary Options?
Binary Options are different from Forex and CFDs. See the main benefits:
- • No Margin.
- • No Margin Calls.
- • No holding losing position forever – expiry times as little as 5 minutes!
- • Profit from rising, falling and range markets.
- • No spreads and commissions.
3 Steps Begginer’s Guide to Binary Options!
STEP 1: The main terms you must know:
- • Expiry date: This is the moment when the trade is closed.
- • Strike price: The price above/below which the option has to expire in order for you to win.
- • Option Price: The minimum price you need to pay to enter the trade.
- • Return in %: The Return in % you will get if the option expires above/below the strike price.
- • In-the-money: The option expires in-the-money if your prediction was right and the option finished above/below the price level you specified when entered the trade.
- • Out-of-the-money: The option expires out-fo-the-money if your prediction was not correct.
- • Call/Put: Old fashioned way of saying “above or below” the Strike Price, binary options brokers apply the term “High or Low” thus making it easy for the traders to understand.
STEP 2: The main types of binary options:
- • High / Low – You have to predict if the binary option will expire above or below the current price (the price at the moment you place the trade). Read a detailed review of High Low Binary Options.
- • Touch / No Touch – You have to predict if the option will touch or not touch a specified price level before it expires. Read a detailed review about Touch Binary Options.
- • Boundary - Also called “Tunnel” or “In/Out” binary options. Here you have to predict if the option will expire within certain price range. Read a detailed review about Boundary binary options.
STEP 3: Watch “How to Trade – 3 Minutes Video”:
What is Traded in Binary Options Markets?
Almost every asset traded on a stock exchange is also traded via binary options. The most well presented group is Forex which is traded 24 hours and volumes continue to grow.
• Currencies – The Forex Market is immense. It currently has almost 5 trillion USD volume per day! The most traded currency pair is EUR/USD which volumes and activity ensure the volatility needed to trade the markets. With binary options you can even profit from a range markets by simply placing an order that the price will stay in the range till expiry.
• Commodities – the brokers do not offer so great variety of commodities but the market will surely evolve and more will available for traders. Those are well known Corn, Cocoa, Coffee, etc. contracts traded on the major commodity stock exchanges.
• Stock Indexes – The stock indexes representing a portfolio of stocks of the major companies in a country (or in a business sector) are usually trader via CFD’s on Futures. Brokers now offer the opportunity to trade Indexes via Binary options by predicting if the price of an index will be in a certain range in a predefined moment of time.
• Stocks -The Stocks or Shares market is usually hardly accessible for the average small trader due to its high fees and minimum trade volumes requirements. Binary options give you the opportunity to trade the large companies stock prices with a small amount.
Most traded currency pairs
Start Trading Forex Binary Options with a selected broker!
Most traded commodities
- • Crude Oil
- • Coffee
- • Natural Gas
- • Gold
- • Brent Oil
- • Silver
- • Sugar
- • Corn
- • Wheat
- • Cotton
Most traded Stock Indexes
- • Dow Jones (US)
- • NASDAQ (US)
- • S&P500 (US)
- • Nikkei 255 (Japan)
- • Hang Seng (Hong Kong)
- • SSE180 (Shanghai, China)
- • FTSE100 (UK)
- • Xetra DAX (Germany)
- • CAC40 (France)
- • Zurich SMI (Switzerland)
- • TADWUL (Saudi Arabia)
- • MICEX10 (Russia)
- • IBEX35 (Spain)
- • Strait Times (Singapore)
- • Tel Aviv 25 (Israel)
Most traded Stocks
Stocks trading activities vary significantly over time due to the events within the companies or other external factors. That is why the companies listed below are just a snapshot of what is actively traded durting the time this article was written. The large companies are usually called “Blue Chips” and can be easily found on daily stocks news websites such as Google Finance (best for US Markets) or Yahoo Finance (best for Asian Markets). We will just list some of the most traded blue chips on the US markets.
- • Cisco Systems Inc.
- • Facebook Inc.
- • Groupon Inc.
- • Intel Corp.
- • Microsoft Corp.
- • Oracle Corp.
- • Apple Inc.
Best binary Options Brokers
Finding the best binary option broker is not an easy task. However, ActionBinary makes it a little bit easier by listing the top selected binary options brokers with their main characteristics.
See the full list of binary options brokers.
Binary Options Bonuses
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