Binary options

Warning: This involves substantial risk and will not be suitable for the majority of you.

At the beginning these graphs will mess with your mind but soon enough you will understand them all

Just like gambling binary options are emotionally and mentally taxing, but the rewards possible are immense. If done correctly it will be the most financially rewarding endeavour you ever undertaken, especially from a £/hour perspective. But you must ensure that you always have a back up plan, i.e. to pay the bills etc.

Buying shares/stock in a company is an unknown, it may take you months if not years to get a profit back, but the most frustrating part is simply not knowing.
With binary options it’s different, before you trade you know exactly how much you stand to profit or lose based on the investment you make.

The most common type of binary options are High/Low. When buying you’re saying that the price of oil is currently X and you expect it to either increase or decrease by Y (time frame). So you select an assest (e.g. Oil), specify the time frame (e.g. 24 Hours) and select Higher or Lower (e.g. Higher), very simple.

So going by the above example (Oil, 24 hours & higher) we are predicting that in 24 hours time the price of Oil will be higher than the current rate, if this is correct we’ll receive a profit. Should the price of oil not be in favour of our prediction, then we’ll not make a profit from this particular trade.

This first technique is very much like placing a bet on a horse, Asset (i.e. the horse), time frame (i.e. race length) & higher or lower (i.e. if the horse comes wins or not).

Binary Options can be a great especially if you have a hunch or ‘inside’ information that not many other people know about or have thought about, think about the following:

  • Product launches (think Apple)
  • Market/Company uncertainty (i.e. first news about a certain issue is posted)
  • News conferences (information is hinted at and you’ve watched & understood those)
  • New Laws/Taxes/Changes

The beauty of Binary Options:

  • Very high yield return
  • No complicated options and overall easy to understand
  • Short time period (no waiting months/years for a payout)
  • Fast paced (time periods can be as low as 60 seconds, but most start at 1 hour)
  • Up front risk evaluation (i.e. you know exactly how much you’re about to Win/Lose)
  • Great for all education levels (novice straight through to professional)
  • No commissions (You don’t pay to trade)
  • Low minimum investments (Lowest is generally £25)

The bad sides of Binary Options:

  • If your don’t win (i.e. the price does the opposite to what you had thought) you will only get back 5-20% of your initial investment.
  • It can be risky as it’s difficult to predict how shares are going to do over an hour, week, month etc.
  • You cannot choose any stock, only certain assest are available i.e. (Oil, Silver, Gold, Google, Linkedin, Amazon) but not smaller companies etc
  • Limits on maximum investment,  i.e. you can only invest a maximum of £1000 to £2000 per option, compared to standard shares where you can generally invest a lot more. (obviously you’re not going to need to worry about these at the moment.
  • Binary options are NOT for long term savings, they’re ideal for beginners who want to test out their skills but should not be used for money that is supposed to be growing over time.

So within a time frame you've got to predict if the value of a certain item (i.e. a share price, or commodity) goes up or down from the current value.

Am I actually buying the shares & assets?

You’re not actually purchasing ownership of the asset or share, you’re simply making a bet on how much the asset/share is going to change in value.

What does binary options mean?

With binary options you can only ever have two possible outcomes, either your estimate is correct or it’s not. This is similar to how most computer brains (i.e. processors) work, they use a binary system (base-2) which calculates processes/etc by seeing if something is on or off (i.e. 0 or 1), hence the name Binary Options.

Other types of binary options

  • One Touch – The idea is similar to High/Low but instead you state you think the price of the asset (e.g. oil) within the time frame (e.g. 24 hours) will hit a target price (i.e. a price point set by you) at some point. So it doesn’t have to end higher or lower than the starting investment, it just has to have a high/low point that is your target price or more.
  • Range Options – The same as High/Low but instead of just saying the asset (e.g. oil) within 24 hours will be higher or lower, you set a range that the price will fall into, e.g. “Oil at the end of 24 hours will be priced between X & Y.”

Selecting the best binary option broker (i.e. where you actually trade) is extremely important

This step is the second most important step, the first step being is this right for me?.

You need to find a broker that gives you full control on your trades, can be easily contacted in case of an error etc & offers the correct time frames that suit you, i.e. you don’t always want to be waiting months for trades to be completed.

Binary Option brokers Description Bonus Rating Regulated
These do change from time to time, but the offers are always fairly similar.
24Option Very user friendly, great mobile apps allowing you to trade on the go. Launched in 2009 it was one of the first in the market. Regulated by the FSC (BV). 100% match bonus, i.e. deposit £100 get £100 bonus Yes
TradeRush Great website but poor withdrawal options, established in 2011. Minimum of $200 (£125) deposit will give you 100% match bonus, i.e. £125 deposit gives you £125 bonus. No
AnyOption Launched in 2008, one of the pioneers in the industryUp to 71% profit per trade, based in Cyprus Varies but you should normally get a 100% match bonus, i.e. deposit £100 get £100. Yes

These companies are well tested and we’ve withdrawn money from them all, we’ve never had any major problems using the sites but it’s worth checking terms and conditions of any bonuses.

Warning –  Watch out for binary option scam websites

We bloody hate scammers, they create these bogus websites preying on people who take a fancy to their posh looking website & then BOOM they run away with all your details or worst still your money.

Due to the industry being fairly new there are always new companies turning up, the majority of these companies are legitimate, but be sure to double check by either asking us or search the web for answers. It’s also important to always get the best rates for your ‘investments’, missing out on just 1% could cost you £100′s over a year or so. So if you’ve got the time compare the prices on multiple Binary Options broker websites then spend that extra minute to see if you can get a better deal, this does mean having multiple accounts but it’s worth it if you’re going to make more cash long term.

How can I improve my profit?

Don't ever give your cold hard cash to someone who want to sell you an eBook/Course/etc

We’ve lost count of the amount of paid e-books, strategies & guides we’ve seen and looked through over the years. Some of these strategies can be good short term but most fail long term. The most important strategy/course of action we’ve learned about and use is ‘Follow the trends’, just like in fashion you need to jump in at the right time along with everyone else, unless you’re a fashion student ;)

You should follow existing trends because the odds are slightly higher that an asset will increase in value if the majority are buying it, unfortunatly following this method will cost you lots of time due to all prices fluctuating through-out the day (but hey you’re a student a few hours a week can’t hurt)!

Knowing when to buy is one of the most difficult decision to make, so make sure you’re running the chart software (supplied by the broker) on your computer all day, to give you the best knowledge of how the prices change.

What amount will I get back on my investment?

If you win you will get back your risked amount + the return back as profit. So it all depends on your initial investment.
The longer the option the greater the return, i.e  5 minute time frames will not give you massive returns, but a 1 hour or even 1 day option will give you amazing returns. An hour option will typically give you a 80 percent return rate, i.e. £100 turns into £180. So after a few winning trades you will have a good amount of money & the fact you know before hand your risks means you can calculate a ‘safe’ bet and remember lots of smaller amounts can still add up to a high return rate.