How to trade binary options
Binary options trading is relatively easy. You can purchase a contract in just three steps:
Define your position
Choose the market, trade type, duration, barrier, and payout.
Get your price
Receive instant prices based on your position.
Make your trade
Buy the contract or re-define your position.
Step 1: Define your position
The first step is to set the parameters of your trade. There are five trade parameters you need to adjust in order to receive a price for the contract:
Choose from four available markets:
Major and minor pairs, plus Smart FX indices
- Stock Indices
All major worldwide stock indices sourced from the over-the-counter market
Major commodities such as gold, silver, and oil
- Synthetic Indices
Our proprietary synthetic indices that simulate market forces
Choose from three main trade types:
Predict if the market will rise or fall from its current level, or if it will end higher or lower than a price target.
- Touch/No touch
Predict if the market will touch or not touch a price target.
Predict if the market will stay between or go outside two price targets.
Aside from the three main trade types above, you also get Asians and Digits trade types exclusively with our Synthetic Indices.
Set the length of your trade from 10 seconds to 365 days, whether you have a short-term or long-term view of the markets.
Set barrier(s) to define your position and trigger the payout you'll receive.
Choose the payout you wish to receive from correctly predicting this contract.
Step 2: Get your price
The price of the contract is automatically calculated by our patented pricing technology based on the parameters you've defined in Step 1. Our prices are benchmarked against the interbank options market, so you always get the most competitive prices. This means that you'll always receive fair and transparent pricing, whatever your position.
Step 3: Make your trade
When you are satisfied with the price that you receive, execute your trade immediately. With our unique platform, there's no risk of 'slippage' or gaping markets. And most importantly, there are no hidden fees. You can also sell back any long-term trades at any time to profit from favourable market conditions.
Range of markets
Binary options allow you to trade on a wide range of underlying markets. One of the advantages of trading binary options is that you are not buying or selling an actual asset, only a contract that determines how that asset performs over a period of time. This limits your risk and makes it easy for anyone to start trading.
Major pairs, minor pairs, and Smart FX indices.
Major worldwide stock indices sourced from the OTC market.
All four precious metals, plus energy.
Synthetic indices that mimic market volatility.
Trade popular major and minor currency pairs, plus Smart FX indices – weighted indices that measure the value of a currency against a basket of major currencies.
There are four types of Smart FX indices that you can trade:
- AUD Index – Measures the value of the Australian dollar against a basket of five global currencies (USD, EUR, GBP, JPY, CAD), each weighted by 20%
- EUR Index – Measures the value of the Euro against a basket of five global currencies (USD, AUD, GBP, JPY, CAD), each weighted by 20%
- GBP Index – Measures the value of the British Pound against a basket of five global currencies (USD, EUR, AUD, JPY, CAD), each weighted by 20%
- USD Index – Measures the value of the US dollar against a basket of five global currencies (EUR, GBP, JPY, CAD, AUD), each weighted by 20%
Enjoy exciting opportunities to trade stock indices with the benefit of real-time charts and pricing.
Our stock indices are sourced from the over-the-counter (OTC) market – sources outside of the centralised exchanges. Please note that due to their OTC nature, the prices of our stock indices may differ from their counterparts on centralised exchanges.
We offer all four precious metals – gold, silver, palladium, and platinum – as well as energy in our list of commodities.
Binary.com's Synthetic Indices are synthetic indices that mimic real-world market volatility and are available for trading 24/7. They are based on a cryptographically secure random number generator audited for fairness by an independent third party.
Synthetic Indices give you exclusive access to various trade types, such as Up/Down, Touch/No Touch, In/Out, Asians, Digits, Lookbacks, Reset Call/Reset Put, Call Spread/Put Spread, Only Ups/Only Downs, and more.
Synthetic Indices are further categorised into two classes:
- Continuous Indices – Choose from the Volatility 10 (1s) Index, Volatility 25 (1s) Index, Volatility 50 (1s) Index, Volatility 75 (1s) Index, Volatility 100 (1s) Index, Volatility 10 Index, Volatility 25 Index, Volatility 50 Index, Volatility 75 Index, and Volatility 100 Index. These indices correspond to simulated markets with constant volatilities of 10%, 25%, 50%, 75%, and 100% respectively.
- Daily Reset Indices – Daily Reset Indices replicate markets with a bullish and bearish trend with a constant volatility. The Bull Market and Bear Market indices start at 00:00 GMT each day, replicating bullish and bearish markets respectively.
The barrier of a binary option trade is the price target you set for the underlying. You can choose trades that stay below or go above a price target, or stay between two targets.
A binary option is a contract purchased by a trader, which pays a pre-determined amount if their prediction is correct.
Commodities are resources that are grown or extracted from the ground, such as silver, gold and oil. On Binary.com, they are priced in US dollars.
The contract period is the timeframe of a trade. It is also called the duration.
A derivative is a financial instrument whose value is determined by reference to an underlying market. Derivatives are commonly traded in the inter-bank market, and binaries are one of the simplest forms of derivatives.
The duration is the length of a purchased trade (see 'contract period').
Ends Between/Ends Outside trades
An Ends Between trade pays out if the market exit price is strictly higher than the low price target AND strictly lower than the high price target. An Ends Outside binary pays out if the market exit price is EITHER strictly higher than the high price target OR strictly lower than the low price target.
Entry spot price
The entry spot price is the starting price of the trade purchased by a trader.
The expiry price is the price of the underlying when the contract expires.
In foreign exchange markets, traders can enter contracts based on the change in price of one currency as it relates to another currency. For example if a trader selects Rise in the EUR/USD market, they are predicting that the value of the Euro will rise in relation to the value of the US dollar.
GMT stands for Greenwich Mean Time, the official time used in the UK during winter. In summer, the UK changes to British Summer Time, which is GMT + 1 hour. All times on the Binary.com site use GMT all year round.
These are trades where the trader predicts if a market will finish higher or lower than a specified price target.
Stock market indices measure the value of a selection of companies in the stock market.
These are trades where the trader selects a low and high barrier, and predicts if the market will stay within these barriers or go outside them (see also 'Stays Between/Goes Outside trades').
Market exit price
The market exit price is the price in effect at the end of the contract period.
No Touch trades
These are trades where the trader selects a price target, and predicts that the market will never touch the target before the expiry of the trade.
(One) Touch trades
These are trades where the trader selects a price target, and predicts that the market will touch the target before the expiry of the trade.
The payout is the amount paid to an options trader if their prediction is correct.
Pip stands for 'percentage in point' which is generally the fourth decimal place (i.e. 0.0001).
The profit is the difference between the purchase price (the stake) and the payout on a winning trade.
The synthetic indices simulate various real market situations and provide an ideal platform for getting used to trading and testing strategies under various market conditions. These indices depend on volatility and drift, and help users to try out scenarios like - high volatility, low volatility, bullish and bearish trends.
The resale price indicates a contract's current market price. Resale prices are on a best-efforts basis and may not be available at all times after purchase. See 'Sell option' for more details on selling contracts before expiry.
The return is the money realized when the contract expires (see 'Payout').
These are trades where the trader predicts if a market will rise or fall at the end of a selected time period.
It is sometimes possible to sell an option before the expiry of a trade, but only if a fair price can be determined. If this option is available, you will see a 'Sell' button inside the popup window, after clicking on the 'View' button next to your trade in the portfolio.
This is the current price at which an underlying can be bought or sold at a particular time.
The stake is the amount that a trader must pay to enter into a trade.
Stays Between/Goes Outside trades
A Stays Between trade pays out if the market stays between (does not touch) BOTH the high barrier or the low barrier at any time during the period chosen by a trader. A Goes Outside trade pays out if the market touches EITHER the high barrier or the low barrier at any time during the period chosen by a trader.
A tick is the minimum upward or downward movement in the price of a market.
Each binary option is a prediction on the future movement of an underlying market.