Binary Options Social Trading

researchFor a lot of people, the very future of the world of online options trading as well as investing in different assets rests in the hands of a new feature called social trading.

This type of trading has been able to enter the market with little to no resistance, and has already got millions of traders all over the world falling head over heels in love with it.

Whether as a follower or as a trader who sets as example for the rest to follow, social trading is something all traders engage in at some point or the other. In fact, this form of trading has pretty much changed the way the game works for good. It has redefined how traders approach all of the different trades and assets, and has made some changes to how money is managed as well.

Why do People Love Social Trading?

Two of the key features of social trading that make it so attractive to traders are transparency and openness. Traders can look at the actions of some of the most professional and expert traders out there and then copy their trades without having to feel bad about it.

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They can also talk to these experts and find out more about the different strategies that they use. While the advantages of this form of trading are many indeed, and while there are countless new opportunities and avenues to success that have been opened up by the penetration of this type of trading into the binary options market, it isn’t like the profits are going to come in just because you follow the actions of some random people.

Analyze the Market to be Successful

The only way in which you can achieve success with this type of trading is to analyze the market as best as you can. You have to be able to identify and create new and improved strategies for trading. These will, in turn, show you as a trader which of the plans, tactics and decisions you make are good for you financially and which are bad. There are a lot of people out there who claim to have the right type of guide to allow you to maximize your social trading profits. The truth is that most of these people barely know what they are doing! You need to follow the advice of true experts if you want to be successful with this type of trading. Take on some of the more practical tips and tricks that you can put into effect in order to be a more effective trader on the social aspect of things.

Social Traders Exist in Millions

The first thing you need to realize is that it isn’t an easy process. One does not simply switch on their computer and become the best social trader the broker has ever seen. In order to become successful and effective at placing and winning your trades, you need to be willing to dedicate your time to the system.

You have to explore every inch of the platform, as well as all the tools and features that are offered to the people trading on it. For the most part, brokers have their own standalone social trading platform that is offered to account holders free of charge. There are other platforms from third parties that exist for the traders who don’t have this luxury. There is also the glaring fact that there are millions of traders doing the same thing, so it might take a while to find the right crowd to follow.

If you are entering a social trading platform for the first time ever, the first thing you need to do in order to maximize your profits is find out who the popular crowd is. You have to get in with the cool kids if you want to be a success in this virtual high school environment. Do a people search and look for the traders who are trending at any given time, and have been for a while. These are the people that you need to keep an eye out for. With the right kind of planning and the right people being followed and used for inspiration, you should be able to make the perfect, profitable social trades in no time at all.

how to win binary options

How to Win in Binary Options Trading

Every wondered how you can become a winner in binary options trading? Winning is not as simple as placing a trade because there are a lot you need to learn. You should know that winning in binary options is not something that can occur overnight as it takes years of learning and experiences. You will slowly become a more professional trader through reading tips and getting advice from other experienced traders. The following is a few tips on how you can increase your winning rate in binary options trading.

Don’t Choose a VIP Account

Many brokers offer VIP accounts and claim that you can increase your profits significantly when you sign up for this account. VIP account requires a large deposits that is at least tens of thousands of dollars which can be expensive for those who are with small capitals. VIP account is only suitable for experienced traders who already know how to quickly flip their investment into profits. If you are new, you should just sign up for a standard account and deposit a small amount to start trading. Many brokers have basic accounts with a minimum deposit that starts from $100 – $250.

Do Research on the Company You Are Trading

To win in binary options, you should access a financial portal site because here you will find up to date information on different stock companies and assets. During your research, you can look up for the publication of the company to learn more about its background. You can join forums to get insights from other traders who more experiences than you in binary trading. YouTube has a lot of videos on binary options system that you can watch for free. You can easily find any tip on binary options trading by performing a search on YouTube.

Learn How to Read Different Charts

You should learn how to read the different types of charts in binary options as it will make it easier for you to perform comparison across different trading strategies. The tick chart shows the movements of the assets’ prices in the last few minutes. The tick chart is ideal for monitoring a trade with short expir y time frame such as 5 – 30 minutes.

Line chart displays the price movement for a period of a few hours or days so it is suitable for monitoring trades that has an expiry of a few hours or more. Candlestick chart displays more information that the other two charts. Candlestick chart is more visual, cleaner, and also look more jerky. The fluorescent jerky movement on the candlestick chart lets you clearly see whether the price is going up or down.

Use a Binary Options Signal Software

You can use a binary options signals software to get more accurate predictions on the price movement. The software will scan different charts and other resources to give an accurate estimate of the price movement. However, before subscribing to a signals provider, you should check to see if they offer free trials so that you can test them out.

You should sign up for a few binary options free trials so that you can compare the result and determine which one is the best. It is important to do a lot of research before using a binary options signal software to automate your trade. Most signals software come with its own approved brokers but some allows you to choose your own broker. Another thing is that the software should have at least 70% of accuracy.

Use Social Copy Trading to Improve Your Trading Skills

Many binary options brokers offer social copy trading feature on their trading platforms, which allows traders to copy the trading strategies of other successful traders. Some platforms allow traders to automatically publish their actions on the forum so that other traders can provide feedback. New traders can improve their trading skill by studying the trades of the experienced traders. Afterwards, it is up to them to decide whether they want to copy the action and place a similar trade.

So how do you win in binary options trading? You must be able to perform the right analysis in order to become a winning trader. There is no shortcut way and the best way to become a successful trader is to practice trading a lot. It is important to learn the inside and out of the platform and test it with a demo account before placing a real trade.

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Effective Strategies for Winning in Binary Options Trading

To increase your chances of winning in binary options trading it is important to implement effective strategies.

One popular strategy is trend following where you analyze market trends and make trades based on the direction of the trend.

News trading is another strategy where you make predictions based on news events that can impact your chosen assets.

Additionally there are short-term trading strategies such as the 60-second strategy and the 5-minute strategy that allow for quick trades and potentially high returns.

Another important aspect of winning in binary options trading is risk management.

Set clear risk management rules to minimize losses and protect your investment.

Lastly continuous learning and research are crucial to refining your strategies and staying updated with market conditions.

Remember there are no shortcuts to success in binary options trading so practice develop your skills and be patient for consistent gains.


Minimize Risks in Binary Options

Binary options trading is a risky investment, so you want to make sure that you take steps to minimize these risks. If trade carelessly, without taking any precaution steps, you will find yourself losing a lot of money. The following are seven tips on how you can reduce the risks in binary options trading.

1. Money Management

You have to get disciplined in money management, because you will be the one deciding how much money you want to invest into the binary trading. Getting disciplined in money managements means you are to set a limit for how many wins and losses are to be allowed in one day. You must, by no means, control yourself and stop trading when the limit you have proposed is reached. You can make a proposal to yourself to stop trading based on the number of wins/losses, percentage of losses, amount of wins/losses and winning ratio. For example, you can propose to yourself to stop trading when you win 10 times/lose 5 times.

2. Trade on a Small Amount

As a rule of thumb, you should always trade in small amounts, no matter how high the ROI rate is. It can be tempting to invest all the money in your trading account when the broker offers a high ROI of 95%, but it is better not to do so. This is because you won’t make the right prediction every time in reality. For example, if you $300 in your account, you should start by just trading $30 in each trade. Trading in small amounts can help you to accumulate into a large amount of profits over time while minimizing your losses at the same time.

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3. Choose a Broker with High Out-of-Money Rate

You should choose a broker that offers some refund for trades that end out-of-money. For example, the broker may offer a refund 10% for out of money trades. This means that you will get back 10% of the capital you invested, if you lose the trade. To find out how much return rate the broker offers, you can check the FAQ section or ask the representative.

4. Monitor the News in the Market

It is essential that you perform a research by using technical analysis tools and monitoring the news in the market, if you want to increase the chances of making a correct prediction. The source of the financial news you rely on, must be up to date. You should get educated on binary options trading by reading books and watching tutorial videos.

5. Implements Hedging Strategy

The hedging strategy requires you to place a trade in both, the call and put positions, to reduce the risks in a volatile market. You will have to predict the highest or lowest level within a certain trading period. The best trading period would be when the movement of the price is within the symmetric channel. You should place a put when the price touch the previous high resistant level and place a call when it touches the previous low support.

6. Choose a Broker with Sell Back Feature

There are a number of brokers that offer the sell back feature on the platform. The sell back feature allows you to end your trade prior to the expiry if you know that you have predicted the wrong direction and will lose. Using the sell back option can help you to get back a portion of your capital that range from 40% – 60%. Although you didn’t get back the full amount of your capital, you still manage to get back almost half of your capital. This is better than you end up with nothing in the event that your trade end out-of-money.

7. Diversify Your Portfolio

You can also reduce your risks by diversifying your trades across different types of asset classes. For example, you can trade on stocks while trading on forex currency pair on a single brokerage account. Apart from diversifying the asset classes, you should also diversify your trading strategies. You can implement both short term and long term trading strategies to reduce your risk.

The key to success in binary trading is to maintain a balance in between the profits and risks. You should always set a budget before executing a binary options trading activity.

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binary options income

How to Read Binary Options Signals

Binary options signals can alert you whenever there is any news that will affect the asset’s price. If you keep using binary options signals, you will slowly become familiar with the pattern of the price movement of a particular asset. These signals are not completely accurate and do not guarantee that you will win in the trade if you follow them. Before trading software exist, traders used to subscribe to binary options signals service. There are both free and paid signals and you can choose to receive the signals through email, or text messaging. Nowadays, there are binary options signals software that can automate the trading process by placing the trade on your behalf after analyzing the market.

The signals are created based on two types of analysis including technical analysis and fundamental analysis. Many different types of financial indicators are used in forming the binary signals including relative strength index (RSI), stochastic oscillator and MACD (Moving Average Convergence Divergence).

Relative Strength Index (RSI)

There are two regions in the RSI scales, with the first region starting from 0 – 30 and the second region starting from 70 – 100. If the trading signal is located in the region of 0 – 30, it means that the currency pair is oversold so the market trend will reverse. You should place a call if you see bullish reversal candlestick formation such as evening doji star or chart pattern such as falling wedge.

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If the RSI value is located in the 70 – 100 region, it means that the currency pair is overbought and so the rate is falling. You should place a put if you see bearish reversal candlestick such as morning doji star and chart pattern such as rising wedge. You can also use the RSI as a trend indicator to determine the trend of the price of the asset. For example, the trend will go downward if the RSI is under 50 so this is a good opportunity to choose Touch in the Touch/No Touch option. The price will move in upward direction if the RSI is above 50, which means you should choose No Touch.

Stochastic Oscillator

Stochastic oscillator, also called K%D, allows you to make accurate prediction on the price movement by making comparison between the asset’s price and trading range. There are two lines in the stochastic oscillator including %K line and %D line. If the %K line has a zero value, the trading range is at the lowest point. If the %D line has a value of 100, the trading range is at the highest point. The value of the stochastic oscillator will drop when the price arrive at the double top. This is the best time to place a put for options with longer expiry time the downward trend of the price movement. If you want to wait for the D% line to cross the %K line, you should choose options with shorter expiry time.

MACD (Moving Average Convergence Divergence)

MACD is suitable to be used for call/put options as well as touch/no touch options. If you want to use the MACD strategy, you must make sure the asset is trending. You can use the MACD histogram to find out if there is any changes on the trend. You should place a call if the red 50 period line is situated higher than the blue 110 period line. In this scenario, the prices of the asset has bounce off from the line of the 50 period EMA.

On the other hand, you should place a put if the red 50 period EMA line is located under the blue 110 period line. There is a pullback on the price of the asset at the 50 period EMA line. The time frame you should choose depend on the time frame of the chart you are using. The timeframe should be set about 4 candlestick apart so if you are using a chart with 30 minutes time frame, you should select an expiry time that last for 2 hours. It is recommended that you don’t trade more than 5% of your investment if you are using MACD indicator.

Learning how to read the trading signals allow traders to easily analyze opportunities and implement a trading strategy. This enables you to place more trades and maximize your returns in binary options trading.

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how brokers make money

How Binary Options Brokers Make Money

There are several ways that a binary options broker can make money from the traders’ investment. Legitimate brokers make money by marking up the price of the asset on the trading platform. Usually, the pricing structure of the different types of assets are derived from the liquidity provider. The asset’s price has been marked up to be slightly higher than the original market.

In-the-Money Trades

Binary options brokers actually make money on both in-the-money trades and out-of-money trades. For in-the-money trades, they earn a portion of the profits when you make the right prediction and win in the trade. The payout ratio displayed on the platform is not calculated based on the actual percentage on the original market so that is how the broker profit on a portion of your payout.

Out-of-Money Trades

For out-of-money trades, the broker profits on your capital investment plus the payout rate when you make the wrong prediction. For example, if the payout rate is 85% and you place a trade of $100 on the USD/EUR currency. You predict that it will go up but the result end up that the USD/EUR currency go down.

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You lose your capital investment and didn’t get any return. In this case, total amount that broker earn will be $185 including your capital investment plus the payout rate of 85%. Everyday, there may be 10 or more out-of-money trades so the broker can easily earn tens of thousands or hundreds of thousands of dollars per day. There are some brokers that offer refunds for out-of-money trades, which is usually 5% – 15% of your initial investment.

If most of the traders are winning, the broker would be losing money and close down. In truth, the majority of the trades will be losing trades for most of the time so this makes a lucrative business for binary options brokers. A survey report that was released in Japan revealed that 85% of the trader lose in their trading. Most traders are not able attain a high winning rate because they lack the patience to learn about trading binary options. Those who do spend time to educate themselves such as reading guides, watching video tutorials and attend webinar will learn how to earn a consistent income over a long term. Therefore, it is all up to you on whether you will make money or lose money binary options trading.

How Peer 2 Peer Brokers Make Money

Some brokers operate on a peer 2 peer network which allows traders to trade against one another. In peer 2 peer network, clients can create options with different types of payouts and the buyers will decide how much they want to invest and place the trade within a single click. If the buyer predict the price movement incorrectly, the seller will profit.

The broker does not profit on the out-of-money trade but they make money by charging a commission whenever the trader purchase a contract. The commission ranges from ten dollars to twenty dollars. This means that the seller won’t earn the full amount on out-of-money trade because the commission will be deducted from here. Hence, both the traditional and the peer 2 peer model are the same because the brokers will end up making the same range of income.

Welcome Bonus

Another way binary options brokers make money is by offering bonus that match with their deposits. They advertise the bonus as an incentive to help new traders to get started in the trading. New traders often get tricked and assume that they will be able to withdraw the bonus from their account. There is a string attached to the bonus, and that is you need to fulfill a certain amount of trading volumes, for example your trading volume must be 30 times of the bonus, before you can withdraw them from your account. The minimum trading volume you must reach is stated in the terms and conditions .

Illegitimate Brokers

An illegitimate broker will attempt to cheat your money in many ways for example charging your credit card for hidden fees you don’t know. This is why it is important to only trade with broker that is transparent about all their fees and lay them out upfront on the trading platform. Scam brokers will find all sorts of excuse to lock the funds in your account so that you won’t be able to withdraw the funds.

It is possible for you to consistently win in your binary options trades if you are patient and willing to spend time to learn all about it. As a rule of thumb, you should only trade with a legitimate broker that is equipped with proper licensing to avoid situation where they try to cheat your money by preventing you from making a withdrawal.

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How Binary Options Brokers Make Money from Peer 2 Peer Trading

Some binary options brokers operate on a peer 2 peer network which allows traders to trade against each other.

In this model the broker doesn’t directly profit from out-of-money trades but rather makes money by charging a commission whenever a trader purchases a contract.

The commission typically ranging from ten to twenty dollars is deducted from the seller’s profit on an out-of-money trade.

This means that regardless of the model used whether it’s the traditional broker or the peer 2 peer model brokers ultimately end up making a similar range of income.

It’s important for traders to be aware of the commission charges and any other fees associated with trading on a peer 2 peer network as these costs can significantly impact their overall profitability.

binary options taxes

How Are Binary Options Taxed

Some visitors of this website asked me the other day: How are Binary Options Taxed?

The taxes on the profits you make from binary options will depend on where you are living. There are a few countries where traders are not required to file for the income tax. Many new binary options traders wonder if they have to declare the earnings they made from their trading activities. The brokers are not responsible for maintaining a record of your profits and losses according to the law. Therefore, you are solely responsible for keeping a track record on every profit/loss.

I am not an accountant or lawyer and I cannot guarantee that the information on this page is accurate. To make 100% sure, please contact your accountant.

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Taxes of Binary Options in USA

Binary options have been classified as capital gains in a number of countries including Australia, USA and Canada. Aside from capital gains, there are also other forms of taxes including income tax and tax for gaming. Binary options brokers are not casinos so they are not required to issue the tax form. You can declare it as extra earnings if you are just earning a small amount. If you earn a big amount from binary options, you have to declare it as capital gains.

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All income derived from binary options trading are taxable no matter if you file it as a business or self employment income. It is classified into a taxable income even if you receive it as a gift from a relative. The profits you earn from options trading is taxed similarly as capital gains in stock trading and you should report it in the tax year. For example, if you place a trade in November and it expire in-the-money on January, you must declare it in your income tax in the new year.

Deductions for the Binary Options Tax

In the USA, you are allowed to deduct up to $3,000 from the total losses. For example, if you make a profit of $15,000 in options trading, you are to declare taxes on the $15,000 earnings. If you lose $15,000, you can deduct $3,000 and the rest of the $12,000 will be rolled over to the future years.

You can use any type of expenses to claim the deduction for the binary options’ taxes. However, you must be able to demonstrate how your purchase is only used for the trading activities so that it will be approved by the revenue agency. Examples of expenses you can claim for tax deductions are trading material, and PC.

Binary Options Tax Forms in USA

There are two income tax forms USA traders have to fill if you have more than $10,000 in your balance. Form 8938 should be filed if the total you earn meets the threshold of $50,000 on the last day to file the income tax or the total reach $75,000 at anytime within the tax year. You should fill the FinCEN Form 114 if your total earnings reach $10,000 at anytime within the tax year. If your total earning is less than $1,500, they will tax you at the marginal rate. If it is above $1,500, you will be taxed up to 20%.

Is Binary Options Taxable in Europe

If you are a trader in Europe, it will depend on whether your country treat it as a capital gain or gambling. EU traders should check with the local authorities to determine whether they are supposed to pay taxes on their binary options. Despite that, it is possible that the European Union will soon make a change on this and starts to require traders to declare their binary options profits in their income tax.

How to File for the Taxes of the Binary Options

This is why it is important that you always keep a record of every single transaction on the trading platform. You must record every deposit and withdrawal you make no matter if it is in-the-money or out-of-money. Recording down all your transactions will make it easier for you to manage the tax preparation at the due date when you are supposed to file for your income tax. You can use a spreadsheet to keep track of the deposits/withdrawal as well as calculating how much you profit or loss. When the time comes for you to file the income tax, you just need to refer to the excel sheet you have created.

There are some brokers that allow traders to generate a report of the historical transactions you made on the trading platform. You can generate this report from the trading platform for tax purposes at anytime.

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Many traders are confused when it comes to filing for the binary options’ taxes because of the lack of information. It is best that you hire a tax accountant if this is the first year you are trading in binary options. Hiring an accountant is useful for help you to get bigger deductions in your binary options’ tax if you earn a lot.

How Long Do Binary Options Trades Last?

Binary option trades can take place for a range of times.  The most common binary option trades are 1 minute or 5 minutes in length, but there are many other trade lengths available to suit different traders preferences.

Binary Options Trades Only Have Value Upon Expiry

Unlike traditional options, which have value before the expiration date, binary options trades are final (you can not sell them before expiration).  A trader can not sell a position, and once a trade is taken it is considered a final decision.  A trader must hold the trade until the option expires without exception.  The time until expiration is different for each trade, and is determined by the brokerage.  Always consider the time to expiration before entering into a trade, because a trade must be in the money at the precise time of expiration for it to be of value.  If the trade is below the strike price at the time of expiration, the trade will expire worthless.

Most Binary Option Traders Prefer Short Trades

The binary option industry has carved out a niche based upon the human need for instant gratification.  Most brokers dangle trades in front of traders as short as 30 seconds.  This gives a trader the opportunity to make up to 80% profit in less than a minute!  This sounds fantastic, and it can be, but unless you have a system or a read as a trader to make money in 30 second time frames, it is a losing proposition for you.  If you do have a system or read which is capable of some degree of predictability on a trade on a very short basis, make sure that you are sizing your positions appropriately.  If you are taking many positions in a short period of time, you have the ability to lose (or earn) a lot of money very quickly.  While the ability to take short time period positions is useful, a trader must manage this carefully.

Most Trades Are 1 to 5 Minutes Long

The most common time period for binary options trades are between one and five minutes.  The brokerage will display the time period on each trade, and it is up to the trader to monitor these and to ensure that they are entering into a trade for the desired period of time.

Other common time frames may be a half hour, or one hour in time.

Some Trades Are Available For Longer Periods

Some brokerages offer traders for a period of a month or longer.  Before entering into this type of trade, be mindful that your capital is tied up until the expiration date.  A binary option position can not be sold for value once entered into.  This type of trade can be useful for someone who has very high conviction on the direction of a security over a long period of time.  As binary option trading expands, more trades of longer time periods are likely to be made available to traders.

Longer trades are typically offered with foreign currency transactions.  This is largely because foreign exchange traders rarely have a short term read on the direction of a currency, but based upon macro-economic factors traders may have more conviction on longer term trades.  While foreign currency trades are most common for long term trades, they may also be offered in commodities such as oil, gold, and silver prices, or in some stocks.


Different Trade Lengths for Binary Options Trades

Binary option trades can take place for a range of times allowing traders to choose the duration that suits their preferences.

While the most common trade lengths are 1 minute or 5 minutes there are many other options available.

It is important to consider the time until expiration before entering into a trade as the trade must be in the money at the exact time of expiration to hold value.

Additionally many brokers offer trades as short as 30 seconds but traders should use caution with these extremely short timeframes as they require a system or an accurate read on the market for profitability.

Most trades in binary options last between 1 to 5 minutes but longer trades for a month or more are also available for those with high conviction on a particular asset.

Longer trades are often offered for foreign currency transactions where traders may have more conviction on long-term trends based on macroeconomic factors.

Use Small Positions When You Trade Binary Options

Binary options are inherently very risky.  The contracts have no intrinsic value per say.  When you lose, you lose 100% of your position, and when you win, you can win big.  To a new trader, binary options can feel a lot like gambling.  Trading binary options is not the same as gambling, but if you don’t know what you are doing it is as least as risky.  Remember, the advantage of using binary options is that you do not need to trade with a lot of capital to earn a high return.  Respect how quickly you can both earn and lose a lot of money trading this instrument.

Think about binary options trades from a broker’s perspective.  Binary options trades are not matched between buyers and sellers on the open market, the broker always takes the opposite side of the position from the trader.  Why is the broker willing to do this?  They know that if a particular trade pays 80% to a winner, and a losing trade loses 100% of its value, with nonprofessional traders about  50% of the trades will pay out and about 50% will not.  This means that the broker earns a spread of 20% on the trade, on average across all traders.

If you start trading with no system, you will probably win on about 50% of your trades and lose on about 50% of your trades.  If every trade is the same size, you will certainly lose your money over time.  Always keep in mind when you trade binary options that you need to win more than you lose to make money.

Controlling Position Size

A common mistake with new traders is taking too large of a position size too quickly.  As any trader will tell you, things change fast in the marketplace.  Even if you have a good system with a perfect trade setup, and you have very high conviction about taking your trade, the news can change the market quickly and turn your trade from a winner to a loser.

Keep in mind that a loss is not the same as a loss when you are trading in the stock market.  If you lose money on an equity position, your position still has value when you exit it.  This is not true of binary options.  If your trade is a loser, you lose the entire amount of your trade.  This is why you need to take positions which are a very small percentage of your total account balance.  The only way to consistently make money is to systematically control your risk, and take enough good trades to win over time.

What is A Small Enough Position?

If the idea is to make money with binary options consistently over time, you need an average position size which equals a very small percentage of your account.  If by chance you have 5 losses in a row, and you are using a position size that is equal to 20% of your initial account balance, you will empty your account in only 5 trades.  As any professional trader can attest to, losing streaks of 5 trades can happen to anyone.

At How We Trade, we recommend using a position size of about 5% of your initial account balance (you can review this if you are profitable and your account has grown).  At this size, you could take 20 consecutive losing trades before your account balance was 0 (its safe to say that if you have 20 losing trades in a row you need a new system).

This position size allows for small losing streaks to occur without serious disruption to your working capital.  By nature the balance in your binary options account will be volatile.  It is the traders job to smooth out the volatility by taking many small sized positioned trades.

When Is a Big Position Justifiable?

Depending on who you are, how much of your money is in your trading account, and how much experience that you have trading, the answer may be never.  There is a particular case when it may be ok to take a large position though.

If you have a lot of experience trading, and if you were to lose the entire amount in your trading account your personal finances would not be seriously impacted, a large position from time to time is ok.  A large position might be a once a year or less type trade for many people.

To take a very large position you must have extremely high conviction that the trade will work.  This does not mean that the trade definitely will work, because no trades are a sure thing, but the trade setup must be almost perfect.  If you study international monetary policy for instance, and you do not think that current exchange rates have fully priced in a central banks stated goal, you may take a longer term foreign currency exchange trade with your binary options account with a large position.

The key is to exercise discretion here, and understand that the market is a very difficult place to extract profits consistently.  Most traders are very well served to put strict limits on their position size for the safety of their account.


risk free trading

How To Get Risk Free Trades

Risk free trading is the holy grail of day trading. While stock traders have been scheming creative ways to mitigate risk for over a century, they are never really able to eliminate all risk.

Even a high tech hedge fund running a high frequency trading algorithm is open to the risk of flash crashes or technology errors disrupting their trading. See the story behind the line of code that almost took down the largest US market maker, Knight Capital.

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For small to medium retail traders, your typical day trader, there finally is actually a risk free trade proposition.  Tradorax is letting anyone who funds a binary options account have 2 risk free trades!  That means even if you lose, your account will not be negatively impacted.  It will be as if the trade never happened.

For an example of how much this can help you, think of a trader who places 4 trades.  Now, some traders are better than others, but overall, about 50% of trades will be winners, and 50% will be losers.  This means that from 4 trades, a trader who meets the averages can expect to be correct on 2 of them, and lose on the other 2.

This would result in an overall loss for the trader in his account if all trades are the same size.

Now imagine that the same trader has 2 winning trades, and 2 risk free trades that do not lose any money.  If each trade returns 80%, The trader will return an astounding 160% on his 2 winning trades, if all trades use the same amount of capital.

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He will not lose any money on the incorrect trades, and from 4 trades the trader has made a higher return in a short period of time than most pros make in a year!  Even if a trader only makes 4 trades and withdraws all his money, he can net a nice profit.

Risk free trading sounds too good to be true, but 24option and BancDeBinary have made it a reality.  Why would they basically give money away?  The first reason is they know only about 50% of the trades will be losers.  A trader has to choose the trade as his risk free trade before he initiates the order.

So even if the trader has a winning trade, he will still use one of his risk free trades.  This still is a huge advantage to traders though.  Some traders will end up losing on both of their risk free trades, and the savings will be immense.

The second reason they do this is because it is a great promotion.  They know that traders will not usually stop after the two free trades, and that they have an opportunity to generate profits in the long run.  The onus is on the traders to be smart and take their profits while they are still on the table.

So while risk free trading has until now been a bit of a myth, Tradorax has created a great new opportunity for new accounts with their brokerage.  If you want to take advantage of this offer while they are running the promotion, you must open and fund your account with their low minimum deposit.  Remember it always pays to be smart.

How Risk-Free Trades Can Reduce Risk at Critical Moments

Risk-free trades can be a helpful tool to reduce the risk of losing funds to zero at critical moments.

When faced with a trade that has the potential for significant losses using a risk-free trade can provide a safety net.

By activating a risk-free trade and choosing the trade amount needed traders can protect their investments in case of an incorrect forecast.

This compensation mechanism allows traders to trade with real money without risking anything providing them with an opportunity to save money in risky trades.

However it is important to remember that risk-free trades should not be relied upon as the sole strategy for success in trading.

They should be used as an additional tool to mitigate risk and enhance trading performance.

Binary Options- Scalping Strategy

Binary Options are tailor made for a scalping strategy.  The some of the most popular options expire in a span of only one minute!  Other popular options contracts also expire in short time frames,  with 5 minute, 30 minute, and 1 hour contracts being popular.  This short time frame means scalpers are at a huge advantage.

This is not an instrument for investors, not for a fundamental analysis, and the shortest options are not even made for a real swing type day trade.  This is made for traders who spot very short term momentum, or the possibility of a very high probability move in price.  This specialty is the realm of a scalpers.

Binary Options, The Scalpers Paradise

Scalping involves capturing small movements in price over a short period of time.  The challenge with scalping is to make those small movements add up to enough profit to be worth a trader’s time.  With binary options, even the smallest of moves can result in an 80% profit for a trader.  This is why binary options have been called the perfect way to trade for scalpers.

To make money scalping, a trader needs to find a spot of likely short term momentum.  At How We Trade, we like to find these spots by find breaks in significant levels.  Simply take a direction long or short as a security moves through a significant price level, and let the short term momentum carry you in the money.  We find these to be the highest probability trades.

How do you spot significant levels? We have two methods we like to use.  The first is the whole dollar price level break.

Whole Dollar Price Level Break

The whole dollar price level break is tried and true.  This happens when the price of a security moves through a whole dollar price level such as $25.00, or $40.00.  This works absolutely the best when the whole dollar level is a multiple of $10.00, but every dollar level works well.  The move through these price levels are most often quick surges, so take your short term trade as it breaks, and let the option expire for big profits.

Significant Technical Level Breaks

When a significant technical level breaks, there is also a nice momentum surge as HFT programs all take positions in the same direction.  There are many many technical levels a trader can look for, but price levels that work best are a previous long term high or low, such as a 52 week high.  It does not need to necessarily be a full year’s time frame though, a 1 week, or even intra-day high or low may work equally as well, the point is the stock needs a significant level to burst through.  Remember you do not need a lot of movement, you just need a highly reliable small movement.

Other significant levels may be found with indicators such as a 200 period moving average, a significant Fibonacci retracement, or a level that has a huge amount of volume posted on a stocks order book that is getting taken out.  When the books is finally cleared, the price will usually jump quickly in the direction of the cleared volume.  So as an example, if the volume on the book is on the offer, when the buyers clear the book the price will usually jump up quickly, and vice versa for high volume on the bid.  Take a long position through a large cleared offer and a short position through a large cleared bid.

Choose A Strategy

No matter what your choice of strategy, it is always good to compare various options for each security.  Each stock and each security will trade differently, so the wise choice is to watch each security respond to each strategy.  Get a feel for the way it trades, and when you are comfortable begin taking positions.  Once you have a strategy that works well, stick with it as long as you are making money.

Binary Options Scalping Strategy: Finding Profitable Short-Term Momentum

Scalping a trading strategy that involves capturing small price movements over a short period of time is an ideal approach for binary options traders.

With binary options even the smallest price movements can result in significant profits due to the high percentage returns offered by these options.

To successfully scalp binary options traders need to identify spots of likely short-term momentum.

This can be done by spotting breaks in significant price levels such as whole dollar price level breaks or significant technical level breaks.

These breaks often lead to quick surges in price and can be reliable opportunities for scalpers.

By understanding the behavior of different securities and observing how they respond to various strategies traders can optimize their scalping approach and increase their chances of success.

How to Start Trading Binary Options

Here is an easy guide to getting started with Binary Options for those of you who are brand new.  This will get you set up and put you on the path to trading successfully.  For those of you unfamiliar with Binary options, we recommend you read our overview of what they are and how they are traded.

To start trading, follow these steps.

1. Sign up for a Binary Options account with a reputable broker. If you are from the US/Canada or Australia then start trading binary options here.

Rank Broker Min. Deposit Max Returns Features Review
review $50 200% + $50 CASHBACK
review $100 85% + CYSEC REGULATED

2.Deposit your funds so you are ready to take advantage of opportunities when they arise, but do not begin trading live yet.  We recommend starting with a small deposit, not more than between $200-$500 is needed but this is up to you.

3.Set up a demo account, this should be extremely easy with the broker to trade in a sandbox mode.

4.Read our binary option trading tips.  This guide is a basic overview of strategy for new traders.

5.Place at least 20 trades in demo mode before making one live trade.  At this stage your focus is on getting a feel for the trading platform and entering trades correctly, as well as beginning to develop your read on how the market moves and factors that influence movement.

6.Begin placing live trades, not more than $5-$10 dollars per trade.  Remember the goal is not to make a million dollars with one trade, it is to systematically make money over time.  You need to start small in order to trade with a clear head, and to work on your strategy without taking a huge risk at this point.

7.Contact us if you would like help with your trading or developing your strategy from this point, remember we are here for a resource to help you learn and grow as a trader.  Things to keep in mind: what time of the day are you trading? What are you using to indicate a trade setup? Did you write your rules down and are you following them every time?  Are you using larger size when you have more conviction on a trade?  Let us know what you are doing and we will help.

This is a guide to getting started.  For more advanced strategy read our posts and strategy guides, and feel free to contact us.  The more you learn the higher the probability of you making a lot of money, so we recommend it.

How to Develop a Successful Trading Strategy in Binary Options

Developing a successful trading strategy in binary options is crucial to achieving consistent profits.

While it may seem overwhelming at first with the right approach and knowledge you can create a strategy that works for you.

The first step is to understand the market trends and identify potential opportunities.

By analyzing historical data and market trends you can make educated guesses about the future behavior of assets.

This information will help you select the right strike price and expiration time for your trades.

Additionally it is important to continuously evaluate and adjust your strategy based on new information and market movements.

By following these steps and practicing with a demo account you can develop a successful trading strategy in binary options.

Remember research and educated guessing are key to success in this industry.

Binary Options Explained

Binary Options are options that only have two possible values upon expiration.  Either the option will pay a predetermined value for being in the money, or will expire valueless in the same way traditional option contracts will.  Predetermined payout values normally vary between 60%-85% but may be higher.  Binary option times to expiration are typically much shorter than traditional options.

Binary option trading has recently become more popular amongst day traders. Binary options have also have received some bad press lately, mostly for brokerages opening accounts from clients who did not have any risk capital to trade with.  Despite some unscrupulous brokerages making a bad name for them, binary options are a legal instrument, and can create extremely nice returns for successful traders.

Compared To Traditional Options

Binary options are not contracts traded over open secondary markets like traditional options.  Binary options are a contract between you and the brokerage.  The brokerage states a payout if the option expires in the money, at Tradorax usually 80% but the amount varies, and the option will expire worthless if it expires out of the money.

Usually the two options a trader has are to either buy a put or a call option, and the strike price is the exact price of the security at the time the trade is taken.  Essentially a trader is simply betting on whether the security will be higher or lower than the current price at the time of expiration.  It does not matter how far in the money a trade becomes, or if it is even only 1 cent in the money, the option payout price will be the same.  Because of this it is obviously in a traders interest to take low volatility but highly probable trades.

Who Makes Money

A brokerage makes money over time because with a big enough sample size, they will win about 50% of the time and all traders combined will win about 50% of the time.  Below is the payout tree to a trader with an 80% return for each winning trade, a typical payout.


Obviously for a binary options trading strategy to be effective for a trader, they must win on at least 56% of trades, given an 80% payout on winning trades. For this reason demo accounts are a necessity for new traders who need to work on developing a strategy.  Choosing only the most probably trades are vital for binary option traders, since it does not matter how far in the money a trade becomes.

Short Time Frame

Binary option contracts have very short time to expiration most of the time.  Some brokers offer time frames as low as 1 minute, and may offer as long as a couple weeks.  Because the time to expiration is extremely short the vast majority of the time, binary options are very convenient for traders who do not have all day to watch trades.  Trading can take place during a lunch hour, or whenever someone has a few minutes. The short time frame also makes it very enticing for traders to trade more often than they should, and traders must remember to maintain a disciplined approach.

Funding and Withdrawing

After the option expires a traders account is immediately credited with the payout amount or loss, and there are no restrictions on when a trader can withdraw money like traditional brokerage accounts.  There are also no restrictions on funding accounts, and this means day traders must be cognizant of the amount of money they are putting at risk, as they must with any strategy.

To open your own binary options account, click below to use our preferred broker.

Access Denied: Binary Options Regulations and Risks

Binary options have gained popularity among day traders but it’s important to be aware of the risks and regulations associated with this trading instrument.

While binary options are a legal investment option some unscrupulous brokerages have given the industry a bad reputation.

Traders need to exercise caution and choose reputable brokers.

It’s also crucial to understand that binary options are not traded on open secondary markets like traditional options.

Instead binary options are a contract between the trader and the brokerage.

Traders must predict whether the price of the underlying security will be higher or lower than the current price at the time of expiration.

With short time frames and high volatility binary options can be enticing but traders need to maintain discipline and employ a proven strategy.

Understanding the risks and regulations involved is crucial for successful binary options trading.