Understanding Binary Options Brokers: A Comprehensive Guide

Binary options trading has gained significant popularity in recent years, offering traders a unique way to speculate on the movement of financial markets. This guide will explore the essentials of binary options, focusing on the types of assets available, the contract terms, and the key aspects of trading with binary brokers.

What are Binary Options?

Binary options are financial contracts that pay a fixed amount of money if a prediction about the future direction of an underlying asset is correct. They offer a straightforward way to speculate on the market, with a defined range of outcomes and potential profits.

Fundamental Assets and Available Assets to Trade

Binary options are available on a wide range of underlying assets, including stocks, indices, commodities, and currencies. Here are the main categories of assets available:

Stock Indices: These include major and niche stock indices from around the world. Digital Currencies: Such as Bitcoin, which can be traded without the need for owning the cryptocurrency itself. Financial Events: These include key economic indicators like interest rates, job reports, and economic growth data. Currencies: Options on currency pairs, such as the EUR/USD or GBP/JPY.

For instance, a trader can speculate on whether the U.S. Jobless Claims will rise or fall in the next week, or on the future value of Bitcoin.

Option Terms and Expiration

Binary options appeal to traders due to their short-term nature and the potential for high returns. The term of a binary option is the period between the purchase date and the expiration date, at which point the option either pays the agreed-upon amount or nothing.

Common terms include:

60 seconds (one-minute options) 15 minutes (quarter-hour options) 30 minutes (half-hour options) 45 minutes (three-quarter-hour options) 60 minutes (one-hour options) Multi-week terms

Traders can potentially exit an option early if the market moves favorably, but some brokers do not allow for early closure. At expiration, the option pays out if the prediction was correct, or nothing if it was incorrect.

Strike Price

The strike price is the predetermined price that decides the outcome of the binary option. Traders can choose a range of strike prices that are above or below the current market price.

For example, a trader might speculate on the future direction of the SP 500 index in the next 30 minutes. If the SP 500 is trading at 2071.5, the trader might buy a call option with a strike price of 2070.0. The trader wins if the SP 500 stays above 2070.0 by the expiration date. If it falls below, the trader loses.

Reliable Binary Options Brokers 2020

There are several reputable binary options brokers that offer a platform for traders to speculate on financial markets. These brokers often provide a user-friendly interface, educational resources, and various types of options. When choosing a broker, it is essential to consider factors such as:

Regulation: Ensure the broker is licensed and regulated by a recognized financial authority. Platform: The trading platform should be intuitive and easy to use. Expiry Options: A wide range of expiry options is crucial for flexible trading strategies. Pros and Cons: Evaluate the pros and cons of each broker based on their reviews, fees, and other features.

Some well-regarded brokers include: Nadex,, and Olymp Trade. It's important to conduct thorough research and read reviews before selecting a broker to ensure it meets your trading needs.

Tips for Successful Binary Options Trading

Stay Informed: Keep up-to-date with market news and economic indicators. Use Technical Analysis: Utilize charts and indicators to make informed predictions. Manage Risk: Implement proper risk management strategies to protect your capital. Practice: Use a demo account to get familiar with the trading process.

Entering the realm of binary options trading requires understanding the specific mechanisms and potential risks. By choosing a reliable broker and employing sound trading strategies, traders can navigate the market with confidence.