How to trade Binary Options – A Binary Options trading guide for beginners

In this guide from experts, you will learn everything about trading Binary Options. We will introduce you to the basics, show you how Binary Trading works, explain to you the best strategies and answer all questions concerning how to trade Binary Options.

how to trade binary options

Before you start trading Binary Options it’s important to understand how this financial instrument works. Don’t start trading without knowing the market. Be aware of brokers which just want to steal your data or money – many Binary Options brokers are scams. Therefore we will show you reliable brokers which we can recommend without any doubt.

Definition: What are Binary Options?

Binary Options are a financial instrument that gained the attention of many traders in the past years. You can trade on long or short markets within a defined period of time. The special thing about Binary Options is: You got only two options as a trader. Whether you lose all your money with one trader or you get a high payout between 75 and 95 % of your money. You bet on rising and falling markets.

Example chart for High-Frequency-Trading (HFT) with Binary Options or other instruments
Binary Options is attractive to many traders all over the world

As a financial instrument, Binary Options are very flexible – you can use different time periods and trade almost every asset. The time periods normally start from 5 seconds and go up to at least one hour. So you only have two possible ways to place a trade:

  • Call / Higher: Your forecast is a higher future price (rising market)
  • Put / Lower: Your forecast is a higher future price (rising market)
pocket option high low
You have only two options: “Higher” or “Lower”

Continue reading to find out more detailed information about how to trade Binary Options. Proper Knowledge is the key to sustainable success. You have also to be aware of the risks that come along with trading a Binary Option.

➨ Sign up with the best binary broker Quotex for free now!

(Risk warning: Your capital can be at risk)

Trading Binary Options: How to start in 2022?

In the next sections, we will further explain to you how Binary Options trading works. But first, of all let’s answer the question of which broker is the best one to trade with. Not every online broker offers trading Binary Options so you have to look out for a firm that offers this financial instrument.

iq option vs quotex
IQ Option and Quotex are just two of our recommended brokers

In the table below you can see three of our most favorable Binary Options Brokers. These are brokers which fulfill many different requirements we set when testing all brokers. They are safe, give a high return to you as a trader, and are located all over the world. With every broker, you can open a free binary demo account to get started risk-free.

You don’t know what a demo account looks like? It’s an account that has (mostly) all functions of a live account – but it has only virtual money in it which you can add for free any time you want.

So the first two steps to take when you want to trade Binary Options are:

  1. Find a reliable and trustful broker
  2. Open a demo account for free and start trading without any risk
Broker:
Regulation:
Yield & Assets:
Advantages:
The offer:
5.0/5
12345
IFMRRC
Return: 95%+
100+ Markets
  • Accepts international clients
  • Min. deposit $10
  • $10,000 demo
  • Professional platform
  • High profit up to 95%
  • Fast withdrawals
Live-account from $10
  Visit broker

(Risk warning: Trading is risky)

5.0/5
12345
IFMRRC
Return: 90%+
100+ Markets
  • Accepts international clients
  • High payouts
  • Professional platform
  • Fast deposits/withdrawals
  • Free demo account
Live-account from $50
  Visit broker

(Risk warning: Trading is risky)

5/5
12345
/
Return: 94%+
300+ Markets
  • $10 minimum deposit
  • Free demo account
  • High return up to 100% (in case of a correct prediction)
  • The platform is easy to use
  • 24/7 support
Live-account from $10
  Visit broker

(Risk warning: Your capital might be at risk)

Broker:
Regulation:
IFMRRC
Yield & Assets:
Return: 95%+
100+ Markets
Advantages:
  • Accepts international clients
  • Min. deposit $10
  • $10,000 demo
  • Professional platform
  • High profit up to 95%
  • Fast withdrawals
The offer:
Broker:
Regulation:
IFMRRC
Yield & Assets:
Return: 90%+
100+ Markets
Advantages:
  • Accepts international clients
  • High payouts
  • Professional platform
  • Fast deposits/withdrawals
  • Free demo account
The offer:
Broker:
Regulation:
/
Yield & Assets:
Return: 94%+
300+ Markets
Advantages:
  • $10 minimum deposit
  • Free demo account
  • High return up to 100% (in case of a correct prediction)
  • The platform is easy to use
  • 24/7 support
The offer:

Binary Options trading: Is it safe or not?

A very important question to answer is the safety of a financial instrument or a broker. Trading a Binary Option is safe, but you need the right broker. It should be reliable, trustworthy, and regulated. In our Binary Options Broker review we discussed the Pros and Cons of our ten favorable brokers, regulated and unregulated ones. Read the article to get into it in detail.

It’s safer if you trade with a regulated broker than a unregulated one!

We did a lot of research while writing all these articles and can say that a regulated broker never cheats on you as a client. To be fair: Most unregulated brokers don’t cheat as well. But it’s never 100 % safe with these mostly small and unknown companies.

So in conclusion, is Binary Options Trading safe? Yes. Use a regulated broker if you want to get started with Binary Options trading. Never trust blindly and do your own research before you register with a broker and deposit money. Additionally, you can rely on our information.

Regulation-certificate-of-Binomo
Example of a regulation (right side)

There are a handful of safe and well-known regulators. If your chosen broker is regulated by one of these companies and institutions, it’s a good sign:

Also be aware if trustful institutions such as the Commodity Futures Trading Commission (CFTC), the National Futures Association (NFA), or especially the Securities and Exchange Commission (SEC) express concerns.

➨ Sign up with the best binary broker Quotex for free now!

(Risk warning: Your capital can be at risk)

Binary Options trading platforms: Basics

There are many many Binary Options Platforms available and you have to search for the one that is not only safe but also offers the functions you want to have to trade effectively. The good thing is: Nowadays almost all brokers offer the same functions like mobile trading or modern and flexible charting software. Especially the opportunity to trade via a mobile app is important if you want to trade where ever you are.

This is how a typical Binary Options platform looks like

If you’re a beginner it seems to be hard to learn how to trade Binary Options with a new and unknown platform. Many platforms offer so many functionalities that they can confuse you. But some of the brokers offer educational material as well. Video tutorials, step-by-step guides, or even individual customer support via mail, phone, or chat to answer your detailed questions.

Every platform offers even a few indicators and technical tools, different chart types like the most common candlestick chart, and many more things to analyze your charts. Some brokers even give you free and direct access to economic news. You can use that to be up to date all the time and react to the news that impact the assets you trade with.

Pocket Option indicators
Pocket Option offers a bunch of helpful indicators

One more word about indicators: They are very important when trading Binary Options. We recommend you get familiar with the most important ones. Read the linked article to learn more about how to use MACD, RSI, etc.

➨ Sign up with the best binary broker Quotex for free now!

(Risk warning: Your capital can be at risk)

Do Binary Options trading platforms offer mobile trading?

To react to the markets where ever you are you need a broker that offers mobile trading. So the only thing you need to trade is the internet. Mobile trading is a great opportunity to boost your profit, which traders back in the day didn’t have.

VideForex mobile app
Many brokers offer mobile apps

Most brokers offer mobile trading, and plenty of them developed a special app for trading on your smartphone. You can download it in the App Store (iOS) or the Play Store (Android). If a broker offers a mobile app, it normally does it for both common systems. This allows you to trade 24 hours a day, 7 days a week, no matter where you are.

Binary Options trading at the desk

But: Most of you, I’m sure and that’s how I prefer it as well, better trade at the desk with your computer. Why? You have more tools to analyze the chart and a better overview if you have one or more monitors and not just your tiny smartphone display.

➨ Sign up with the best binary broker Quotex for free now!

(Risk warning: Your capital can be at risk)

Step-by-step guide: How to trade Binary Options

In the following section, we will show you how to trade in detail. Follow these five simple steps:

  1. Choose the asset
  2. Make a forecast: Price up or down?
  3. Choose the expiration time
  4. Choose the investment amount
  5. Start the trade and wait till it expires

Let’s go into detail for every single step. If you are more the video guy and don’t want to read but watch how to trade Binary Options, we can recommend our full video guide for Binary Options:

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Step #1: Choose the underlying asset

When you’re trading stocks, for example, you are limited to one asset. The good thing about Binary Options is that you are free to choose your assets. You can choose between Forex, Stocks, Commodities like gold or oil, Cryptocurrencies, stock indices, and more.

assets to trade
Some of the assets you can trade via IQ Option

No matter which asset you prefer, trading it via Binary Options always works the same way. The process shown below is always exactly the same. If you are new to trading Binary Option, we recommend you start with a demo account where you can trade and practice without risk.

➨ Sign up with the best binary broker Quotex for free now!

(Risk warning: Your capital can be at risk)

Step #2: Make a forecast – price up or down?

Once you have chosen an underlying asset or underlying market you are ready to go. The main question is: Is the asset price going up or down in the future? You have to to this forecast. To get an answer to this question, you can have to identify the market trends and use indicators to analyze the underlying asset.

Up and down High and Low
Up or down? This is the main question

It is very important to have a working strategy to gain maximum profit. Use technical analysis to get trading ideas and develop your own trading strategy. You can also use the different education tools many Binary Options brokers offer.

Step #3: Choose the expiration time

Every Binary Option expires after a defined time. So within your prediction of whether the price will raise or fall, you have to consider the expiration time. You can set it in a range between 5 seconds or many hours, the choice is all yours. You see: It’s possible to trade long-term or short-term Binary Options.

quotex expiration time
You set the expiration time

Once you decided on the direction – up or down – and the expiry time, you’re one step away from placing the trade. Just to remind you of the two options you have:

  • Call (Higher): The price goes up in your expiration time
  • Put (Lower): The price goes down in your expiration time

Step #4: Choose the investment amount

The last step before you can place your trade is to set the investment amount. Some brokers limit this to a specific amount which often depends on your account level.

The investment is the amount you can lose
The investment is the amount you can lose

For example, if you have a beginner account you can only trade with $500. But with a VIP account, you can trade up to $5000 within one trade.

Be careful: Your investment is the amount of money you can lose. If your prediction is wrong, all of your money is gone.

Step #5: Start the trade and wait till it expires

If you set the investment amount, click Up / Call or Down / Put to place the trade. Some brokers want you to verify the trade, so you have to do another click. Now it’s time to wait until your trade expires. Some brokers offer to close trades before the expiration time is up – this allows you to reduce the impact of a wrong decision.

Close a trade
Some brokers offer to close your trades before time’s up

If you are right and the price moved in the right direction below or up your strike price, you will get a payout between 75-95% of your investment. The yield depends on which broker and underlying asset you select.

➨ Sign up with the best binary broker Quotex for free now!

(Risk warning: Your capital can be at risk)

Example of how to trade Binary Options: EUR/USD 95% return

The payout formula is easy. For example, if you invest $100 and get a payout of 95%, you will receive $195 if you win the trade. You get your $100 investment back and additionally 95% of it ($95) as profit.

Tutorial-on-how-to-trade-Binary-Options
You can see the maximum payout with the asset (1), the chart (2), the expiration time (3), your investment amount (4), and your payout for winning the trade (5)

Let’s make a specific example:

  1. Go for an asset with a high payout ratio such as the EUR/USD pair. Not every broker offers the same profits for a specific asset.
  2. Analyze the chart by using different time frames and indicators. Consider financial news as well for your strategy.
  3. Once you have analyzed everything you need and made a prediction about whether the price will raise or fall, set the expiration time
  4. Now pick the right investment amount. If you’re a beginner start with lower amounts of money, many brokers offer trades starting with $1.
  5. Trade the Binary Option with a call or put.
➨ Sign up with the best binary broker Quotex for free now!

(Risk warning: Your capital can be at risk)

Binary Options trading: Conditions

You are completely free to trade any underlying asset you can imagine – and your broker offers. No matter if you choose stocks, commodities, forex, or crypto, the process is always the same. Most of the brokers we tested give you the chance to trade more than 100 different assets.

otc assets on iq option
Many brokers offer OTC assets as well

The expiration time differs from broker to broker. But most of them offer expiration times from 5 seconds on. The upper limit mostly is one hour or three hours.

So the two main conditions are:

  • Trade any underlying market you wish: stocks, forex, commodities, cryptocurrencies, and many more
  • Choose between short-term and long-term time horizons (expiration times)

How high is the maximum yield (return on investment)?

Not every broker offers the same maximum yield (return on investment) for a specific asset. For example, broker A offers a 90% payout for Bitcoin, and broker B offers 85%. The better choice if you only want to trade Bitcoin is broker B.

Binary-Options-assets-and-yield
Assets and their payout

The unwritten rule is that short-term trades have the highest payouts while long-term payouts aren’t that high. From my experience, the yield for standard accounts is between 70% and 95%.

But if you’re having a type of VIP account, you may have higher yields. Almost all brokers offer different account types that are linked to the amount of money you deposit. For example, if you deposit $3000 with IQ Option, you will get the VIP account status.

iq option vip account support
Screenshot of an IQ Option VIP Account

To attract traders and animate them to deposit more and more, you will get a higher payout with a better account level.

➨ Sign up with the best binary broker Quotex for free now!

(Risk warning: Your capital can be at risk)

Risks of Binary Option trading

No doubt – Binary Options are a risky financial instrument. Nevertheless, there are many advantages that overweigh the risks. Many new traders fear the loss of all of the money they invest in one trade. Sure, you can lose all the money you placed in your trade – but not more. Many other financial products work another way, where you can lose more than you have invested.

Facets of risk management
It’s important to have a well-planned risk management

There are a lot more advantages, for example, that you get a high asset payoff no matter how strong the market reacts and moves. The price of your chosen asset just has to go up or below your strike price and you win. Many traders including us like this financial product because it’s easy to understand and you can make a lot of profit in a short time.

Only invest money which you can afford to lose!

Binary Options trading: How to get started

If you want to start Binary Option trading now, there are a few things you need to know and answers that may come up. We try to answer all of them and give you all the information you need to get started. This section is less about how to trade Binary Options but more about the things besides the Binary Option themselves.

➨ Sign up with the best binary broker Quotex for free now!

(Risk warning: Your capital can be at risk)

Should you use a Binary Options demo account or not?

Many of you ask us if it is necessary to first trade via a demo account or not. Our clear answer is: Yes, it’s necessary. With a demo account, you can learn how the market moves and how the broker you have chosen works. Almost all of the reliable brokers offer a demo account with virtual money that you can top up with just one clock.

Quotex switch to demo
Quotex, one of our favorite Binary Options brokers, offers a fully functional demo account

Learn about your Binary Option trading platform before you invest your real money. You can also try out new strategies or form your own, individual trading strategy throughout a demo account. First: demo account. Second: Strategy. Third: Real account.

Best binary broker:
(Risk warning: Trading is risky)

Quotex - Trade with high profits

123455.0/5

Quotex - Trade with high profits

  • Accepts international clients
  • Min. deposit $10
  • $10,000 demo
  • Professional platform
  • High profit up to 95%
  • Fast withdrawals
(Risk warning: Trading is risky)

How to open your first real account

Once you’re ready to open your first real account, you have to fulfill different criteria. On most brokers, you can trade without verifying your broker account. But in our opinion, you should do the verification before getting started, so you have unlimited access to all functions and deposit and withdrawal methods.

quotex verification process
Quotex verification process: Click on your account details (1) and upload your documents (2)

For the verification process, you need your real personal data (full name, birthday, address, mail, phone number) and some personal documents. You have to upload for example a copy of your passport and a utility bill or similar. You have to do this to prove that you are a real person.

The verification process only takes 24 hours in most cases. Some brokers – not many – don’t want to see any documents or verification.

How much money for trading Binary Options?

The answer to this question depends on how you are willing to invest. Always stick to your risk and money management. Many brokers offer low deposit minimums. For example, Quotex or IQ Option enables you to start trading with just $10.

pocket option minimum deposit
The minimum deposit at Pocket Option: $50

The upper limit is almost endless. From my experiences in the past years, it’s possible to earn a lot of money with the right trading strategy. So it’s not necessary to invest all your money when getting started. Just start slow and if your strategy turns out to be tremendous, deposit more.

➨ Sign up with the best binary broker Quotex for free now!

(Risk warning: Your capital can be at risk)

All about deposit and withdrawal methods

Maybe you already asked yourself which payment methods are available when trading Binary Options. In the past, many brokers did only offer some special payment and withdrawal methods. Nowadays the market is user-friendly and brokerage firms offer many different payment methods.

Binary Options platforms: Facts about the deposit

  • Many platforms offer a minimum deposit of $10
  • Minimum trade amount: $1
  • High amounts can be traded as well
  • The minimum deposit depends on the broker
Quotex payment methods
A few possible payment methods (broker: Quotex)

Deposit and withdrawal are easy. Most brokers do not offer any fees for depositing or withdrawing your funds. Many of them offer up to 20 different payment methods. It’s possible to capitalize on your trading account within seconds. The withdrawals last a little bit longer, up to 24 hours.

Some of the major payment methods Binary Options brokers offer:

  • Bankwire
  • Credit Cards (Master/VISA)
  • Cryptocurrencies (Bitcoin, Ethereum, Ripple, and more)
  • E-Wallets (Skrill, Neteller, FasaPay, ePayments, Yandex, and more)

Are there bonuses for deposits?

To attract new customers, almost all Binary Option brokers offer a free bonus when you top up your account the first time. Some brokers even offer a bonus every time you deposit money. In both times, it can vary from 10%, 20%, 30%, 50% up to even 100%. In other words: Some brokers double your amount of money.

Deposit-Bonus-of-Olymp-Trade
Olymp Trade offers a deposit bonus up to 50%

Be aware of the fact that the bonus isn’t completely free. In most cases, you have to reach a certain turnover with the bonus before you can withdraw your funds. For example, you need to make a turnover of 30x the bonus you got. The bonus isn’t mandatory. So if you’re not good with the conditions, turn it off.

Get a free deposit bonus of 50% at Quotex with our promotion code “bobroker50

You can only use this bonus code by signing up via our website.

➨ The best broker: Sign up for your free Quotex bonus!

(Risk warning: Trading involves risks)

How much money can you earn by trading Binary Options?

It’s up to you, how much money you will earn by trading Binary Options. The key to your successful career as a trader is good education, risk management, and a professional strategy. Also, your money management has to be good.

money
How much money will you earn?

At first sight, it is easy to make money with Binary Options. But if you’re getting more into it, you will experience that the markets, especially for beginners, aren’t that easy to understand. We are sure, that your success won’t come immediately.

It’s normal that it takes some time until you see progress and the winning rate of your trades gets higher and higher.

Let us give you some more insights into four specific topics that are directly linked with your success as a Binary Options trader.

Education

It’s the most important rule for beginners: Educate yourself before getting started. Use the educational sections most of the Binary Options brokers offer. Use websites like ours, and YouTube videos, and read books to learn about trading and the financial markets. And of course trade via the demo account to learn the mechanisms of the markets and assets.

Strategy

Once you know the theory about trading and Binary Options it comes to real trading and you will see: It differs a lot from the theory. Trading a Binary Option requires analyzing charts, fundamental analysis, and a feeling for the markets and assets.

Follow-the-trend-trading-strategy-for-Binary-Options
Example for the “Follow the trend” strategy

So develop your own trading strategy, otherwise, you will blow up your account. Use the knowledge of our website as a base and create your own strategy. Here are some of the main trading strategies that you can have a look at and use for your next Binary Options trade:

Money Management

Many of the traders I know had to learn how real money management works. That’s why we recommend getting familiar with it before you start trading.

Money-management-with-Binary-Options
The investment amount is 1% of the account balance

In my personal opinion, never use more than 0,5 to 3% of your account balance for one trade. Even if you have bad luck and a losing streak, it won’t get you down. If you stick strictly to your money management, you can trade without emotions.

Signals

Have you ever heard of trading signals? Professional traders offer trading setups and signals that you can copy. If it is a reliable trader, you can trust him or her. But be careful: There are a lot of scams and unsuccessful signals.

Best binary broker:
(Risk warning: Trading is risky)

Quotex - Trade with high profits

123455.0/5

Quotex - Trade with high profits

  • Accepts international clients
  • Min. deposit $10
  • $10,000 demo
  • Professional platform
  • High profit up to 95%
  • Fast withdrawals
(Risk warning: Trading is risky)

Conclusion and checklist: How to trade Binary Options with simple strategies

You have to be aware of scams in the Binary Options market. But the financial instrument itself isn’t a scam. It gives you the chance to invest in short-term or long-term opportunities in the market. Therefore you can select any asset you want and the functionality of a Binary Option is easy to understand.

Trading binary options with Pocket option
Trading Binary Options is a good way to earn a lot of money

My honest advice to you: It is very important to choose a good and reliable broker. Don’t register with the first broker that comes to mind. Check reviews and make sure, it’s not a scam!

Binary Options checklist

Watch out for this short trading checklist for beginners:

  • Select a trustful broker
  • Register and verify your account
  • Use the demo account to get into it
  • Deposit money and switch to the real account
  • Choose an asset or market to trade
  • Analyze the chart
  • Forecast the price movement (up or down)
  • Choose the expiry time (short-term = higher payout)
  • Set your investment amount
  • Place the call (higher) or put (lower)
  • Use a trading journal, especially if you’re a beginner

With this little checklist, we have shown you everything you need to know about trading Binary Options. We wish you the best of luck and happy trading!

➨ Sign up with the best binary broker Quotex for free now!

(Risk warning: Your capital can be at risk)

FAQ – frequently asked questions:

Can you really make money with Binary Options?

Yes, it’s possible to earn money with Binary Options. But be aware: 80% of traders lose their money. To belong to the other 20%, you need a working trading strategy and sensitive money management.

How can I learn Binary Options?

First of all, get familiar with the financial instrument and your chosen broker via using a demo account. After you developed your own strategy and feel comfortable with your decisions, switch to a real account. Common online trading platforms are Quotex, IQ Option, and Pocket Option.

How do you master Binary Options?

It is important to understand how the market goes. Therefore you have to develop a trading strategy, learn the technical analysis and use indicators to analyze the chart of an asset. Use books, videos, our website, and many more educational tools to get into Binary Options trading. The learning process never ends.

Are Binary Options a good investment?

When you understand, how Binary Options work and created your promising trading strategy, Binary Options are a good investment. But be aware that it isn’t risk-free.