Trading Binary Options -FAQ, Strategies, and Rules

Binary Options offer a fixed price profit potential

Binary options or digital options are commercial instruments that are traded during an agreed period of time with a pre-fixed return. Binary Options provide only two possible outcomes. Either you're in-the-money or you're out-of-the-money. A trader can profit by just predicting the direction of a price trend. No matter if the price of an asset has moved 10 pips or 50 pips -and either in case of a call option or a put option- the profit potential remains always the same. Every binary option that ends in-the-money offers a fixed payout. Usually, binary options offer Payouts 70-80%. Furthermore, binary brokers offer usually a refund 5-15% in case of an out-of-the-money option. 

Trading binary options are simpler than standard options as fewer factors affect their pricing. Opposite to standard options, binary options offer specific payouts based on small moves of a financial instrument. 

Which are the Underlying Assets?

The underlying assets of the binary options include stocks, indices, bonds, Forex currencies, and several commodities. Gold, Oil, and EUR/USD are the most popular assets in binary options trading.

How Are Binary Option Priced?

Binary options contracts are priced in a similar way as standard options. Traders in order to determine if there is value in buying a put or a call binary option they must evaluate three factors:

i) strike price

ii) underlying price of the financial instrument

iii) implied volatility of the underlying instrument



The US Dollar against the Japanese Yen. USDJPY. USDJPY is the second most traded Forex pair worldwide, accounting for 21.8% of the Foreign Exchange market volume (2016). USDJPY is a very dynamic pair offering rich volatility and smooth trends.  Historically, USDJPY trades in the same direction with the American markets (S&P 500, DJIA, NASDAQ).


EURUSD is the most traded currency pair in the world, accounting for 28.4% of the Foreign Exchange market volume in 2016. Historically, the EURUSD exchange rate moves in a general range between 0.80 and 1.60. EURUSD is positively correlated to GBPUSD and AUDUSD, and negatively correlated to USDCHF.

• Sessions Overlaps and Highest EURUSD Trading Activity:

EUR/USD (as GBP/USD) is more active and liquid between 8:00 am and 12:00 EST (noon) when both the US and the European Markets are open.



These are the average monthly returns of EURUSD throughout the period 2000-2018.



The US Dollar against the Swiss Franc. USDCHF accounted for 4.4% of the Foreign Exchange market volume in 2016. The Swiss Franc is the official currency of Switzerland, Liechtenstein, and Campione d’ Italia.


GBP/USD is the second more popular Forex currency in the world and it is usually offered in very tight spreads. The British Pound Sterling is the oldest actively traded currency on the global Foreign Exchange market, and London is the largest Forex center worldwide. GBPUSD accounted for 11.4% of the Foreign Exchange market volume in 2016. GBP/USD is a selection for scalpers and day-traders.

Sessions Overlaps and Trading Activity:

The best time to trade GBPUSD, based on the average historic volatility, occurs between 08.00 GMT and 15.00 GMT {Eastern Time = GMT - 05:00}



These are the average monthly returns of GBPUSD throughout the period 2000-2018.



The Canadian Dollar is a commodity currency, as Canada is a major exporter of oil, gas, ferrous, and non-ferrous metals. The Canadian Dollar is positively correlated to the price of Crude Oil. Canada exports daily about 2 million oil barrels to the United States, while 85% of all Canada’s exports are going in the US.


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