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What are Binary Options

What are Binary Options and how does Binary Option Trading differ from Regular Foreign Exchange Trading?

Binary Options are a very easy way of Trading Currencies, Hot Assets like Gold and Oil and other assets such as Shares – because the mechanics of their operation is so simple.

The word Binary in Itself means that it is a base-2 numeral system. It may sound complicated but actually all it means is making a choice of up and down – this is your Option. And there is not much else to it in terms of the mechanical operation of the Binary Option platforms. It is an all or nothing, or Win/Loss Decision – And you will know whether you have made the correct decision within a few minutes of your choice.

Okay, so perhaps this is an oversimplification of Binary Option Trading, but we shall go into more detail immediately. So you are faced with a question… Will the EURO rise against the USD Dollar in the next half an hour? That is the question.

If you are watching this currency pair and you think that the Euro will rise you will take what is called a “Call” Option and if you think it will fall you will take a “PUT” Option for the amount which you would like to put at stake. Depending on the Binary Option Platform or broker you use, it can just be an UP and DOWN Button or a CALL and PUT button.

 

Let us for the sake of the argument, assume that you have a lot of cash to spare, and that you will wager a $100 on this trade because you feel it in your bones that the Euro will be rising steadily in the next half an hour and therefore you take a CALL or UP option.

What happens in the next half hour, is that according to how the market will move, you will know whether it has moved in your favour or against your direction. If let us say, you took your call option, when the rate was at 1.1111 – this is called your STRIKE PRICE and the market swings up and down for a couple of minutes but eventually steadily climbs to 1.1122 – at the end of the Half Hour, which is your Expiry Time – you will win your stake. Clap your hands and shake your booty… you are IN THE MONEY or ITM as the lingos like to say.

How much will you win?

Well different brokers, hand out different payouts, or a percentage of your invested capital but let us say on average they would be paying you 75% of your staked investment. In this case you would be getting $175 since the market moved in your favour. Hurray.

If however, you were wrong and the Euro dropped to 1.1100 within that half hour, then you would loose all of your original staked cash deposit of $100. Good-bye Margaritas at Sunset because you are OUT OF THE MONEY, or OTM for the Gurus. Ouch burnt fingers – your bones don’t feel that great anymore, and you start thinking of your money Management. (Check this out in Nappy Stage)

For Binary Options you will win or loose even with just a fraction of a pip movement up and down…. Now if you don’t know what pips are, we will discuss this in Teething Problems.

One thing that you will start calculating immediately, is how many times you can play the currency or stock market, in order to have financial gain.
Let us assume that you will continue playing the market with a $100 cash investment per trade, and that the Percentage Payout is for $75.

If out of 10 trades you loose 2 trades, then you loose $200 but your make $75 on the other 8 trades. This will total $600 in profits less the $200 loss, and you will collect a neat $400 in net profits. Not too bad or a few trades just pushing a YES OR NO BUTTON, right?

Wrong. If you have a 7/10 win rate with the same currency pair and with the same amount staked per trade and pay out, you will make $225 – not as great but hey, we are still making money right?

Wrong. If your win rate falls down to a 6/10 with the same variables, you are suddenly down to just $50… This is starting to become tricky… and with a 5/10 win situation you are actually losing $125.

So what are you going to do??

Looking into the glass ball to make your best bet is not an option. Luckily, there are mentors and an even better solution. You could be doing this job with people who know what they are doing, because they have studied how the market will react. One Manual Trading Signal group that I would definitely recommend is Michael Freeman’s Manual Trading Signal Group. Here a bunch of bright young people, who dedicate their lives to studying the market, give you signals over a facebook page on which options to take.. Hey check it out, and it is actually for FREE.

GOLDEN WORDS

Few words of advice before we go any further on education.
1. Binary Option Trading is not for Everyone. You can loose a lot of money, especially if you are not level headed and prepared to understand what you are doing.
2. Never invest more than what you are prepared to loose. Check this out on our money management.
3. Go with Binary Option Traders that are regulated and which will offer you a DEMO ACCOUNT once you open an account with them.
4. Practice only on DEMO ACCOUNT or PAPER MONEY until you consistently have a minimum of 7/10 win rate.
5. Follow others who know what they are doing. You don’t have to go this alone. It’s more fun making money with plenty of others

 

Happy trading and remember to trade safely.

sheriff university

Comment(13)

  1. Ok so question…it seems basically like this is betting on the horses with 2 options vs. win, place, first etc…sounds good for the cautious person who can walk away…not for those who are addicted to the rush..thanks for the great info!

    1. We are absolutely in agreement Katy. Binary Options requires a lot of discipline. If it can be mastered it will prove fruitful, otherwise, it is best to go to a casino

  2. I AM Happy to have a demo account and follow experienced traders–I am almost finished with the PIP course and I will be ready to trade in a group–thanks for all your advice and recommendations. Anastasia

  3. There are only 10 types of people in the world; those who understand binary and those who don`t
    People have lost so much in binary options, that is; Traders have failed to withdraw profits made from binary options, failed to use the right strategies when needed, failed to engage with the right broker, not giving their trade a break, also having too many trading accounts which is one of the cause of their lost of funds, deposits of too low or too high amount of funds and most especially, not being able to present the full history of their trade when trying to withdraw their profits.
    If you are out there and having problems such as these or you are a beginner, or for a good reason need to raise your standard of living or you have been scammed or you have problems withdrawing profits made from your recent trades, contact me on alvinbarry030@gmail.com

  4. What do you need to know about Binary options?
    Binary options trading is an exciting and revolutionary way to trade. It also enables both freshers and experienced investors to mainly make substantial returns from stock market trading.

    1. Michael Freeman’s is a closed Facebook Group and you can only be accepted by an introduction from an approved member. Therefore please email us on support(at)binaryoptionsheriff.com

  5. Hi Guys, Some time ago I recall a video by the sherriff that produced a signals provider for both Binary and FX
    Does anyone recall the name and is it still a recommended provider
    Cheers

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Information on BinaryOptionSheriff.com should not be regarded as recommendations to Trade Binary Options. Trading Binary Options carried substantial risk of loss of capital. BinaryOptionSheriff.com is not licensed nor authorized to provide advice on investing and related matters. Information on the pages of BinaryOptionSheriff are only guidelines and should not be treated as investment advice. Clients without a good knowledge of Binary Option trading should seek individual advice from an authorized source. Past performance is not a guarantee for future returns. BinaryOptionSheriff.com does not accept any liability for any loss or damage as a result of reliance on the information contained within this website. This website is independent of the Binary Options Brokers and the Signal Software featured on it. Before trading with any of the brokers, or using Signal software, clients should make sure that they fully understand the risks and check and ensure that the broker of their choice is licensed and regulated. We recommend choosing an EU regulated broker if you reside within the European Union. US REGULATIONS IMPORTANT NOTICE. Binary Options Companies are not regulated within the US. These Companies are not supervised, connected or affiliated with any of the regulatory agencies such as the Commodity Futures Trading Commission (CFTC), National Futures Association (NFA), Securities and Exchange Commission (SEC) or the Financial Industry Regulatory Authority 9FINRA). Please NOTE that any unregulated trading activity by U.S. Citizens is considered unlawful. Trade only at your own risk. CFTC rule 4.41: Hypothetical or simulated performance results have certain limitations. Unlike an actual performance record, simulated results do not represent actual trading. Also, since the trades have not been executed, the results may have under-or-over compensated for the impact, if any, of certain market factors, such as lack of liquidity. Simulated trading programs in general are also subject to the fact that they are designed with the benefit of hindsight. No representation is being made that any account will or is likely to achieve profit or losses similar to those shown. All information on this website are for educational purposes only and are not intended to provide financial advice. Any statements about profits or income, expressed or implied, do not represent a guarantee. Your actual trading may result in losses as no trading system is guaranteed. You accept full responsibilities for your actions, trades, profit or loss, and agree to hold Binary Option Sheriff.com and any authorized distributors of this information harmless in any and all ways.

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