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Binary Options and Online Stock Trading

Binary Options and Online Stock Trading

Binary options and online stock trading are both similar and different, but we feel that binary options provide a distinct advantage over trading in the traditional stock markets.  For one thing, binary options are a more efficient way to profit from price movements in stocks.  Because of the leverage provided when trading binary options it is much easier to realize substantial profits in a shorter period of time versus buying and selling the actual underlying stocks.

Binary brokers offer hundreds of different individual stock options, spanning all the major industries, and from all corners of the globe.  You will find technology companies such as Google and Twitter, telecommunications firms such as Vodaphone, entertainment companies like Disney and Sony, and financial stocks such as JPMorgan and Citigroup.  Indeed, there are many advantages to binary options versus online stock trading.

One of the benefits to choosing binary stock options over other assets is the ease with which you can do your research.  Information about all the companies offered as binary stock options is no more than a click away.  When you combine this fundamental analysis with a solid understanding of charting and how stock prices move historically you have a formula for success in binary stock trading.  Anyone can learn how to do this, and once you become proficient it is a skill that can be applied to any stock, or any asset you would like to trade.

Trading binary options is also much easier than trading the actual stocks.  It is quite easy to follow a stock’s price and make a prediction of whether it will rise or fall thanks to the wealth of information available from analysts, financial publications, company reports, and many other sources.  This access to information makes trading stocks easy, but when done through binary options it becomes even easier as there is no need to worry about liquidity in the binary options markets.

Because stocks are linked to their industry group, a binary option trader can take advantage of broad moves much more quickly than an online stock trader can.  They can also do so with a much smaller base of capital, since binary options are available for as little as $1 each.  A move by one stock in an industry often leads to similar moves in most if not all the other stocks in that industry.  In this way, a binary options trader can profit from news in stocks that aren’t even offered by the binary broker, as the news is likely to affect all the other companies in the same industry.

Binary options also provide a benefit in that they are not linked to any specific country.  Traders in Japan can easily trade U.S. stocks as binary options, just as U.S. traders have access to German stocks.  This simplifies the trading process greatly, and also avoids any currency risk that might be inherent in trading foreign stocks.

Evaluating Binary Trading Platforms

binary trading platforms

Before you dive into the world of binary option trading it is important that you take the time to set yourself up properly for success.  One of the steps in doing this is evaluating binary trading platforms to find the one that is best suited to your needs.  Note that I did not say the best binary option trading platform, because I don’t believe that there is a single best platform.  The determination of best trading platform is going to depend on the trader’s needs, expectations, and goals.  So, you need to do your own evaluation to find the best binary trading platform for you.

What exactly will you be looking for when evaluating the trading platforms?  Well, a bit of that depends on your needs, but there are some basics that any good platform will contain, so we can certainly start with those to help narrow down the field of choices.  Below are the 3 characteristics that are going to be most important when evaluating binary trading platforms.

  1. The stability and reliability is the most important characteristic of any trading platform.  It doesn’t matter what other features you find in a trading platform, if it isn’t reliable it won’t be a benefit to your trading.  Can you imagine having a trade fail because the trading platform disconnected from the broker’s servers?   Such an event is more than just frustrating.  So, test the platform, look for reviews from others, and make sure that it is reliable and stable.
  2. A binary options trading platform should be designed for ease of use.  It should not only be clear to you what everything in the platform is designed to do, it should also be quick and easy to place trades.  One click trading will ensure you don’t miss out on a trading opportunity as you fumble through the user interface of the trading platform.  One of the key attractions of binary options is the ease of trading, and the trading platform should reflect this.
  3. If you never trade from outside your home this might not be important to you, but I feel that all binary trading platforms should be available in mobile versions.  Even if you don’t trade when you are away from home now, maybe you would if you had access to a good mobile trading platform.  At the very least, you would appreciate the ability to check on open trades and do some market analysis while out and about.  It beats wasting time with Twitter and Facebook.

Any other features that are beneficial in binary trading platforms will depend on the needs of each individual trader.  Some will appreciate having deposit and withdrawal options built into the trading platform, while others will find it more useful to have access to customer support from within the platform.  Still others will be impressed by more advanced charting capabilities from within the binary platform.  This is why it is so important that each trader goes through the process of evaluating binary trading platforms on their own.

Finding Reliable Binary Option Trading Brokers


When getting started with binary option trading one of the top concerns for new traders is finding reliable trading brokers.  With so many warnings about binary options scams this isn’t too surprising, but the truth is that it can be fairly easy to find trading brokers who are both reliable and trustworthy.  How does one go about doing this?  By following the following 4 steps.

  1. First you can narrow down the list of prospective brokers by getting rid of all those who are not regulated by either the Cyprus Securities and Exchange Commission or by the Financial Conduct Authority in the UK.  While not all of the non-regulated brokers are necessarily unreliable, you’ll have much better success finding reliable trading brokers among those who are regulated.  Plus you will have an added degree of safety and security, not to mention a course of legal action if something does go wrong.  Regulation is one of the most positive steps that has been taken in the binary options trading industry.
  2. Next do your own research regarding the remaining brokers.  Search through websites and forums to find any negative reports about each of the brokers.  You will likely find some negative reports about all of them, but further digging will often reveal that the negative report was caused by something the trader did (or did not do), or is simply someone trying to discredit the broker with a false report.  You can overlook a few negative reports, especially if they are more than a year old, but you might want to consider removing any trading brokers with excessive negative press from your list.
  3. Test the brokers to see how responsive they are to client, and prospective client, needs.  The performance of the brokers customer service staff can be a good indicator of the reliability of the broker.  Those brokers that are unreliable will likely have a good deal of questions and complaints coming from clients, leading to a customer service department that is overworked and slow to respond.  In addition, they may be terse and less than friendly when talking with you, due to the large volume of questions and complaints they are dealing with.
  4. Take the broker for a spin by using their demo account, if one is available.  Considering the fact that demo accounts are becoming the norm among the best binary options brokers you might even consider dropping brokers from your list if they don’t have a demo account option.  When using the demo account note the speed of the platform, the reliability of the quotes, and whether they seem to be based on the same data as the live platform.  You should have a good experience with the demo.

These four steps can help you weed out the brokers you really don’t want to be using, allowing you to focus on those trading brokers deemed to be reliable and worth trusting.

Beginning to Trade with Binary Options Brokers

beginning to trade with binary options brokers

Beginning to trade with binary options brokers is a simple undertaking.  It consists of opening a binary options account with a broker, depositing money with them and placing your first trade.  And the binary option brokers make is a really easy process to get started.  They don’t require a huge amount of information, and they have deposit options that will credit to your account immediately, meaning you can be trading in as little as 5 minutes.

So, the first thing you will need to do is begin to read up on the various binary options brokers to find one that is suitable for you.  There are a few criteria you will want to look at while you do your research.  The fist is that the broker is licensed and regulated.  This used to be a rare thing, but in the past 18 months more and more brokers are becoming regulated.  Licensing and registration provides you with safety, and with a fair number of brokers now regulated there’s no reason to compromise on this.

You will also want to find out about the broker’s deposit and withdrawal conditions, as well as about any bonuses the broker offers.  You should also check to make sure the broker offers the assets you want to trade.  And it won’t hurt to test the brokers customer service staff and make sure they are up to snuff.

Once you’ve found a suitable broker you can head over to their website and find the “Open an Account” link.  It should be pretty easy to spot, the brokers don’t make it difficult to open an account.

In nearly every case opening an account will be free (find another broker if it isn’t), but it may not give you access to every area of the brokers site.  That’s ok, we aren’t worried about making a deposit yet.  Fill out the required information which will include your name, email, phone number and other relevant information.  Tick the box to indicate you’ve read the terms and conditions of the broker (you HAVE read them right?) and then click the button to create your account.

You’ll receive a confirmation email from the broker and you will probably have to click a link to confirm that you requested an account with them.  Now you can login and get started.  If they offer a demo account you probably want to start there and spend some time trading with virtual currency until you become comfortable with the trading platform and are fairly certain you can make money.  At that point you can make a deposit and begin trading for real.  And that’s all there is to beginning to trade with binary options brokers.

Is Binary Option Trading Allowed in Islam?


Because Muslims also want to be able to participate in the financial markets, many wonder is binary option trading allowed in Islam?  It is a good question, because no one would wish to break their religious beliefs just for the sake of a few dollars of profits.  In addition, many of the countries that follow Sharia law make any violations a legal matter as well as a religious one.  Most notable of these is Saudi Arabia, with its large population and even larger economy and wealth.

The problem with most trading under Sharia law is that the trading accounts accrue interest and charge fees overnight when a position is held.  These profits from interest and fees are strictly prohibited under Riba.  As a result, for many years there was no financial trading, especially not in binary options, in countries which follow Sharia law.  However, the binary option brokers wanted to find a solution that would allow Muslims to trade, and they did exactly that.

At any of the largest and longest running brokers you will find that they are able and willing to create special Islamic accounts.  These accounts are similar to typical trading accounts, but they differ in one very important feature.  These Islamic accounts do not charge fees or accrue interest, thus they are in accordance with Sharia law.  This change has allowed Muslims from all over the world to participate in the financial market and has finally answered the question is binary option trading allowed in Islam.  The answer is yes.

One other condition for the Islamic accounts is that they offer options on the Saudi Stock Exchange, which is called the Tadawul.  This makes perfect sense for many Muslim traders as they are located in or near Saudi Arabia and are familiar with the movements of the Tadawul.  It doesn’t hurt that the market is also one of the most profitable in the world, and has a market capitalization of over $370 billion.  Made up of 168 different companies, many of which are in the financial and oil sectors, it is one of the strongest markets in the world.

In addition to offering binary options on the Tadawul, most brokers with Islamic accounts also offer forex trading in the SAR crosses.  The availability of trading the SAR is another benefit to Muslim traders.

It is important to note that with the exception of the removal of fees and interest from Islamic accounts, trading binary options in such is not all that different from trading binary options in a regular account.  One benefit that some Islamic traders has seen is that the lack of fees actually makes them more profitable in comparison with traders whose accounts are subject to such fees.  And since Suadi Arabia is one of the world’s strongest economies, Muslim traders benefit from that as well, since they are most familiar with the SAR and the Tadawul exchange.

Binary Long and Short Trades


One of the advantages to trading binary options is the ability to take both binary long and short trades.  You might wonder about exactly how this works, and the answer is quite simple.  This goes in line with the simplicity of trading in binary options in general.  So, no matter which direction you think an assets price will move, you can profit from that movement with binary options.

Binary Long Trades

When you place a long trade in binary options you are simply taking advantage of the oft quoted trading principle to “buy low and sell high”.  A binary long trade is a prediction that the price of some underlying asset will increase in a given amount of time.  For example, you might think that the price of oil will go higher in the next hour because you have seen it already trending in that direction.  Price has pulled back recently and has subsequently begun to climb once more, so you can see that the daily trend is upwards.  You could then place a binary long trade that the price of oil would be higher than the current price 60 minutes from now.  If your prediction is correct you have a winning trade, and you collect the return on that option, which was already disclosed to you when you purchased the option.  This trade could easily net you a 75% return on your money in just 60 minutes.  Try doing that with any of the conventional markets.

Binary Short Trades

The short binary trade is an even more interesting concept, because traditional markets typically have restrictions against trading short, or betting that the price of an asset will fall.  This is especially true in the stock market, but it occurs in other markets as well.  Plus, there is a psychological block in some trader’s minds against profiting from the fall in an assets price.  A smart trader can take advantage of this by trading short binary options.  There are no restrictions to binary short trades, meaning you can make money just as easily from falling prices as you can from rising prices when trading binary options.  In addition, the cost for trading short is the same as trading long, unlike the conventional markets where short trades may come with large margin requirements.  Many trader’s focus solely on binary short trades, as prices tend to fall more rapidly than they rise, making a short trade a more likely profitable trade.

Now that you understand about binary long and short trades better, I recommend that you give it a try for yourself to see how simple it is to profit from moves on both sides of the market.  Most binary options brokers will allow you to set up a demo account with them and you can try out these trades for yourself risk free.  You’ll soon come to appreciate the ability to place both binary long and short trades just as I have.

What is Night Trading?


We’ve all heard about day trading and the profits that can be made by day traders, but what about night trading?  In case you aren’t aware of night trading, this is the practice of trading the markets after your countries markets have closed.  In the U.S., this type of trading was illegal before 1999, when the Securities and Exchange Commission made a change to allow trading U.S. stocks outside market hours.  Now, anyone with an internet connection can trade stocks, futures and forex at any time of day or night, and many are choosing night trading as a way to gain an edge.

Financial markets trade around the clock in different parts of the world.  While most Americans are snoozing, markets in Asia and Europe continue to chug along.  Forex and futures markets also trade 24 hours a day, so profits can be made from worldwide occurrences such as natural disasters, economic announcements, and normal market volatility.  Thanks to the internet, traders can participate in these market changes at any time of the day or night.

The most popular night trading occurs in the forex and commodities arenas, where trading is conducted 24 hours a day already.  This is a huge benefit to traders who need to hold down a regular job, or wish to spend evening time with their families.  These dedicated traders can now take care of the normal daily responsibilities, and then move into the markets later at night, or early in the morning before the sun rises, to make profits and improve their lifestyle.  With China and the European Union becoming increasingly important in both the currency and commodities markets, trading at night can be a good way to catch trend reversals and market moves that would otherwise pass traders by.

It isn’t just Americans who are taking to this trend of night trading though.  Because Asian markets can often be slow during the day, many Asian traders prefer to wait until night time so that they can trade the more active U.S. markets.  European traders can also take advantage of the volume and activity of U.S. markets by trading at night, after markets have closed in their country, but just as volatility and volume is increasing in the financial markets.

Trading the night markets can pose some obstacles, especially for U.S. based night traders.  It is not possible to get real time quotes on prices for U.S. stocks overnight, which means the actual fill that a trader receives could be quite different from the price quote.  While this could work in their favor, at times it can also affect profitability negatively.  In addition, when trading at night in the U.S., volume and liquidity is much lower than it is during the daytime hours.  This can cause large spreads and slippage that may lead to unexpected losses.  Technical issues may also crop up overnight, as data providers update systems or certain other networks go offline.

Night trading may not be for everyone, but there is a dedicated group of investors who have made it work for them.

Getting Started: Binary Options Trading

Getting Started: Binary Options Trading

With so many people gravitating to binary options trading I thought it might be helpful to put together a short guide to getting started with binary options.  While not comprehensive, it will get you off to a good start, and possibly let you avoid some of the beginner’s pitfalls.  The good news is that getting started with binary options trading is a very simple process.

The first thing you should do is know which asset or assets you are interested in trading.  Once you have decided on the assets you will trade, you need to also make sure that you understand the market for that asset.  You don’t have to become an expert, but if you aren’t already familiar with the price action of the market and what types of news cause the greatest movements for that asset you should take some time to become familiar with this.

With those things out of the way I next recommend that you decide on a strategy for trading as well as your money management rules.  Your strategy can be basic at this point, as it will likely evolve over time as you become more familiar with trading each asset.  If you like you can modify the existing strategy of another trader, but before you do that make sure you completely understand each aspect of the strategy and why it has been included.

You should now be ready to trade, but not with real money.  First, you should find a binary options broker that offers demo accounts and get one set up so that you can test out your trading strategy.  This broker should also be regulated, and should have a good reputation within the trading community.  Of course this isn’t necessary if you aren’t going to eventually trade real money with the broker, but you might as well find a broker that you can stay with after using their demo account as it will save you the trouble of learning another broker’s platform.

I can’t say for sure how long you will be trading this demo account, but it should be long enough to know that your strategy will be profitable.  At a minimum I would suggest you wait until you can be profitable for a full month when trading the demo account before moving to a real money account.  This will mean that as soon as you start trading your hard earned capital you can be fairly certain that you will make profits.

As you can see it isn’t difficult to get started with binary options trading, but it will take some time when done properly.  While it may seem frustrating as you prepare for binary options trading, think of how wonderful it will be when you begin trading and making profits right from the start.  This is much better than taking the route that some take, which is the school of hard knocks.  This type of approach can cost thousands of dollars as you learn to become profitable.  Why not avoid that and take your time to learn how to profit before putting money at risk.

Stock Binary Options

Stock Options

One of the attractions of binary options trading is the ability to trade so many different asset classes all from the same account and the same platform.  You can trade currencies, commodities, stock indices and individual stocks with ease.  Many traders have really come to enjoy stock binary options, leading the brokers to greatly increase the number of stocks available as binary options, and more are coming all the time.  Not only can you trade your favorite stocks from the US markets such as Disney, Twitter, and Microsoft, but with stock binary options you can trade stocks from around the world, including those listed on the FTSE 100, the DAX and the Nikkei.

Trading stock binary options has some distinct advantages over traditional stock investing or trading.  This type of stock trading definitely begs for further investigation by those who are interested in stock trading.  Below you can learn about some of the benefits to trading stock binary options.

Lowered Costs

Because you are only betting on the future price movement of a stock when trading binary options the costs are greatly reduced.  You can purchase a binary option on Google for as little as $10.  Purchasing just one share of the actual stock would cost you more than $550.00 currently.  And with binary options there are no commissions or brokers fees, allowing you to keep more of your profits

Increased Profits

While we are on the subject of increased profits, you should know that the profit potential from stock binary options is incredible.  Using the same example of Google, it would cost roughly $55,000 to purchase a 100 share block of the stock currently.  Each 1% move in the stock would net you a $550 profit, which isn’t bad at all.  However, with stock binary options you could invest just $1,000 in a trade on Google’s share price and your return would be a whopping 70% or $700.  That means less than 2% of the investment for the actual stock can give you better returns, plus you have all the additional capital to invest elsewhere.

Quick Profits

With the exception of day traders, investors normally wait weeks or months to see profits from stock investments.  With stock binary options your profits are generated in just a day, or as little as a minute.  There is no way to make the large profits in stocks through traditional means that you can achieve with binary options.

Trade Both Sides of the Market

With traditional stock investing it is very difficult to make money on a falling stock.  There are many rules and regulations related to the short sale of stock, and the margin requirements make it quite expensive as well.  With stock binary options you can sidestep all these rules and profit easily in a falling market.  Because stocks often fall much faster than they rise, focusing on short selling can be very profitable with stock binary options.

The above are just a few of the benefits to trading stock binary options rather than the actual stocks.  There are others, but I’m willing to bet that this has been enough to whet your appetite to learn more about trading binary options.

What is a Binary Option?


Those who haven’t come across them yet may ask what is a binary option when first confronted with these new financial instruments.  It isn’t unusual that so many people are just discovering binary option trading.  They only became available to retail traders six years ago, so the industry is very young indeed when compared with the equity, currency and commodity markets.  Below you can learn what a binary option is and decide if this type of trading might be suitable for you.

In its simplest form, a binary option is a digital financial instrument that is used to make a prediction about the price of an underlying asset in a given period of time.  The assets available to trade are quite diverse and include currency pairs such as the EUR/USD, commodities such as oil and corn, individual stocks like Apple and Citigroup, and equity indices such as the Nasdaq and the Japanese Nikkei 225.  Time frames used in binary options are also quite broad and range from as short as 60 seconds to as long as several weeks.

In practice, a trader who wishes to trade a binary option must first open an account with a binary options broker.  It is the brokers who create the digital options and set the strike price and expiry of the option.  The strike price is the target price, and the trader attempts to have the price of the asset close either above or below the strike price at the expiry of the option.  The option expiry is the length of time the option exists.  So, an option with a 60 minute expiry will exist for just 60 minutes.

Once an account is opened, and this takes just a few minutes, the trader can deposit funds and begin trading binary options.  The trader will choose an asset and make a prediction about where the price will be at the end of a certain time period.  If the trader believes the price of the asset will rise he buys a call option, and the price must finish above the strike price at the expiry of the option.  If he believes the price of the asset will fall, he buys a put option and the price of the asset will need to be below the strike price when the option expires.

It is important to note that the price in relation to the strike price is only considered at the expiry of the option.  It doesn’t matter what price does up to this point, all that matters is that the price is above or below the strike price at expiry.  So, in the case of our theoretical call option, the price could rise above the strike price, but if it drops back and is lower than the strike price when the option expires this is still a losing trade.  It is irrelevant that the price was above the strike price earlier in the life of the option, all that matters is the price when the option expires.

The real draw of the binary option is the fact that a winning trade will return between 60 and 89% to the winning trader.  This is a huge return and massive profits can be generated very quickly.

Now that you know about binary options will you try your hand at trading them?

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