Trades Pro Guide

BINARY OPTION
SECRETS REVEALED
A Complete Guide to Binary Trade Options Trading
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Table of Contents
3 Preface
CHAPTER 1:
4 An Introduction To Binary Options
CHAPTER 2:
52 Binary Options Brokers
61 CHAPTER 3:
Getting Started Trading Binary Options
68 CHAPTER 4:
Resources And Strategies For Success
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Binary options have evolved over the past few years into some of the most exciting
financial trading products available to retail stock, commodity and forex traders.
Part of the reason for the growing appeal of these exotic options is that binary options
provide a uniquely straightforward way for traders to speculate on asset price
movements, while at the same time maintaining a limited risk profile.
Originally developed and used by professional option traders at major financial

institutions, the relatively new innovation of online binary option trading platforms
designed for a broader audience has allowed almost anyone with a relatively recent
computer and an Internet connection to trade binary options from home.
Although the process of starting to trade binary options can seem challenging and
perhaps even risky at first, this e-book intended to help provide speculators with the
education that they need to become successful as binary option traders, while
avoiding common pitfalls along the way.
Our goal in sharing this valuable information is that it will assist you in learning about
what binary options are, how to transact them easily through online brokers, and how
they can be used as a tool to enhance your trading performance and choices.
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Chapter One
AN INTRODUCTION TO BINARY OPTIONS
If you have not yet traded or read much about binary options, you probably have quite
a few questions about these fascinating and useful financial products.
The following list of Frequently Asked Questions about binary options - and their
answers — should help get you started on your way to becoming a binary options
trader. If some of the terminology used in this FAQ seems unfamiliar to you, be sure to
check the next Glossary section to see if the term is defined there.
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WHAT IS A BINARY OPTION?

Like most options, a binary option is a derivative financial instrument whose value
is determined by where the price of its underlying asset is trading relative to its strike
price.
The underlying asset for a binary option can be a currency pair’s foreign exchange
rate, a commodity’s price, a stock index, or a stock price.
In contrast to a traditional option’s payout, which varies depending on how much

better its strike price is than the prevailing market at expiration, a binary option’s
payout in that favorable situation is fixed.
Both vanilla and binary options generally expire worthless if their strike price is worse
than the prevailing market at expiration, although some binary options are structured
to yield a smaller token payout in this case, primarily as a consolation to the
purchaser.
To assist you in relating trading binary options to a more mundane experience,

consider the following analogy.
BINARY OPTIONS
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MYSTERY CAR ANALOGY

Buying a binary option is a bit like buying a mystery car at an auction that you do not
know if it runs or needs substantial and costly repair work in order to operate.
Here’s why:
OUTCOME #1:THE CAR RUNS

If the mystery car turns out to run well, your payout is a working vehicle.
This is analogous to a purchased binary options ending up in the money by its

expiration, resulting in a payout.
OUTCOME #2:THE CAR DOES NOT RUN

If the mystery car does not run and instead requires substantial repair, you are out
your initial investment, although you still might be able to sell it to the junkyard for
scrap.
ANALOGOUS PRICING CONSIDERATIONS

This is analogous to a purchased binary option ending up out of the money by its
expiration, resulting in the loss of your investment, although you might get a small
amount back as a consolation.
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In terms of price, you will probably pay more for the mystery car than its scrap value,
but less than a similar car's value if it was guaranteed by the seller to run.
Similarly, you will pay more for a binary option than its value if it expires out of the
money, which is typically either zero or a small consolation payout.
Furthermore, you would generally pay less for an out of the money binary option with
an uncertain payout (the mystery car) than you would earn if you instead traded the
underlying asset and it subsequently went to the binary's strike price by expiration (a
similar car guaranteed to run).
BINARY OPTIONS MAKES TRADING EASIER

Basically, using binary options can simplify your trading decisions considerably - as
well as your results - since a binary option either pays out a fixed amount if you are
correct, or it does not. Also, your risk is always limited to the amount of premium you
initially paid for the binary option
Accordingly, when considering buying a binary option, you usually only need to
forecast whether you expect the underlying asset’s price will either (1) end up above
or below a certain level at expiration, or (2) will trade above or below a certain level by
the option’s expiration date.
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WHO TRADES BINARY OPTIONS?

Originally, binary options were primarily traded only between large financial
institutions and their customers, usually in the over the counter market.
In more recent years, institutional traders and money managers began trading binary
options via organized exchanges, such as the Chicago Board Options Exchange or
CBOE.
Most retail traders have only had the opportunity to trade binary options since online
binary option brokers began offering variations on the product via their Web based
trading platforms over the last couple of years.
This latest important development has opened up the market for binary options
considerably. These days, just about anymore can now trade binary options easily
and efficiently, as long as they have access to a relatively recent computer connected
to the Internet and some funds to place at risk.
Retail traders are increasingly turning to binary options to provide them with a limited
risk profile, which seems especially desirable in more volatile financial markets.
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WHEN ARE BINARY OPTIONS TRADED?

Binary options are typically available for trading purposes whenever the underlying
assets on whose value they are based are being traded. For example, if you are
interested in binary options on a U.S. stock, then you can usually trade them
whenever the relevant U.S. stock exchange is open for business. Similarly, binaries
on UK stocks trade when the London Stock Exchange is open, and so on
Some markets, such as the spot currency, gold and silver markets, trade actively on
a global basis around the clock during weekdays. Although different online binary
option brokers set their own trading hours, binary options based on these assets can
usually be executed as long as their underlying market is actively trading.
In the currency market, active trading typically halts at 5pm New York Time on Friday
afternoons, and then begins again as early as the Sydney open at 5pm New York
Time on Sunday afternoon. The forex, stock and commodity markets are all closed on
Saturdays, so binary options based on those assets would generally not be available
for trading on that day.
BINARY OPTIONS
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WHEN DO BINARY OPTIONS PAYOUT?

Binary options generate their predetermined payout if or when the option’s underlying
asset price reaches the binary’s strike price either at or before the option’s time of
expiration.
The two basic classes of binary options and their payout characteristics are as
follows:
1. “At Expiration” Binary Options – Whether or not the payout of these binary
options occurs is determined by comparing their strike price to the prevailing asset
market price at their pre-determined expiration date and time. If the strike price is
better than the market at that time, then they pay out. If the strike price is worse, they
do not pay out.
2. “One Touch” Binary Options – These binary options pay out immediately and
also expire early if their strike price level trades in the underlying market at any time
prior to their contractual expiration date and time. If their strike price level does not
trade prior to their official expiration, they generally do not pay out, although some
binaries are structured to just pay out a nominal amount to help console the buyer.
Many online binary option brokers provide pricing for both classes of binary options.
Accordingly, you should know in advance which kind of binary you require, and then
check to make sure that kind is what you are indeed trading.
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HOW ARE BINARY OPTIONS USED?

Binary options provide a limited risk and limited reward payout profile that some
traders find very attractive for speculative purposes. This provides them with a
potentially useful alternative to the unlimited risk/reward profile of the underlying asset
market.
Furthermore, highly speculative traders can use binary options with strike prices quite
distant from the prevailing market prices to take long shot market bets where a small
premium is paid for a less likely, but larger payout.
On the other hand, a more risk-averse binary option trader can elect to pay a higher
up front premium in order to obtain considerably better odds of receiving a payout.
The pricing of a binary option can also provide an indication of the current market
sentiment for the particular financial instrument that serves as its underlying asset.
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For example, binary options with strike prices above the prevailing asset market price
tend to rise in value in an upwards trending market relative to binaries with strike
prices equally below the underlying asset’s current price.
Binary option pricing also incorporates an estimate of the asset’s likely price
movement or volatility expected over the time frame until the option expires that can
provide a useful risk measure. If expected volatility rises, so does the binary option’s
price. If volatility falls, the binary’s price gets cheaper.
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GLOSSARY OF KEY BINARY OPTIONS TERMS

The following list defines and explains a variety of common terms related to binary
options.
Expiry or Expiration: The pre-determined date and time at which the binary option's
active time period ends and the binary’s strike price is then compared to the
underlying asset price to assess whether or not it has value. If its strike price is better
than the market, the binary pays out. Otherwise, the binary does not
generate its desired payout, and it either expires worthless or produces just a token
payout for its buyer.
In-the-Money or ITM: The phrase used to describe a binary option that has a
strike price better than the prevailing market price.
At-the-Money or ATM: The phrase used to describe a binary option that has a
strike price equal to the prevailing market price.
Out-of-the-Money or OTM: The phrase used to describe a binary option that has
a strike price worse than the prevailing market price.
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Call Option: For vanilla options, a call option contract conveys the right, but not the
obligation, to purchase an underlying asset, and it typically appreciates in value as the
underlying market rises. The analogous binary option product to a Vanilla Call Option
would be an Up Binary where a buyer would be expecting the market to rise above its
strike price.
Put Option: For vanilla options, a put option contract conveys the right, but not the
obligation, to sell an underlying asset, and it typically appreciates in value as the
underlying market falls. The analogous binary option product to a Vanilla Put Option
would be a Down Binary where a buyer would be expecting the market to fall below
its strike price.
Digital Option: Another common term used to refer to binary options that are digital
in nature because they have a limited cost, as well as a limited payout that is either
paid in full or not at all.
All or Nothing Options: Another common term used to refer to binary options that
have a limited cost, as well as a limited payout that is either paid in full or not at all,
and hence they display a characteristic all or nothing payout.
Fixed Return Options: Another common term used to refer to binary options that
have a limited cost, as well as a limited payout or fixed return that is either paid in
full or not at all.
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Exotic Option: A type of option contract that is not a plain vanilla European or
American style call or put. Binary options are typically considered one of the simplest
types of exotic options.
At Expiration Binary: A type of binary option that pays out a fixed amount if its strike
price is better than the prevailing market at the date and time of its expiration. At
Expiration Binaries can be either Up Binaries, which are analogous to call options and
pay out if the market is above their strike price, or Down Binaries, which are
analogous to put options and pay out if the market is below their strike price.
One Touch Binary: A type of binary option that immediately pays out a fixed amount
if its strike price becomes better than the prevailing market prior to the date and time
of its expiration. One Touch Binaries can be either Up One Touch Binaries, which are
analogous to call options and pay out if the market trades above their strike price, or
Down One Touch Binaries, which are analogous to put options and pay out if the
market trades below their strike price.
Up or Above Binary Option: An exotic option that pays out a fixed amount if the
market price is above its strike price either at expiration, or at any time prior to
expiration for a One Touch Up Binary. Analogous to a vanilla call option.
Down or Below Binary Option: An exotic option that pays out a fixed amount if the
market price is below its strike price either at expiration, or at any time prior to
expiration for a One Touch Down Binary. Analogous to a vanilla put option.
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Range, Zone or Boundary Binary Option: An exotic option that pays out a fixed
amount if the market price is between its upper and lower strike prices either at
expiration, or at any time prior to expiration for a One Touch Range Binary.
Outside Binary Option: An exotic option that pays out a fixed amount if the market
price is outside its upper and lower strike prices either at expiration, or at any time
prior to expiration for a One Touch Outside Binary.
Over-the-Counter or OTC: Describes financial products transacted between two

parties outside of an organized exchange designed to manage such deals. Some
binary options trade on exchanges, but most are available only in the Over-the-
Counter market. Retail traders can obtain binary options from online brokers, and
major financial institutions often make prices in them for their large customers.
Premium or Investment Amount: The stake, cost or amount of money invested up

front by the buyer when purchasing a binary option. Since the premium is a fixed cost,
it represents the maximum loss that a trader can suffer from taking a binary option
position.
Payout: The fixed amount of money that a binary option will generate for the buyer
should it finish successfully. Some binary options also provide a minimal fixed payout
even if they end up out of the money.
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Strike Price: In vanilla options, this term refers to the price at which the option
contract can be exercised and the underlying either purchased for a call option, or
sold for a put option. When used in reference to up or down binary options, this term
refers to the price used to determine whether a contract has expired In-the- Money or
Out-of-the-Money. For one touch binary options, the term refers to the value that the
asset must trade at for the contract to become In-the-Money and generate its payout.
Underlying Asset: Refers to the financial instrument upon which a binary option’s
value is based. The price of its underlying asset will determine if a binary option trade
is ultimately successful or not.
Turnover: A term usually employed in reference to the number or volume of contracts

traded during a particular time frame. For example, daily turnover in the over the
counter foreign exchange market often exceeds $3 trillion dollars per day.
Trading Session: The period of time during which trading operations can occur in an
asset market, and hence when binary option prices for that asset might be available.
For example, a daily trading session for U.S stocks listed on the New York Stock
Exchange typically runs from the opening bell to the closing bell. In the forex market
that trades around the clock, the three primary trading sessions correspond to normal
London, New York and Tokyo business hours.
Vanilla: A term often used to describe a normal European or American style put or
call option to distinguish it from an exotic option. Binary options are exotic options, not
plain vanilla style options.
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HOW BINARY OPTIONS WORK

Before investing any money in purchasing binary options, most traders would benefit
from first obtaining a thorough understanding of how binary options work.
Fortunately, this is a relatively easy process since one of the main advantages of
trading binary options is that they are a very simple form of exotic option where a fixed
price is paid for the opportunity to obtain a fixed payout if the trade is ultimately
successful. The two possible outcomes of a binary option give this class of exotic
options its name.
This simplicity contrasts with a regular vanilla option, which is a derivative financial
product where the buyer does not actually purchase the underlying asset for the
premium they pay, but instead they obtain the right to buy the asset at a set price at
some pre-determined point in the future, without being obliged to do so.
This set price is generally known as the vanilla option’s strike price, and it is usually
worse than (out-of-the-money) or equal to (at-the-money) when compared with the
market price of the underlying asset at the time when the option contract is originally
purchased.
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What makes binary options different from normal vanilla options that have a
variable outcome is that they either pay the buyer a certain amount of cash or nothing
at all. This dual outcome is why they are also known as all-or-nothing options, digital
options or fixed return options.
Furthermore, traders typically purchase a binary option based on their forecast of how
the price of its underlying asset will end up. If the underlying asset has reached the
value they anticipated at the expiry of the option, then the binary option is in- the-
money and the trader gets paid a certain amount of cash.
On the other hand, if the underlying asset price does not reach the trader’s objective
before the expiry time, then the option is out-of-the-money. In this case, they might
either receive nothing, or sometimes only a small percentage (around 12%) of their
initial investment.
When trading binary options, you also need to understand that you will never have to
physically buy or sell the underlying asset that you are buying an option on since the
payout for binary options is settled in cash.
This makes binary options very suitable for more speculative trades because you
will never have to assume the full downside risk you have when you buy or sell a
security or exercise a plain vanilla option. With binaries, the only downside that you
are responsible for is the price you pay for the option, which is fixed at a fraction of
the price of the security itself and is paid up front.
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To sum it up, buying a binary option offers you the benefit of a fixed payout if your
view on an asset’s price turns out to be correct, without you having to worry about the
relatively unlimited risk of loss involved in holding a position in that asset.
TYPES OF BINARY OPTIONS

Although the range of binary option types was considerably narrower in the past, most
of today’s online binary options brokers now offer their trading customers an
interesting selection of different types of binary options.
These alternatives provide more creative ways for a trader to take a view on the
market with the objective of making a profit. A review of the seven most popular types
of binary options follows, along with classic profit and loss diagrams that show at what
prices the associated binary options would payout and at what prices they would
expire worthless for a loss equal to the initial premium paid.
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UP OR ABOVE BINARY OPTIONS

Up or Above Binary Options are those that pay out a fixed amount if the market
price is above their strike price either at expiration, or at any time prior to expiration for
a One Touch Up Binary.
These are binary option analogs to a vanilla call option and are used by traders to
speculate that the underlying asset will be above the strike price when the binary
option expires.
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DOWN OR BELOW BINARY OPTIONS

Down or Below Binary Options are those that pay out a fixed amount if the market
price is below their strike price either at expiration, or at any time prior to expiration for
a One Touch Down Binary.
These are binary option analogs to a vanilla put option and are used by traders to
speculate that the underlying asset will be below the strike price when the binary
option expires.
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IN OR INSIDE BOUNDARY,RANGE OR ZONE BINARY OPTIONS
In Boundary, Range or Zone Binary Options (also sometimes called Inbound binaries)
are those that pay out a fixed amount if the market price is between their upper and
lower strike prices either at expiration, or at any time prior to expiration for a One
Touch Boundary, Range or Zone Binary.
These binary options are analogs to a short strangle vanilla option strategy (without
the unlimited downside risk) and are used by traders to speculate that the underlying
asset will be inside the range defined by the strike prices when the binary option
expires.
BINARY OPTION DEMO ACCOUNT

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OUT OR OUTSIDE BOUNDARY, RANGE OR

ZONE BINARY OPTIONS
Out Boundary, Range or Zone Binary Options (also sometimes called Outbound
binaries) are those that pay out a fixed amount if the market price is trading outside
the range defined by their upper and lower strike prices either at expiration, or at any
time prior to expiration for a One Touch Out Boundary, Range or Zone Binary.
These binary options are analogs to a long strangle vanilla option strategy and are
used by traders to speculate that the underlying asset will be outside the range
defined by the strike prices when the binary option expires.

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TOUCH OR ONE TOUCH BINARY OPTIONS

With Touch or One Touch Binary Options, traders speculate on whether the binary
option’s underlying asset will reach or touch a pre-determined value at any point
before the option’s expiry. If so, the Touch Binary pays out immediately, if not, it
expires worthless or with a minimal payout.
You can buy Up Touch binaries that pay out as soon as the underlying asset market
rises to touch their strike price or Down Touch binaries that pay out when the market
falls to hit their strike price.

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HIGH YIELD TOUCH OR ONE TOUCH BINARY OPTIONS
With High Yield Touch or One Touch Binary Options, traders speculate on whether the
binary option’s underlying asset will reach or touch a relatively high or low pre-
determined value at any point before the option’s expiry. If so, the High Yield Touch
Binary pays out an excellent return, if not, it expires worthless or with a minimal
payout.
The potential yield or return on such binaries is higher than normal because the
chances of the target price trading before the option’s expiration is quite low.
Accordingly, these binaries offer traders the opportunity to make long shot bets
yielding especially high returns if the target price is actually touched.

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NO TOUCH BINARY OPTIONS

With No Touch Binary Options, traders speculate that the binary option’s underlying
asset will not reach or touch a pre-determined value at any point before the option’s
expiry.
If that level does not trade by expiration, the No Touch Binary pays out, but if it does,
the option immediately expires worthless or with a minimal payout.

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Overall, numerous types of binary options exist, and they are currently available
online via binary option brokers for many popular underlying assets that traders might
wish to speculate on.
ADDITIONAL BINARY OPTION FEATURES AND TOOLS

In addition to the wide range of binary option types available, some online binary
option brokers offer specific features and tools that might be useful for traders,
depending on their specific needs.
The helpful features offered by online brokers typically include the ability to close out
existing option positions, as well as the ability to roll out or extend the expiration date
of an open binary option contract. As far as binary option tools are concerned, the
Option Builder is popular for helping traders narrow down their binary option choices.
A quick introduction to each of these features and tools follows.
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THE CLOSE OUT FEATURE

Although not provided by all online binary option brokers, this feature allows a trader
to close out a binary option contract before its expiry time by executing an offsetting
trade.
Basically, if you notice that the underlying asset has already reached its objective, and
are concerned that the market might begin to retrace, you can elect to close out the
profitable option now and get paid for it since the option is probably already in-the-
money.
While a substantial retracement could eliminate your return on a profitable binary

option position altogether, you also have to keep in mind that closing a binary option
out before its expiry can lower its overall return rate since you will be eliminating your
risk of the position ending up out of the money.
THE ROLL OVER OR EXTEND FEATURE

This feature enables binary options traders to extend the time until expiration of an
existing option position in order to increase its probability of finishing in-the-money.
For example, if an option is close to expiring, and you think it might end up just out-of-
the-money, you have the ability to extend the expiry time of the option by paying a flat
one-time roll over fee to your broker.
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The roll over fee is usually equal to the price of purchasing a new binary option for the
extended period you desire, less the sell back value of the existing binary option that
you already own. Both binaries would usually have the same strike price.
This roll over strategy can be especially useful if the underlying asset is very close to
the binary option’s strike price as its expiration nears.
OPTION BUILDER TOOLS

On most binary option trading platforms, you are given a selection of various assets,
expiration dates and strike rates to choose from, along with the choice of whether you
want a High (Call) or Low (Put) binary.
Certain brokers offer a considerable variety in binary options, while others have a
more narrow set of choices. In either case, you are essentially limited to what the
broker permits you to trade via their user interface.
Some binary option traders find this situation too restrictive and prefer more flexibility
when they trade binaries. To satisfy their needs, brokers came up with an Option
Builder tool that allows traders to create and execute their own binary option strategy.
A typical Option Builder tool’s interface gives you certain choices. For example, you
might first need to pick your underlying asset, typically from among the major forex
currency pairs, commodities, stocks and indexes.
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Once you select the asset, you can then choose the binary option type, such as
Range, One Touch, High/Low, etc.
The next step might be to choose the option’s strike price, payout and its expiry date.
Some tools of this type might allow you to enter the amount of premium you intend to
invest in purchasing the binary option, although others will price your tailor made
binary option based on the parameters you enter.
If you are agreeable to the price, you can usually then choose to enter into the binary
option position you have specified.
When option traders buy binary options of their own design, they can achieve
considerably greater control over what they are trading. To determine which brokers
offer this useful tool, you can visit professional websites dedicated to binary options
trading, such as BinaryOptionsNow.com, since online brokers change their offering
frequently.
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WHAT ARE THE AVAILABLE UNDERLYING ASSETS?
The underlying asset upon which a binary option’s value is based will always be the
main component of a binary option trade. An underlying asset can be a forex currency
pair, an index, an individual stock or a commodity. Although binary options on bonds
are theoretically possible, they are not widely available to retail traders at this time.
In practice, the range of underlying assets you will have access to trading binary
options on will depend on the broker you choose to trade with. Some brokers choose
to offer more or less choice among these financial markets, and traders can either
specialize in trading binaries on one asset or they can diversify their portfolio of
options.
Furthermore, all the possible underlying assets are not equally volatile, so some might
be riskier to trade than others. For example, the EUR/USD currency pair has been
extremely volatile during much of the European Debt Crisis, although the USD/JPY
currency pair was relatively stable. Furthermore, the prices of individual stocks tend to
be more volatile than stock indexes.
Since the pricing of binary options depends on the underlying asset’s volatility, those
based on risker assets might be more expensive than the comparable binaries based
on less volatile assets.
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For these reasons, it is very important to take the time to analyze an asset market by
taking into account its price volatility and liquidity, as well as key fundamental and
technical factors, before choosing to trade a binary option based on it.
Unless you want to make long shot bets using binaries, you will probably want to
choose a highly liquid underlying asset market that displays a moderate amount of
volatility to avoid excessive unanticipated price swings.
An overview of some of the primary asset classes available to online binary option
traders follows, including normal market hours, their pros and cons, and sample
products.
COMMODITIES
Commodities are raw materials or agricultural products. Those commodities whose
prices fluctuate can offer excellent binary option trading opportunities, and they
include the most popular metal and energy commodities, but only rarely the soft and
livestock commodities.
The price of commodities can be affected by specific supply and demand factors, as
well as the overall economic picture, so traders typically research the market carefully
and watch for relevant news items.
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METALS
Most binary option brokers will only offer options on the precious metals like gold,
platinum and silver, although some might allow you to trade binaries on other metal
commodities, like the various base, rare earth and radioactive metals.
ENERGY COMMODITIES
A number of binary option brokers provide pricing for options on crude oil types like
WTI or Brent, although some might offer pricing on natural gas or an index of oil
related stocks, for example.
SOFT AND LIVESTOCK COMMODITIES

Soft commodities include agricultural products like coffee, orange juice, soybeans and
grains, while livestock commodities include live cattle and pork bellies. Binaries on
these commodities are difficult to find at most online binary option brokers.
The trading hours for binaries based on these commodities can vary among brokers
and typically reflect the traditional trading hours for the underlying asset. Some are
available on Monday through Friday from 5:00am GMT to 10:00pm GMT.
FOREX CURRENCY PAIRS

Currencies trade in pairs in the foreign exchange or forex market. These currency
pairs fluctuate in value and are very popular trading instruments, with moderate
volatility under most circumstances.
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Currency pair exchange rates can be affected by a country’s monetary policy and its
overall economic picture, so traders typically watch for the release of major economic
data and central bank policy statements for each currency’s country, and they also
watch for relevant news items.
The major currency pairs that many binary option brokers provide binaries based on
include the following:
EUR/USD - The EU’s Euro versus the U.S. Dollar.

USD/JPY - The US Dollar versus the Japanese Yen.
GBP/USD - The UK’s Pound Sterling versus the US Dollar.
USD/CHF - The US Dollar versus the Swiss Franc.
AUD/USD - The Australian Dollar versus the US Dollar.
USD/CAD - The US Dollar versus the Canadian Dollar.
NZD/USD - The New Zealand Dollar versus the US Dollar.
Some binary option brokers also provide pricing for binaries based on the major
currency cross pairs that do not involve the US Dollar. These pairs include:
EUR/JPY - The EU’s Euro versus the Japanese Yen.

GBP/JPY - The UK’s Pound Sterling versus the Japanese Yen.
EUR/GBP - The EU’s Euro versus the Swiss Franc.
EUR/CHF - The EU’s Euro versus the UK’s Pound Sterling.
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Finally, a few binary option brokers might offer pricing in the so-called exotic or
emerging market currencies, such as the Turkish Lira, Singapore Dollar or Thai Baht.
The trading hours for binaries based on these commodities can vary among brokers,
although some make pricing on such options available Monday through Friday from
5:00am GMT to 10:00pm GMT. Nevertheless, the underlying markets in these
currency pairs trades around the clock from the Sydney open at 5:00pm EST on
Sunday to 5:00pm EST on Friday.

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STOCK INDEXES OR INDICES

Many online binary option brokers offer binaries based on the value of a stock market
index as an underlying asset. Such stock indices, or indexes as they are sometimes
called, are often used as benchmarks for the performance of national stock markets.
Due to an averaging effect, indexes tend to have a lower volatility than each of their
component stocks. Some of the more common stock indexes used as underlying
assets for binaries and their typical trading hours include the:
DJIA Index – The Dow Jones Industrial Average is an index based on stock prices
for 30 blue chip industrial companies traded on the New York Stock Exchange and the
NASDAQ. Binaries on this index are commonly traded during normal U.S. stock
market hours of Monday through Friday from 02:30pm – 9:00pm GMT.
S&P 500 Index – An index based on stock prices for 500 large cap stocks actively
traded in the United States on the New York Stock Exchange or NYSE and the
NASDAQ Stock Market. Binaries on this index are commonly traded during normal
U.S. stock market hours of Monday through Friday from 08:00am – 10:00pm GMT.
S&P 100 Index – An index based on stock prices for 100 large cap stocks actively
traded in the United States on the New York Stock Exchange or NYSE and the
NASDAQ Stock Market. Binaries on this index are commonly traded during normal
U.S. stock market hours of Monday through Friday from 08:00am – 10:00pm GMT.
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NASDAQ Composite Index – An index based on stock prices for all of the common
stocks listed on the NASDAQ Stock Market. Binaries on this index are commonly
traded during normal market hours of Monday through Friday from 02:30pm – 9:00pm
GMT.
Nikkei 225 Index – An index based on stock prices for 225 active Japanese
companies traded on the Tokyo Stock Exchange or TSE. Binaries on this index are
commonly traded during normal market hours of Monday through Friday from
08:00am – 10:00pm GMT.
Hang Seng Index – An index based on stock prices for 45 of the largest companies
actively traded on the Hong Kong Stock Exchange or HKEX. Check with your broker
to see if and at what times they trade binaries on this index, although HKEX opening
hours are from 1:20am – 8:00am GMT, with a lunch break from 4:00am to 5:00 GMT.
FTSE-100 Index – An index based on stock prices for 100 of the largest companies
traded on the London Stock Exchange. Binaries on this index are commonly traded
during normal market hours of Monday through Friday from 08:00am – 4:30pm GMT.
DAX-30 Index – An index based on stock prices for 30 blue chip German companies
traded on the Frankfurt Stock Exchange. Binaries on this index are commonly traded
during normal market hours of Monday through Friday from 08:00am – 4:30pm GMT.
CAC 40 Index – An index based on stock prices for 40 active French companies
traded on Euronext Paris, formerly known as the Paris Bourse. Binaries on this index
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are commonly traded during normal market hours of Monday through Friday from
07:00am – 9:00pm GMT.
IBEX-35 Index – An index based on stock prices for 35 active Spanish companies
traded on the Bolsa de Madrid. Binaries on this index are commonly traded during
normal market hours of Monday through Friday from 08:00am – 4:30pm GMT.
SMI Index – An index based on stock prices for 20 active companies traded on the
Swiss Stock Exchange or SIX. Binaries on this index are commonly traded during
normal market hours of Monday through Friday from 08:00am – 4:30pm GMT.
MIB-40 Index – An index based on stock prices for 40 active companies traded on
the Italian Stock Exchange or Borsa Italiana located in Milan. Binaries on this index
are commonly traded during normal market hours of Monday through Friday from
07:00am – 7:30pm GMT.
ASX 200 Index – An index based on stock prices for 200 active companies traded on
the Australian Securities Exchange or ASX. Binaries on this index are commonly
traded during normal ASX market hours of Monday through Friday from 11:50pm –
06:11am GMT.
Nifty Index – An index based on stock prices for 50 active blue chip companies
traded on the Indian Stock Exchange or NSE. Check with your broker to see if and at
what times they trade binaries on this index, although NSE opening hours are from
3:45am – 10:00am GMT.
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INDIVIDUAL STOCKS
Some online binary option brokers offer binaries based on the value of an individual
company’s stock as an underlying asset. These stocks will typically be some of the
largest national or international companies listed on major stock exchanges, and their
price action can be quite volatile at times.
Earnings announcements and other key company press releases can strongly affect a
stock’s price. Although the choice of stocks as underlying assets varies considerably
among binary option brokers, a selection of the more common stocks used as
underlying assets for binaries and their typical trading hours include the following:
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U.S. STOCKS
Apple Inc. - Produces personal computers, mobile phones, and portable digital music
and video players. Apple’s stock is quoted on the NASDAQ, and its typical trading
hours are Monday through Friday 14:30pm to 21:00pm GMT.
Coca Cola Enterprises – One of the world’s largest soft drink manufacturers, and its
stock is traded on the NYSE and other exchanges. Typical trading hours are Monday
through Friday 14:30pm to 21:00pm GMT.
Google Inc. – Operates the Internet’s leading search engine, as well as YouTube.
Google also developed the Android mobile device platform, and its stock is quoted on
the NASDAQ. Typical trading hours are Monday through Friday 14:30pm to 21:00pm
GMT.
Nike Inc. –A large sports shoe, apparel and goods retailer, and its stock is traded on
the NYSE. Typical trading hours are Monday through Friday 14:30pm to 21:00pm
GMT.

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UK STOCKS
Barclays plc. – Britain’s third largest bank. Barclay’s operates branches in sixty other
countries, and its stock is quoted on the London Stock Exchange. Typical trading
hours are Monday through Friday 8:00am to 4:30pm GMT.
BAE Systems plc. – BAE is among the largest military contractors worldwide, and is
a UK-based multi-national defense, security and aerospace company. Its stock
is quoted on the London Stock Exchange, and typical trading hours are Monday
through Friday 8:00am to 4:30pm GMT.
BP Group plc. – London based BP Group provides petroleum products for

transportation, heating and light. The company’s stock is quoted on the London Stock
Exchange, and its typical trading hours are Monday through Friday 8:00am to 4:30pm
GMT.
Lloyds Banking Group plc. - This banking and financial services group operates in
the United Kingdom, the United States and Europe. The company’s stock is quoted
on the London Stock Exchange, and its typical trading hours are Monday through
Friday 8:00am to 4:30pm GMT.
Vodafone - London based Vodafone is the world’s largest mobile telecommunication

network company, operating in more than 30 countries worldwide. The company’s
stock is quoted on the London Stock Exchange, and its typical trading hours are
Monday through Friday 8:00am to 4:30pm GMT.
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EUROPEAN STOCKS
France Télécom S.A. - France’s primary telecommunications company and is one of
the largest in the world. France Télécom’s stock is quoted on the Euronext Paris, and
its typical trading hours are Monday through Friday from 8:00am to 4:30pm GMT.
Société Générale S.A. - Paris based Société Générale S.A. is one of Europe’s
largest banking institutions. Société Générale’s stock is quoted on the Euronext Paris,
and its typical trading hours are Monday through Friday from 8:00am to 4:30pm GMT.
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Telefónica, S.A. - A Spanish based broadband and telecommunications provider

operating in Europe and Latin America. Telefónica’s stock is quoted on Bolsa de
Madrid, and its typical trading hours are Monday through Friday from 8:00am to
4:30pm GMT.
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Chapter Two
BINARY OPTIONS BROKERS
WHAT IS A BINARY OPTIONS BROKER?

A binary options broker is a company that provides its customers with the ability to
trade several different types of binary options on a variety of underlying assets,
typically via an online trading platform.
In the last few years, the number of brokers providing binary options to their trading
clients has grown substantially, providing greater binary option features and
opportunities for online traders.

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Most binary option brokers interact primarily with their clients via their websites, so a
reliable Internet connection is usually required to obtain binary option prices and deal
with them.
These binary option broker websites generally incorporate an online binary option
trading platform and provide basic account management capabilities. Many of them
also offer some educational information about binary options and how to trade them.
The typical online binary option broker will display a list of a particular type
of binaries that can be traded at the current time on their website’s home page,
including data such as the asset name, target or strike price, maximum return and
expiration date and time.
Pushing buttons or links usually lets you to toggle between different types of binaries,
such as high/low binaries, above/below binaries, one or no touch binaries, and in or
out boundary binaries. Some brokers also allow you to select specific asset class
binaries to view, such as those based on stocks, indexes, commodities or forex
currency pairs.
Once you have opened up an account with an online binary option broker by
providing required information and depositing funds with them that you will use to
purchase binaries with, you can usually trade binaries right from this web page that
also acts as a binary option trading platform.
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FINDING THE BEST BINARY OPTIONS BROKER
Most individuals considering trading binary options will need to select an online broker
to execute their trades with. As with any other decision that involves large sums of
money, you will want to ensure that your funds are safe and that you are getting the
best possible service available in the market today.
Regarding the safety of your funds, you can check out the broker’s website to
ascertain whether the broker is registered with and regulated by an appropriate
financial regulatory body. These include: the NFA or CFTC in the United States, the
FSA in the UK, Bafin in Germany, CySEC in Cyprus, the Banque de France in France,
ASIC in Australia, the FSA in Japan, and the MAS in Singapore.
In addition, you will want to make sure that any broker you are considering will accept
accounts from traders based in your locale, since some brokers will not deal with U.S.
based traders, for example.
You can also verify that the broker has a good reputation with its clients and within the
industry by doing an Internet search. Furthermore, independent high quality websites
dedicated to binary options, such as BinaryOptionsNow, provide expert brokers
reviews and news that can be helpful to traders in the process of selecting a broker.
Beware of amateur websites that give spurious advice on binary options trading and
biased broker reviews.
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The next thing to look for when investigating a prospective broker is the list of
underlying assets that they offer for binary option trading since some broker offer
more assets than others or provide a wider range within certain asset classes. You
will therefore need to check if the broker offers the assets that you like to trade.
For example, if you wish to trade forex binaries, check to see that the currency pairs
you want to trade are offered by the broker during the time frames that you wish to
trade them in. Alternatively, stock or commodity traders will need to make sure that
the stocks, indexes or commodities they like to trade are offered at suitable times.
Following that, you will want to see how attractive the broker’s pricing is. This can
be compared by reviewing their in-the-money and the out-of-the-money payout
percentages on comparable strike prices and option types for the particular assets
you want trade to determine which broker offers you the best payout for the best
chances of making a winning trade.
Another aspect of a binary broker's services worth looking into is what types and
quality of customer service the broker offers in case a problem arises or assistance is
required. For example, they might offer telephone support or live chat services with an
immediate response time, or they might only offer e-mail support with a longer
response time.
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If you are new to binary option trading, you might also look for a broker that offers
an array of high quality educational information about binary options, successful
trading strategies and how to use their system. This can help you increase your
chances of success while trading binary options on their platforms.
Last, but certainly not least, you will want to check what sort of deposit and withdrawal
methods the binary broker makes available to their clients, and how long it takes for
such transactions to complete. Some allow deposits and withdrawals to be made via
Moneybookers or PayPal, while others might only allow bank wire transfers. This
information can typically be found on a broker’s website or by contacting their
customer service department.
By going through this checklist before you start trading with a binary options broker,
you can increase the likelihood of getting the highest quality and most appropriate
service possible from the broker you eventually select. To verify your choice, the best
next step is to open up a free demo account and test the broker you want to trade
with.

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COMPARING TRADING PLATFORMS

Each binary option broker has its own trading platform, although most of them
have been developed in similar ways, perhaps even by the same companies. The
most commonly used online binary option trading platforms are:
• SpotOption used by Banc de Binary and TradeRush

• Tradologic used by OptionBit
• TechFinancials Used by 24Option and OptionFair
• MarketsPulse used by Opteck and GCM Binary
• TradeSmarter used by TradeSmarter and StartOptions
Some binary option brokers also have their own trading platforms, such as Bet on
Markets or EZ Trader. You can typically open a demo account with a binary option
broker to test its trading platform.
Each platform varies in functionality and design, although their main purpose is to
allow the real time purchase and sale of different kinds of binary options on wide
variety of underlying assets. Some platforms also include an option builder, where you
can select custom option parameters, while others do not, so be sure to check for this
feature if you think it will be useful.
If you have never used a binary option platform before, you will also want to check out
the documentation that the broker provides for its platform to make sure that it is
sufficiently well written and informative to allow you to get started.
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Another helpful feature for those who wish to execute binary option trades and
monitor an account while away from their office or home base is mobile trading.
Binary option brokers are increasingly offering mobile trading solutions for such
traders.
Citrades.com is one such broker, and their free mobile trading application is available
both for the iPhone and the iPad through the Apple App Store. The mobile trading
controls are a straightforward and streamlined version of its online platform. You can
also use the mobile platform to deposit funds or view live charts.
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CHOOSING THE BEST BROKER BONUS OFFERS

Due to the competitiveness of the options market, most binary option brokers offer
incentives to get your business and entice you to open an account with them. In
doing so, the brokers hope that their bonus offers can make the difference between
potential clients opening an account with them or with some other broker instead.
A binary option trader can typically earn a bonus either by opening a new account
and funding it with real money, or by referring a friend to the broker who opens a real
money account. Most traders would qualify for the first type of bonus once they have
finished their demo trading phase.
The exact bonus amount offered will depend on the binary options broker you choose.
Different brokers have different amounts, including some that offer no bonus at all.
The amount of the bonus can also depend on how much you deposit initially and what
level of account you qualify to open.
As a rough ballpark, if you trade binary options with a smaller-sized account, you
could receive anywhere from $50 to $100 as an account opening bonus. Higher
deposit levels tend to pay out higher bonuses, with some bonuses totaling as much
as $1,500.
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One caveat is that most brokers have specific requirements for the bonuses they offer
to avoid abuse. For example, before you can withdraw a bonus, many brokers require
that you make a certain number or volume of trades.
This helps them ensure that you are an actual trader, and not just someone looking
to make a fast buck from a bonus. Most such requirements are very reasonable, but it
always pays to read the fine print when shopping for options brokers based on the
bonuses they offer.
Basically, a binary options trader can receive bonus money just by opening an
account with an online broker and fulfilling all requirements that their broker specifies
for the particular bonus offer. Such bonus offers help make binary options trading
even more affordable, attractive and accessible to new and experienced traders alike.

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Chapter Three
GETTING STARTED TRADING BINARY OPTIONS
OPENING A FREE DEMO ACCOUNT
Since most novice binary options traders make mistakes during their first trades, they
could typically benefit from practicing binary options trading using a free demo
account before moving into a live trading environment.
Trading without investing real money will let you develop confidence as you practice
taking risks, and it will also show you how successful you are likely to be trading
binary options.

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Nevertheless, not all of the top binary options brokers provide free demo accounts, so
you can visit Citrades.com to read reviews about the brokers that do offer demo
accounts
Once you have found the right broker to open a demo account with based on your
particular needs, you will be able to practice trading in real time with virtual money
using the broker’s trading platform.
A demo account allows individuals to practice as much as they need to before

investing real money. Some advantages of using a binary options demo account
include:
• Developing a trade plan by using technical and/or fundamental analysis to formulate
trading strategies.
• Testing trading strategies over time to see if they show consistent success
• Practicing trading and taking risk in a demo account to learn how to trade in a live
account.
• Learning how to use the broker’s trading platform to avoid mistakes when trading
with real funds.
• Building confidence in you trading skills, your trade plan and your broker.
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Nevertheless, some differences do exist between real and demo binary option trading
that are important to keep in mind. These include:
• The ability to determine how you handle the risk of actually losing money is lacking
with demo trading.
• Demo trading pricing and execution may differ from what is experienced when
trading live.
• People tend to take greater risks with virtual money than with real money, which can
affect observed returns.
• Past performance trading in a demo account may not reflect future performance
trading in a live account.
With those caveats noted, the use of a binary options practice account can improve
your success rate considerably once you decide to graduate to a live trading
environment.
Significant profits are being made by traders that can practice, create strategies, build
confidence, and then invest real money in binary options that they choose based
upon their own market research and analysis.
Basically, if you want to make profits trading binary options online, it makes sense
to start practicing using a free demo account as soon as possible.

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OPENING A LIVE TRADING ACCOUNT

Once you feel sufficiently confident to start using real money to trade binary
options, you will have to follow a more formal registration process to set up a live
trading account and transfer funds to it. The set up procedure should only take a
few minutes, and typically involves completing an online form.
You will need to fill in all form fields required by your broker, which typically
include your legal name and addresses, as well as details about the bank account
that you want funds to be transferred to and from. You will also need to accept all of
the legal terms and conditions required to use the broker’s website.
At that point, you should be sent a validation e-mail. Your registration on the website
will generally only be confirmed once you have clicked on the activation link located in
that validation email. The live account set up process should as easy as that, but if it
is not, then you might consider opening an account with a different broker.
The next step involves funding your live trading account. Most brokers will accept
wire transfers from your bank account, although some might accept credit and debit
card transfers or PayPal and Moneybookers transfers.
Once your account is properly registered and funded, you can then start making
binary option transactions in a live trading environment.
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EXECUTING A BINARY OPTION TRADE

Online binary option brokers have made executing a binary option transaction as easy
as visiting a website, logging into your account, making a few clicks with your mouse
and entering an amount to select the option you wish to purchase.
The specific steps involved in the option selection process typically go something like
this:
1. Select an Underlying Asset - You need to choose which financial asset you feel
comfortable speculating on from among the numerous choices provided by your
broker.
2. Speculate on the Underlying Asset's Future Value – Choose a direction that you
predict the underlying asset's value will move in the near future. Remember to
perform all of the necessary analysis and research to determine which direction the
underlying asset’s price or exchange rate is most likely to move in.
3. Pick a Binary Option Type - Most brokers offer a selection of binary option
types, such as up/down, one touch/no touch and in/out boundary binaries. Choose
the type of binary that most accurately reflects your market view.
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4. Choose an Expiry Time - Decide when you would like the binary option’s active
period to end. This period can vary from 60 seconds to a few weeks for the binaries
available at most online brokers. Buying longer term binaries is typically more
expensive, except for no touch and in boundary binary options, since the chances of
them ending up in the money are greater.
5. Decide How Much You Want to Pay - Determine how much premium you feel
comfortable investing in the binary option based on the underlying asset’s value, the
time until expiration, and the option's payout amount. In general, the more money you
invest up front, the more you risk, but the more you can potentially earn if the option
ends up in-the-money.
6. Execute Your Trade – Once the above binary option details have been entered,
you typically just have to hit the execute button to actually enter into your desired
binary option position.
Once you have executed your binary option trade, you will then want to monitor the
underlying asset’s value to see if your option finishes up in-the-money by expiration.
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If the option ends up in-the-money, your trade will be profitable, with your gain
equal to the option’s payout less the premium you paid for it. If it does not, your loss
will be equal to the premium paid, although if your binary option is close to being in-
the-money, it might be beneficial to use the roll over feature, when available, to extend
the expiry time of the option for an additional fee.
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Chapter Four
RESOURCES AND STRATEGIES FOR SUCCESS

Now that you know what binary options are, how they work and how to transact them,
you next need to learn how to be successful trading them.
As one might expect, this represents the considerably more challenging aspect of
binary options trading, and many traders admittedly never master this crucial element.
Successful traders typically research and analyze market conditions thoroughly in

order to make sound strategic trading decisions based on their resulting market view.
Furthermore, successful traders tend to be disciplined about their trading practices,

especially in terms of money and risk management, and they usually take the time to
develop an objective trading plan that has a good success rate over time when it
comes to generating profitable trades.
Since the risk on a binary option position is always limited to the premium paid out
initially, this makes them a particular useful product for traders who might have
experienced discipline problems in the past and have let losses run too far into the
red.
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The following sections will discuss how to go about formulating a market view and
developing a trading plan that will greatly enhance your chances of success as a
binary options trader.
FORMING A MARKET VIEW

The first step to trading binary options successfully involves having access to the
market research and analysis tools that will allow you to formulate a market outlook or
view for the underlying asset that has a good chance of being correct in future.
If you are already trading the underlying market, then you probably already know how
to develop a market view. If not, then you will want to take some time to develop your
fundamental and technical analysis and research skills to supplement any additional
market research you feel is warranted.
Some traders rely exclusively on one form of analysis or another, although most
traders look for key aspects of each form of analysis to confirm one another.
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FUNDAMENTAL ANALYSIS
Fundamental analysis involves looking at different things for different markets, but
in general, it attempts to project market movements based on known facts, news and
supply and demand conditions that way influence a market’s future price.
When fundamental data indicates that supply of an asset may be contracting or

demand rising, the price tends to rise, while an increase in supply or reduction in
demand will tend to lower the market price.
This form of analysis is especially useful for explaining why markets move, and most
market commentaries and news articles focus on the fundamental factors behind
significant market movements.
Fundamental information about a specific market can be obtained by reading trade

journals or by performing focused research on the Internet. If you do decide to use the
Internet, you will want to make sure that any sources you take into account are of a
high quality and are written by someone with considerable expertise in the field, and
not an amateur posing as an expert.
For example, some of the more reliable and well respected resources for financial
news, which also have excellent websites, are: the Financial Times, Bloomberg, CNN
Money, the Wall Street Journal, Reuters, The Economist and Barron’s. Yahoo and
Google Finace are up and coming financial sites, and many stock brokers, such as E-
Trade, will offer good qualify financial news.
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In addition to these public websites, binary options brokers often provide their
customers with useful additional data, graphs and news about markets. Some brokers
even insert a news tab inside their trading platform. This facilitates real time binary
options trading and could save you time or make you money when trading. In
addition, many traders also look at the fundamental economic data released regularly
by government agencies and other official or reputable sources to identify trends in
supply and demand within a market. This information can be obtained from the
economic calendars available at numerous websites.

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Such economic data can also induce significant volatility in an affected underlying
asset market when it is released, especially if the result differs substantially from the
consensus of market analysts’ expectations, so it can pay to know what data is being
released and when.
Remember that staying aware of financial news can only help you in your quest for
success as a binary options trader.
TECHNICAL ANALYSIS
In contrast to fundamental analysis, technical analysis typically involves looking at the
price action of the underlying asset for classic chart patterns, trends or waves, as well
as for key support and resistance levels where the market has reversed substantially
in the past.
In summary, the basic tenets of technical analysis are that:
1. The market price already incorporates, or discounts, all of the fundamental

information that is already known.
2. Prices tend to move in trends.
3. History tends to repeat itself.
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Using these principles and applying them to price charts allows a trader to quickly
obtain a visual image of what a market has done in the past, as well as to identify
what trends are in the process of evolving over time, in order to efficiently and
relatively accurately predict future price movements.
In addition to the price action itself, many technical analysts also review market
observables like volume and open interest figures for confirmation purposes.
Furthermore, they might compute technical indicators like Moving Averages, Bollinger
Bands and the Relative Strength Index, which can provide additional useful
information about the observed price action, such as its average level, volatility or
momentum.
Most quality financial websites provide price charts that a trader can use to carry
out basic types of technical analysis for stocks, commodities, currencies, indexes and
other tradable underlying assets.
Some websites also offer interactive charts that permit traders to draw trend lines
and add indicators, although more advanced forms of technical analysis are usually
performed using specialized software that requires historical price and volume data.
Forex traders wishing to perform technical analysis are particularly fortunate since
they can use the relatively sophisticated MetaTrader technical analysis and trading
platform software. That program is currently available for download at no charge from
its developer’s website, and it automatically downloads historical data for a variety of
currency pairs.
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DEVELOPING A BINARY OPTION TRADING PLAN

Once you have learned how to analyze a market to formulate a view, you will probably
next want to take some time to develop a binary option trading plan. At this stage, it
pays to remember that even a trader with a very good trading plan in theory can lose
money in practice if they fail to cultivate the discipline needed to stick to it.
Ideally, a trading plan will be as objective as possible, since subjectivity will often
allow your emotional responses to start to rule your trading activities, leading to
potentially disastrous results.
BINARY OPTIONS STRATEGIES

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COMPONENTS OF A BINARY OPTION TRADING PLAN
A binary option trading plan can be as simple as putting together a series of analytical
steps or conditions that you intend to use to determine in which direction to enter the
market. Many traders use one or more technical indicators to provide them with
directional signals.
You will then need to specify how you will figure out what type and size of binary
option position you can afford to purchase given your portfolio size and risk tolerance.
Since the risk on long binary option positions is limited to their initial cost, and the
profits are limited to their payout, you do not have to worry about placing stop loss or
take profit orders in the market.
INCLUDING SPECIAL BROKER FEATURES IN YOUR TRADING PLAN
Some traders who use brokers that support binary option rollovers might also like to
incorporate that feature into their trading plan in order to avoid having one of their
binaries end up just out of the money at expiry.
Furthermore, if close outs are permitted by your broker, you might also want to include
conditions in your trading plan under which you would consider closing out profitable
binary options positions.
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This is close out strategy can be especially helpful when it seems like a market might
retrace to make a currently in-the-money binary become out-of-the-money by the
option’s expiration.
BINARY OPTION TRADING STRATEGIES Binary

option trading strategies are often quite similar to vanilla option trading strategies,
although the unique payoff profiles and characteristics of binaries make for some
additional enhancements when used by savvy option traders.
Also, most binary option brokers only permit clients to purchase binary options, so the
typical short option and option spread strategies are not available to most retail
traders.
Of course, you need to take the time to develop a market view before investing your
capital in buying a binary option appropriate for that view. Some of the more popular
binary option trading strategies appropriate for bullish, neutral and bearish market
views are discussed in further detail below and examples are provided for illustration
purposes.
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BASIC BULLISH BINARY OPTION STRATEGIES

A bullish binary option strategy is typically employed when a trader believes that The
market price of the underlying asset will rise. The classic bullish binary option
strategy involves purchasing an up binary option, which is analogous to a vanilla call
option.
Furthermore, if their broker permits them to trade one touch binaries, the trader will
also need to decide whether they want to pay more upfront premium to purchase a
binary with the one touch feature to help them eliminate some of the timing risk
involved in making the trade.
Also, if they decide to buy a simple up binary option and the market rises above the
strike price to send the position into the money, the trader might want to close the
position out early if they are concerned about the market retracing back below the
strike price by expiration.
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Example 1
BULLISH TRADING
Consider the case of a trader that decides to purchase an Up binary option on gold
expiring in one week’s time for $1,000 in premium that has a prospective payout of
$1,800.
They have chosen this option because they expect that the price of gold will rise over
the coming week to end up above the strike price specified by the broker by
expiration. If the option is a One Touch Up binary, then the market would only have to
trade above the strike price at any time prior to expiration to trigger a payout.
If the market ends up above the quoted strike price at expiration, then the option will
be in-the-money, and the trader will receive $1,800 at the time of expiration.
This means that their net profit on the trade would be $1,800 less than $1,000 they
paid, or $800.
Alternatively, if the trader’s view is incorrect and the market ends up below the strike
price at expiration, or fails to trade above it for a one touch binary, the trader’s losses
will equal the $1,000 premium initially paid.
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BASIC NEUTRAL BINARY OPTION STRATEGIES
Binary option traders can choose between two neutral binary option strategies.
Neutral binary option strategies do not typically include a directional bias, although
some might incorporate a market view that is skewed either upwards or downwards
relative to the current market.
For example, if a trader thinks that the market will stay within a particular range by
expiration, then they can purchase an In Boundary binary option with strike prices
placed at or just outside the expected trading range. They will then receive a payout
market actually ends up between the strike prices by expiration.
Alternatively, if they think that the underlying market will move outside a particular
range by expiration, then they can purchase an Out Boundary binary option with strike
prices placed at or just inside the range that the market is expected to break out of.
The trader will receive a payout if the market actually ends up outside the range
defined by the two strike prices by expiration.

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Example 2
NEUTRAL TRADING
Consider the case of a trader that decides to purchase an In Boundary binary option
on Google expiring in one hour’s time for $1,000 in premium that has a prospective
payout of $1,800.
They have chosen this option because they expect that Google’s stock price will be
stable over the next hour and will remain between the two strike prices specified by.
the broker or will at least end up within that range by expiration.
If the market ends up inside the quoted range at expiration, then the option will
Be in-the-money and the trader will receive $1,800 less than the $1,000 they paid, or
$800.
Alternatively, if the trader’s view is incorrect and the market ends up outside the
anticipated range, the trader’s losses will equal the premium paid.
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BASIC BEARISH BINARY OPTION STRATEGIES

A bearish binary option strategy is typically employed when a trader believes that
the market price of the underlying asset will decline. The classic bearish binary
option strategy involves purchasing a Down binary option, which is analogous to a
vanilla put option.
Furthermore, if their broker permits them to trade one touch binaries, the trader will
also need to decide whether they want to pay more upfront premium to purchase a
binary with the one touch feature to help them eliminate some of the timing risk
involved in the trade.
Also, if they decide to buy a simple down binary option and the market falls below the
strike price to send the position into the money, the trader might want to close the
position out early if they are concerned about the market retracing back above the
strike price by expiration.
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Example 3
BEARISH TRADING
Consider the case of a trader that decides to purchase a Down binary option on EUR/
USD expiring in one month’s time for $1,000 in premium that has a prospective
payout of $1,800.
The trader has chosen this option because they expect that the EUR/USD
exchange rate will fall over the coming month to end up below the strike price
specific by the broker by expiration. If the option is One Touch Down binary
then the market would only have to trade below the strike price at any time prior to
expiration to trigger a payout.
If the market ends up below the quoted strike price at expiration, or trades below it for
a One Touch Down binary, then the option will be in-the-money, and the trader will
receive $1,800 at the time of expiration. This means that their net profit on the trade
would be $1,800 less the $1,000 they paid, or $800.
Alternatively, if the trader’s view is incorrect and the market ends up above the strike
price at expiration, or fails to trade below it for a One Touch Down binary, then the
trader’s losses will equal the $1,000 premium initially paid.
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MORE COMPLEX BINARY OPTION TRADING STRATEGIES
Those traders who are already familiar with more complex vanilla option trading
strategies might well be wondering at this stage whether these strategies can also be
implemented effectively using binary options. The short answer is that depends.
Basically, a large part of the limitations involved in doing so will depend on whether
you can sell binary options via broker. This is due to the fact that many of the more
complicated vanilla option strategies involve selling options, either as naked short
option positions or as part of a spread trade that involves both selling and buying
options. Fortunately, the downside risk from selling a binary option is limited
compared to the potentially unlimited risk from selling a vanilla option, so that makes it
easier for a broker to assess the maximum risk on the position.
As described above, binary option traders can readily buy up or down binaries
that are analogous to purchased vanilla calls or puts. They can also purchase binary.
straddles – which would involve simultaneously buying up and down binaries at the
same strike price and expiration. Nevertheless, one touch binary straddles do not
make sense because at least one leg will be immediately touched.
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Furthermore, binary strangles — which involve buying both up and down binaries
at different strike prices that are both set out of the money- can also purchased from
binary brokers and structured as a market neutral strategy. The short binary
version of this strategy also has the advantage of limited downside risk, while the
vanilla version has a theoretically unlimited downside exposure.
The guts strangle, which involves purchasing both an in the money call and in the
money put option with the sme expiration, has the same profit and loss profile as the
regular strangle. Accordingly, a long guts strangle offers little advantage to a
strategic trader since it just costs more money up front to enter into.
On the other hand, professional option strategists might use a short guts strangle to
take in the high initial premium until expiration, when it has to be repaid, as a form
of funding. Retail binary option traders may have difficulty finding an online binary
options broker that will allow them to do this.
If your binary broker does happen to support economical spread strategies, then you
might be interested in the binary version of the various vanilla option spread
strategies. For example, the binary equivalent of a vertical call spread would consist
of a purchased up binary and sold up binary with different strike prices, but the
same expiration and underlying asset. A vertical put spread implemented with
binaries would involve buying one down binary and selling a different down binary
again with the same expiry date.
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Horizontal binary option spreads would involve buying an up (or down) binary for one
expiration date and simultaneously selling an up (or down) binary for another date
with the same strike price. Diagonal spreads involve spreading up or down binaries
with different strikes and expiry dates.
A long butterfly is a neutral spread strategy that consists of a purchased straddle

and a sold strangle, while a long condor spread involves buying a near the money
strangle and selling a further out of the money strangle. Each strategy can also be
implemented using just up or just down binaries due to the conversion relationship
between them.
Nevertheless, some of the classic spread option strategies just do not work that well
for binaries, and online binary option brokers may not support them for an Economical
price. This is especially true of up and down binary option spreads, as well as the
relatively neutral butterfly and condor option strategies, since their profit and loss
profiles are very sensitive to dealing spreads, which tend to be wider for binaries for
vanilla options binaries than for vanilla options.
Risk reversals are directional binary option strategies that consist of spreading an up
binary against a down binary, usually with both options struck out of the money to
a similar degree around the prevailing market price. The sale of one option typically
finances the purchase of the other. A trader that buys the up binary and sells the
down binary is considered to be long the risk reversal and takes a bullish view on the
underlying market.
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A reversal strategy is a market neutral arbitrage that involves selling the underlying
asset, buying a vanilla call and selling a vanilla put with the same strike price and
expiration date. A similar strategy for binaries would not be a low risk arbitrage since
their payout of binaries is limited, while the risk on the underlying is not, and
it might also involve a significant spread.
The opposite strategy- where the trader buys the underlying assets, sells the call and
buys the put – is called a conversion, and it would suffer fro the same issues as the
reversal when structured using binary options.
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SIX EXPERT BINARY OPTION TRADING TIPS
Even though binary options are a relatively new financial product compared with
more traditional vanilla options, binary option traders today can still enjoy the . benefit
of tips from more experienced traders gained from their years of practice
trading binary options.
The sections below contain six key binary option tips that you can use to improve your
chances of trading binaries profitably.
TIP #1:! TAKE ADVANTAGE OF BROKER BONUS OFFERS
Due to the competitive nature of the binary options market, many binary option
brokers offer substantial account start up bonuses to attract new clients. This
presents an immediate opportunity to improve your trading account’s balance, which
you should certainly take full advantage of.
You can usually choose among a variety of reputable brokers that offer bonuses that
will help you maximize your investment return on your first deposit of funds to
purchase binaries with.
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Also, some brokers have certain conditions under which an account opening bonus
will eventually be credited to you, so make yourself aware of these and remember to
keep to them if you want to retain the bonus.
TIP #2 :!PRACTICE MAKES PERFECT

One of the best binary option trading tips is to experiment and practice using this
unique financial product, since most would-be professional traders start by making
hypothetical paper trades.
Fortunately, if you have a relatively recent computer connected to the Internet, then
you can probably open up a practice binary options account and start trading with
virtual money since some online binary option brokers offer demo trading facilities to
their prospective clients.
You can use these practice accounts to hone your trading skills and develop a
successful trading plan. Also, since most brokers offer multiple underlying asset
classes, such as stocks, commodities, and currency pairs, you can explore which
assets work best for your trading style using practice accounts.
TIP #3:! KNOW YOUR UNDERLYING ASSET

Trading binary options involves taking risk related to price changes in an underlying
asset, and one way to mitigate that risk and improve your chances of success is to
understand your underlying asset.
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In essence, trading binaries successfully is not just a numbers game, and you should
avoid random gambling if you want to show consistent profits over time.
Improving your fundamental and technical analysis skills and developing your market
knowledge will go a long way toward furthering your success as a trader.
For example, you need to understand what events or conditions tend to move prices
in a particular asset and in which direction. If you trade binary options on stocks, you
need to be aware of the factors that make a company’s stock price shift and to look at
historical price trends and levels.
If you prefer to trade currencies, then you need to follow the major economic events
that primarily move the forex market, like central bank monetary policy
announcements and national economic data.
Commodities are typically affected by factors that affect their supply and demand.
These might include mining production estimates for precious and weather
forecasts for agricultural commodities.
TIP #4:! LEARN BINARY OPTIONS TRADING STRATEGIES

You also need to understand how each type of binary option works and when they are
Appropriate to use, as well as whether your broker offers any special features such as
rollovers or close outs that can help you improve your trading profitability further.
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Reading material like this manual and your broker’s description of each binary
option product they offer will help you better understand how these derivatives work
and how they can be a beneficial addition to your trading arsenal.
TIP #5:! GET YOUR VIEW RIGHT AND PROFITS WILL FOLLOW
Trading binary options successfully usually involves developing a market view and
then knowing how to express it by purchasing the appropriate binary option.
The good news is that if you can use preferred analysis methodology to call the
underlying market’s direction correctly more often than not, then you can probably
and learn to profit consistently from trading binary options.
Focus your attention on calling the market’s direction, and then implement a suitable
binary option strategy based on the strategy suggestions described in the preceding
sections.
TIP #6: FOLLOW TRENDS BUT BEWARE OVEREXTENDED

MARKETS
Trading binary options well usually involves knowing when to buy them near the start
of an extended market trend and when to avoid them because a move is overdone
and due for a retracement.
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Trend directions can be assessed using important trend indicators like moving
averages, and the MACD technical indicator can help identify important trend
reversals that can help you establish profitable binary option positions at the start of
a market move.
Overbought and oversold markets can be identified with the Relative Strength
Index, where levels above 70 are considered overbought and below 30 oversold.
Waning market momentum or divergence is typically signaled when the price hits a
new extreme level but this indicator fails to do so.
Indicators like these can help you get a feel for the momentum of a particular market.
Basically, if a market has been moving in one direction over a long period of time, it
may be due for a correction. Rather than purchasing a trend following binary option in
this case, you might consider purchasing a binary option profit from a correction
instead.
WANT TO TRADE LIKE A PROFESSIONAL?

Receive binary options signals from the experienced, reliable sources.
Click here for more information:! http://wwww.Citrades.com
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OTHER RESOURCES AND CONCLUSION

Binary options are one of the simplest types of derivative products, and purchased
binaries provide traders with limited losses in return for limited profits in their
market view turns out to be correct at the option’s expiration.
Should you be interested in pursuing this topic further, additional information on binary
options and online binary brokers can be obtained from trusted independent Internet
sites dedicated to the subject like Citrades.com
Most online binary brokers also offer educational information about binary options, as
well as product specifications for the binaries that they offer to clients.
Basically, if you take the time to learn about binary options and your chosen
underlying assets, as well as how to develop a good market view and implement a
Consistently profitable trading plan that incorporates binaries, then you will be well
on your way to becoming a successful binary options trader.
We wish you well on your journey!
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What are binary options?

What are binary options?

What are the benefits of binary options trading?

What are the benefits of binary options trading?

BINARY OPTION

Originally developed and used by professional option traders at major financial

AN INTRODUCTION TO BINARY OPTIONS

WHAT IS A BINARY OPTION?

In contrast to a traditional option’s payout, which varies depending on how much

To assist you in relating trading binary options to a more mundane experience,

MYSTERY CAR ANALOGY

OUTCOME #1:THE CAR RUNS

This is analogous to a purchased binary options ending up in the money by its

OUTCOME #2:THE CAR DOES NOT RUN

ANALOGOUS PRICING CONSIDERATIONS

BINARY OPTIONS MAKES TRADING EASIER

WHO TRADES BINARY OPTIONS?

WHEN ARE BINARY OPTIONS TRADED?

WHEN DO BINARY OPTIONS PAYOUT?

HOW ARE BINARY OPTIONS USED?

GLOSSARY OF KEY BINARY OPTIONS TERMS

Over-the-Counter or OTC: Describes financial products transacted between two

Premium or Investment Amount: The stake, cost or amount of money invested up

Turnover: A term usually employed in reference to the number or volume of contracts

HOW BINARY OPTIONS WORK

TYPES OF BINARY OPTIONS

UP OR ABOVE BINARY OPTIONS

EXCLUSIVE OFFERS & BONUSES

DOWN OR BELOW BINARY OPTIONS

IN OR INSIDE BOUNDARY,RANGE OR ZONE BINARY OPTIONS

BINARY OPTION DEMO ACCOUNT

WHO TRADES BINARY OPTIONS?

OUT OR OUTSIDE BOUNDARY, RANGE OR

BINARY OPTION DEMO ACCOUNT

TOUCH OR ONE TOUCH BINARY OPTIONS

BINARY OPTION DEMO ACCOUNT

HIGH YIELD TOUCH OR ONE TOUCH BINARY OPTIONS

BINARY OPTION DEMO ACCOUNT

NO TOUCH BINARY OPTIONS

BINARY OPTION DEMO ACCOUNT

ADDITIONAL BINARY OPTION FEATURES AND TOOLS

A quick introduction to each of these features and tools follows.

THE CLOSE OUT FEATURE

While a substantial retracement could eliminate your return on a profitable binary

THE ROLL OVER OR EXTEND FEATURE

OPTION BUILDER TOOLS

WHAT ARE THE AVAILABLE UNDERLYING ASSETS?

SOFT AND LIVESTOCK COMMODITIES

FOREX CURRENCY PAIRS

EUR/USD - The EU’s Euro versus the U.S. Dollar.

EUR/JPY - The EU’s Euro versus the Japanese Yen.

BINARY OPTION DEMO ACCOUNT

STOCK INDEXES OR INDICES

EXCLUSIVE OFFERS & BONUSES

BP Group plc. – London based BP Group provides petroleum products for

Vodafone - London based Vodafone is the world’s largest mobile telecommunication

Telefónica, S.A. - A Spanish based broadband and telecommunications provider

BINARY OPTIONS BROKERS

WHAT IS A BINARY OPTIONS BROKER?