So here we are, nearing the end of our guide and hopefully having made you a binary options genius. However, if you think somethings slipped past you, fear not! We've compiled all the questions and queries we can think of right here for you. If you've got a question we've missed, leave us a comment and we'll make sure we answer.
Frequently Asked Questions
- What Are Binary Options?
- Who Can Trade Binary Options?
- Is It Legal and Safe?
- Am I Trading Or Gambling?
- Where Do I Trade Binary Options And Who Can I Trust?
- Where Can I Practice Trading Binary Options?
- What Deposit Methods Can I Use?
- How Do I Know How Much Money I Will Win?
- How Can I Be Successful Trading Binary Options?
- Where Can I Find Good Advice to Help Me Trade Binary Options?
What Are Binary Options?
Binary Options are bets placed on whether the price of an asset will fall or rise in the future. A binary option bet would sound something like this ‘Will the price of Apple’s stock rise or fall in the next seven days?’
As you can see above, as well as predicting the rise or fall of an asset's price, binary options also involve a time frame. Time-frames can be customized to suit your trade, varying between anything from ten seconds to a whole year.
With binary options, you can trade various sorts of assets such as gold, oil, stocks and shares and currency pairs. An asset is just the financial term for a resource of economic value; this is the thing that you need to predict the price of.
The most common type of binary trade is a Up/Down trade, which can also sometimes be called a Rise/Fall trade, or a Call/Put trade. There are also various other more advanced types of trade.
Who Can Trade Binary Options?
Generally, if you're above the legal age of 18 you should be able to trade Binary Options. However, restrictions and regulations may be in place in some countries so it's always best to check this out beforehand.
You don't need to be a stockbroker or have had any sort of formal training to trade binary options, although we do recommend you give our guide a good read through before starting to trade!
Is It Legal and Safe?
Of course binary options are legal! Binary options have been legal and regulated in the UK since 2012. This means brokers must possess a certain licence and follow a strict charter imposed by the regulator. You can check out all the information about regulations here. By making sure your broker is regulated and licensed you can sleep easy knowing that binary options are safe.
Am I Trading Or Gambling?
Binary options stand on the border between the world of stock market trading and the world of gambling. Binary options and stock market trading deal with the same subject matter – assets and the market value of those assets.
Marketers of binary options like to use the word trading to create the connection to stock market trading so that binary options seems professional and appealing.
However, with binary options, you aren't trading any assets themselves, you’re just speculating about the future price of those assets. The speculative element is what makes it a gamble.
It's worth noting that the regulations for binary options in the UK could be set to change hands. The UK government is planning a consultation to decide whether binary options should be regulated by the UK Gambling Commission (UKGC) or the Financial Conduct Authority (FCA). Whilst not a lot would change to the regulation, as both are concerned with the security and ensuring fair trading, it would change the way binary options would be viewed. Passing binary options over to the FCA would mean they become seen as financial transactions instead of gambling transactions.
Where Do I Trade Binary Options And Who Can I Trust?
Binary Options are traded online using binary options brokers. Due to the increasing popularity of binary options, there are plenty of different brokers to chose from.
We've already mentioned how important checking your broker's credentials is; a broker must be regulated and licensed. This is normally a good sign of a trustworthy broker. Take a look at which brokers made our Top Ten for some excellent places to start!
Where Can I Practice Trading Binary Options?
Many binary options brokers offer free demo accounts. These accounts credit you with virtual money to trade with so that you can practice in a secure environment without real money at stake. A demo account is also useful for fine tuning strategies, or for revising your technique if you wish to start trading using a new asset.
Take a look at our video to learn how to set up a demo account, and which sites are the best place to do it.
What Deposit Methods Can I Use?
The available deposit methods can vary from broker to broker, but most brokers allow you to deposit via credit/debit card, wire transfers or using e-wallets.
- Credit Cards / Debit Cards – Nearly all brokers allow you to deposit via VISA, MasterCard and Maestro.
- Wire Transfer – Commonly, brokers will allow you to use wire transfers to deposit into an account. This also generally includes transfers made using Western Union. However, often wire transfers can take up to 5 business days in order to complete.
- E-Wallets – A lot of brokers allow money to be deposited using e-wallets, the most common of these being using Skrill/Ukash or Neteller. In order to deposit in this way, you need to have an account with the e-wallet service first.
How Do I Know How Much Money I Will Win?
Binary options are a type of bet with a fixed payout that’s predetermined. If you are correct with your prediction about the assets price direction, you’ll receive the agreed payout. If not, you’ll lose your stake but nothing more.
Payouts can range from £1 to £100 000, depending on the broker. Your payout includes the price of the option, and you can work out the profit you’ll make by subtracting the price of the option from your total payout.
How Can I Be Successful Trading Binary Options?
To be a profitable Binary Options trader there's a lot of homework and planning to be done. Reading this guide thoroughly is a good place to start.
You need to get to grips with fundamental and technical analysis. These skills help you to predict a rise or fall in an asset's price as they look at the external factors which can influence the market.
Create a solid strategy is also crucial for trading. A trading strategy means that you have a predefined plan of action when trading, so that you can trade at the right times and circumstances.
Having the right mind-set is also crucial if you want to be successful at binary options trading. This includes knowing when to step away from a trade, how to accept losses and how to manage your money. Trader psychology and trading strategies go hand-in-hand as they are both about discipline.
Where Can I Find Good Advice to Help Me Trade Binary Options?
Here! Duh! But our own genius aside, we recommend joining trader forums such as Binary Options Edge to get advice from your trading peers. Other traders' advice is more reputable than expensive guides or strategies that promise success, because other traders are likely to share negative experiences and any potential scams.
Other Articles In this Guide:
- Read Now!
- An Introduction
- Key Concepts For Beginners
- What Are Assets?
- Types of Trade
- What is Fundamental Analysis?
- Setting Up A Free Demo Account
- How To Trade Successfully
- Trading Strategies
- Top Ten Broker Sites
- Industry Regulations
- PDF Download – The Complete Guide
- Presentation: Trading Binary Options — A Step-by-Step Guide