Binary Options Pros and Cons

Best Binary Options Brokers 2020:
  • Binarium
    Binarium

    The Best Binary Options Broker 2020!
    Perfect For Beginners and Middle-Leveled Traders!
    Free Demo Account!
    Free Trading Education!
    Get Your Sign-Up Bonus Now!

  • Binomo
    Binomo

    Good Broker For Experienced Traders!

Platform Analysis: Pros and Cons of IQ Option’s Autoclose Feature

Knowing when to take profits isn’t always easy. Technical targets are one method, the autoclose feature is another but both come with risks that can cost you money.

Profit targets or autoclose, you be the judge

Knowing when to take profits isn’t always easy. Technical targets are one method, using an autoclose feature like the one at IQ Option is another. Both methods seek to lock in and maximize profits, but both come with risks. On the one hand a technical target may not be reached, or it may be exceeded, and on the other an autoclose may trigger well before a move is done costing you percentage points of unrealized gains.

Technical Targets – Technical targets are price levels on the charts at which prices can be expected to halt or reverse, or price levels a move is projected to reach based on past price movement. What I can say for these targets is that, over the 12+ years I have been trading and chart watching I’ve seen these targets hit time and time again.

Example of a technical target on the EUR/USD price chart

The only downside is that the time it takes for prices to reach those targets and what happens after they are reached is uncertain at best. This means that successful traders will have to sit and wait, watching for prices to reach their projected levels and decide; do I sell, or do I wait. If you sell you lock in profits and if you wait, you gamble on keeping what you have already worked hard to earn.

The Autoclose Feature – Autoclose is one of the most useful tools of the successful trader. It’s most important function is as a stop-loss. By setting the autoclose to sell out at a loss of 10%, 20% or 30% traders can protect their capital and live to trade again another day. Without it traders risk losing 100% of their trades as they watch prices move in the wrong direction and wrestle with the decision to close out. What many traders do not realize is that the IQ Option autoclose has two settings; the first is for stop-loss, the second is for taking profits.

Pros and Cons

  • Pros of Autoclose – When a trader sets the take-profits to close a trade they are taking all emotion out of the decision. When profits reach a satisfactory amount, the trade is closed no questions asked. This means they don’t have to sit by and watch the trade freeing them up to do other things. Another pro is that it only takes one touch of the target level for the trade to trigger. This means that if prices are volatile and only reach the target level for a brief period the trade will close.
  • Cons of Autoclose – When it comes to auto closure there is only one drawback, it can cost you money. I know that as many times as I’ve seen my profit targets reached I’ve seen them exceeded. This means that potential profits are often far greater than what I think is reasonable to expect. Setting the take-profit may guarantee a portion of the profit but it could cut you off from maximum profits.

How to use the autoclose feature

Using the autoclose feature is very simple. All you must do is set it to the percent of your capital that you want to protect in the event of loss or lock-in in the event of gains. A good rule of thumb for the stop-loss is 3% of the total account. If your total account is $10,000 then 3% of your account is $300 so set the stop-loss on every trade so you lose no more than $300. I like to set it so that my 3% of account is equal to about 30% of the trade. This means, in a $10,000 account, trades of $1000 are acceptable because you will only be losing $300 if it should fail.

Taking profits is a little more difficult but only because you want to lock in the most profits you can. I set my initial profit target at 50%. This means that if the trade should move up quickly and hit 50% I make $500 (assuming the $10,000 account balance). If prices begin to move in my direction but don’t hit my take-profit I then begin to adjust based on market conditions. The first thing to do it too slow raise the stop-loss to lock in more of your capital as the trade moves in your favor. The next thing to do is asses the technical targets for profit and the likelihood they will be reached; if necessary raise the take-profit limit to suit.

NOTE: This article is not an investment advice. Any references to historical price movements or levels is informational and based on external analysis and we do not warranty that any such movements or levels are likely to reoccur in the future.
In accordance with European Securities and Markets Authority’s (ESMA) requirements, binary and digital options trading is only available to clients categorized as professional clients.

GENERAL RISK WARNING

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage.
87% of retail investor accounts lose money when trading CFDs with this provider.
You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

Best Binary Options Brokers 2020:
  • Binarium
    Binarium

    The Best Binary Options Broker 2020!
    Perfect For Beginners and Middle-Leveled Traders!
    Free Demo Account!
    Free Trading Education!
    Get Your Sign-Up Bonus Now!

  • Binomo
    Binomo

    Good Broker For Experienced Traders!

7 Binary Options

Binary options trading software is a great way to boost your trading advantage. However, you need to be aware that not all of the automated signal providers that are advertised on the internet are reliable. Some of them are even downright scams. It is important to make sure that you are investing your money with a legitimate trading system.

Binary Options Pro Signals is one of these automated trading robots that claim it can earn you thousands of dollars in just sixty scones. Can this trading system be trusted or is it in fact just another scam system? Read our Binary Options Pro Signals review to find out the truth.

Basic information:

Cost: Free
Software: 100% Automated
Max Returns: Up to 88%
Minimum Deposit: $250
Countries: All nations

  • Website is easy to navigate
  • Binary Options Pro Signals software is 100% automated
  • $14 charge for 14-day trial
  • $97 monthly service fee
  • Customer service is subpar and unresponsive
  • Customers have complained that they were not given the promised 60-day money back guarantee.

7BO Verdict:

Not Reliable Service

What Is Binary Options Pro Signals?

Binary Options Pro Signals is a fully automated trading system that claims it can accurately predict trading signals and earn users thousands of dollars within just minutes of activating their account. There is a 14-day trial offered for this system, however, you will be charged $14. After this time, should you continue to use the service, you will be charged $97 a month.

Binary Options Pro Signals boasts that it has the largest variety of trading assets available for traders and even offers a 60-day money back guarantee if you are not completely satisfied.

Okay, first of all, we feel that the $14 charge for the “trial” period is a bit much. There are plenty of other signal providers out there that offer free trials, as well as free demo accounts. Secondly, the month charge is also a bit exuberant. And as far as the 60-day money back guarantee, we read far too many complaints from traders that said they put in a request for their money back guaranteed and are still awaiting a response from Binary Options Pro Signals customer support.

How Does It Work?

Once you make your initial standard deposit of $250 and create an account with one of the brokers associated with Binary Options Pro Signals, as well as pay the $14 for your 2-week “trial,” you will be able to gain access to the trading software. As it is fully automated, you can set it up so it will automatically place trades on your behalf. Once you start to see a profit, you may initiate the withdrawal process.

However, we must point out that the majority of traders who have used this service have stated that they do not obtain any winnings with Binary Options Pro Signals. Others complain that they filed for the 60 Day Money Back Guarantee as they were unsatisfied with their service and never received word from customer service regarding their request. We feel that these factors render this service untrustworthy and therefore we cannot stand behind this trading software.

Conclusion: Is Binary Options Pro Signals a Scam?

As of this writing, we have no proof that Binary Options Pro Signals is, in fact, a down and out fraud, but we strongly recommend that you do not sign with this trading system. There are far more reliable trading systems available, both for manual and automated trading. The number of negative reviews and complaints we found regarding Binary Options Pro Signals lack of results and poor customer service leads us to believe that this system cannot be trusted under any circumstances.

A Guide to Trading Binary Options in the U.S.

Binary options are financial options that come with one of two payoff options: a fixed amount or nothing at all. That’s why they’re called binary options—because there is no other settlement possible. The premise behind a binary option is a simple yes or no proposition: Will an underlying asset be above a certain price at a certain time?

Traders place trades based on whether they believe the answer is yes or no, making it one of the simplest financial assets to trade. This simplicity has resulted in broad appeal among traders and newcomers to the financial markets. As simple as it may seem, traders should fully understand how binary options work, what markets and time frames they can trade with binary options, advantages, and disadvantages of these products, and which companies are legally authorized to provide binary options to U.S. residents.

Binary options traded outside the U.S. are typically structured differently than binaries available on U.S. exchanges. When considering speculating or hedging, binary options are an alternative—but only if the trader fully understands the two potential outcomes of these exotic options.

Now that you know some of the basics, read on to find out more about binary options, how they operate, and how you can trade them in the United States.

U.S. Binary Options Explained

Binary options provide a way to trade markets with capped risk and capped profit potential, based on a yes or no proposition.

Let’s take the following question as an example: Will the price of gold be above $1,250 at 1:30 p.m. today?

If you believe it will be, you buy the binary option. If you think gold will be below $1,250 at 1:30 p.m., then you sell this binary option. The price of a binary option is always between $0 and $100, and just like other financial markets, there is a bid and ask price.

The above binary may be trading at $42.50 (bid) and $44.50 (offer) at 1 p.m. If you buy the binary option right then, you will pay $44.50. If you decide to sell right then, you’ll sell at $42.50.

Let’s assume you decide to buy at $44.50. If at 1:30 p.m. the price of gold is above $1,250, your option expires and it becomes worth $100. You make a profit of $100—$44.50 = $55.50 (minus fees). This is called being in the money. But if the price of gold is below $1,250 at 1:30 p.m., the option expires at $0. Therefore you lose the $44.50 invested. This called out of the money.

The bid and offer fluctuate until the option expires. You can close your position at any time before expiry to lock in a profit or a reduce a loss, compared to letting it expire out of the money.

A Zero-Sum Game

Eventually, every option settles at $100 or $0—$100 if the binary option proposition is true and $0 if it turns out to be false. Thus, each binary option has a total value potential of $100, and it is a zero-sum game—what you make, someone else loses, and what you lose, someone else makes.

Each trader must put up the capital for their side of the trade. In the examples above, you purchased an option at $44.50, and someone sold you that option. Your maximum risk is $44.50 if the option settles at $0, and so the trade costs you $44.50. The person who sold to you has a maximum risk of $55.50 if the option settles at $100—$100 – $44.50 = $55.50.

A trader may purchase multiple contracts if desired. Here’s another example:

  • NASDAQ US Tech 100 index > $3,784 (11 a.m.).

The current bid and offer are $74.00 and $80.00, respectively. If you think the index will be above $3,784 at 11 a.m., you buy the binary option at $80, or place a bid at a lower price and hope someone sells to you at that price. If you think the index will be below $3,784 at that time, you sell at $74.00, or place an offer above that price and hope someone buys it from you.

You decide to sell at $74.00, believing the index is going to fall below $3,784 (called the strike price) by 11 a.m. And if you really like the trade, you can sell (or buy) multiple contracts.

Figure 1 shows a trade to sell five contracts (size) at $74.00. The Nadex platform automatically calculates your maximum loss and gain when you create an order, called a ticket.

Nadex Trade Ticket with Max Profit and Max Loss (Figure 1)

Binary Options – Pros & Cons

The Good & Bad Of Binaries

Trying to decide whether to trade binary options, try out spread betting, or do a more traditional type of trading in stocks, currencies, commodities, or indices? Ultimately the best type of trading is the type that fits your trading personality, but here are some binary options pros and cons to help you make your choice.

Binary Options Pros – Advantages Of Trading Options:

  • Small Budget Can Still Trade – You can trade without a big bankroll. This is unlike many stock brokerages and forex accounts that require a few grand to get started. With binary options you can open accounts with most sites for a few hundred bucks. This is perfect for many traders who are trading on the side and do not want to invest a lot. We like to say that most traders should start with a deposit of at least $500 if possible. This allows you to utilize better binary money management tactics which is crucial for long term success.
  • Low cost way to trade a lot of different underlying instruments. You can trade stocks to commodities to currencies to indices with binary options. Some brokers offer 80 or more different assets for you to choose from. Where else can you trade and profit from commodities like gold or oil for $10, or even $100. Where else can you trade stocks like apple or google for $20? You can make binary option trades for as little as $1 (where?). This enables you to have access to a wide range of markets, which means when conditions make trading impossible in one, you might find optimal conditions in another. There are many chances to find good setups.
  • Big Returns Possible Swiftly – An advantage of trading binary options is speedy returns. You can make one trade per day and make 75-90% profit if you choose. You could even trade faster expiry times and most people trade 15, 30 minute or hourly options. If you are really feeling the need for fast returns, you can even trade one minute options (https://www.bestfxbrokers.com/binary-trading/60-second-options/).
  • Trade different types of binary options. Many brokers will let you not only trade High/Low, but also do One Touch, No Touch, and Boundary trades. These all offer you different ways to profit in different situations. Boundary trades in particular provide a unique means of profiting; you can literally profit on price not moving in these trades. It’s usually challenging to make money in ranging markets, but with Boundary trades it may be easier. Brokers which offer you rollover and early closure give you even more control over your trades. Option Builder (choose your own expiry period) is also great.
  • Simple to learn and understand. You can learn the basics of how to use binary options platforms in under five minutes. This shouldn’t lure you into complacency; instead look at it as freeing up your time to learn more about how to trade intelligently and consistently using a trading method.

Binary Options Cons:
Make no mistake – you can get burned trading binary options. You should only do so responsibly and with funds you can afford to lose. It’s not all fast money and huge returns. With those returns come risk. Do not forget that.

  • Poor regulation and shady spots in history. Right now so many binary options brokers are unregulated. In other types of trading (Forex for example), regulation is the norm. This makes it more challenging to find a trustworthy broker. We have a few good starting recommendations however, and strive to only list brokers with a legit history and reputation.
  • Tighter restrictions on trade sizes for the big high rollers. Some brokers have no exposure limits, but most restrict you to investing no more than several thousand dollars at a time, which can be problematic if you have a large bankroll and want to move a lot of money.
  • Limited demo testing capabilities. Note that this doesn’t apply to every binary options broker—just the majority. If you were going to trade Forex, you’d find that many brokers give you a demo platform you can use indefinitely. Most binary options brokers seem to skip this altogether, or only provide you with a demo platform you can use for a few days or a few trades. There are a few brokers with less restrictive demo platforms however such as Banc De Binary and MarketsWorld.
  • Simple to learn and understand. Yes, this is arguably also a con. While it’s great to be able to use a trading platform in minutes, it can encourage traders to believe that they know all they need to in order to become profitable in minutes as well, which is never the case. As long as you have realistic expectations and you’re dedicated to putting time into learning what you need to, this should not be a problem for you.
Best Binary Options Brokers 2020:
  • Binarium
    Binarium

    The Best Binary Options Broker 2020!
    Perfect For Beginners and Middle-Leveled Traders!
    Free Demo Account!
    Free Trading Education!
    Get Your Sign-Up Bonus Now!

  • Binomo
    Binomo

    Good Broker For Experienced Traders!

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