<iframe src="//www.googletagmanager.com/ns.html?l=en-GB&wl=ETX&id=GTM-K79WJF" height="0" width="0" style="display:none;visibility:hidden"></iframe>

How to Trade Binary Options


Trading binary options is a relatively straightforward, alternative way of trading on indices, currencies and commodities. As the trade only requires a trader to predict which of two different possible eventualities will occur, its simplicity can be ideal for traders looking for straightforward decisions.

However, once you have decided to start binary options trading, where should you start?

Here are a few pointers:


Which assets should I trade?

With ETX Capital, you can trade on a diverse range of assets, including currencies, commodities, shares and indices.


However, although the concept of trading binary options is simple to understand, trading is certainly not a simple, risk free activity, and choosing the assets best suited to your interests may be beneficial in the long term.

Firstly, define the kinds of assets that interest you. Trading something that you can understand rather than an asset completely foreign to you may make a big difference. For example, trading shares enables you to research and attempt to capitalise on your favourite brands. On the other hand, trading indices may be more for you if you enjoy looking at the bigger picture and tracking various sectors and assets simultaneously.

It is also best not to spread yourself too thinly by trading too many unrelated assets at once. To stay focused as a trader and to try and gain a greater understanding of the markets you are trading, choose one or two assets and follow any news events and reports related to them, as well as industries that may affect their market value.


The advantage of binary trading is the simplicity of the format, making it easy for traders of any type to grasp. There are several variations of binary options, but they all share one key similarity; traders are able to choose one of two potential choices. If the trader is right then they will make a pre-specified amount of profit, while if they are incorrect they’ll lose the funds that they initially put down on the option.

How Much Capital Should I Place on a Trade?

How Much Capital Should I Place on a Trade?

Binary_Options_How_Much

How Much Capital Should I Place on a Trade?

This is often the first decision to make before entering a binary options trade. Binary options trading enables you to decide how much capital you would like to place on a trade. Remember that for any one trade it is better to put a small amount of capital relative to your account size – so that you don’t lose too much on a single trade that may lead to an account wipe-out if the market turns against you suddenly. The more capital you place on the trade, the greater the amount of profit you could potentially make, but the greater the loss you could incur.

How Do I Choose Which Position to Hold?

Binary_Options_Which_Way

How Do I Choose Which Position to Hold?

The next step is to decide whether the price of your asset is likely to increase or decrease within your defined timeframe (and, if you’re trading one-touch options, whether it will increase or decrease beyond a certain level). Take time each day to research the assets you are trading as well as industries which may affect their price. Monitoring news events in addition to company announcements and economic reports that may influence the movement of your asset can potentially help you to predict market movements with greater accuracy.

 

How Long Can I Keep a Trade Open For?

Binary_Options_How_Long

How Long Can I Keep a Trade Open For?

ETX capital offers both short term and long term binary options, so you can select the time period that is optimal for your trading style. You can take positions ranging in size from 60 seconds to an hour or a day – depending on what works best for you. Those who enjoy the thrill of shorter trades may go for 60 second to hourly options, whereas those with a longer term focus may opt for daily trades.

Traders will often have the ability to close a trade earlier than the official expiration time. Alternatively, traders will sometimes have the option of extending their trade time, keeping it open for longer.

To learn more about binary options trading strategies, take a look at our Binary Trading Strategies page.


Binary Options are not regulated by the Financial Conduct Authority

Apply for our

Apply for our