A Guide To Trading In Binary Options

There are many financial instruments you can trade online, but a few will give you peace of mind, like binary options. They are easy to trade and provide returns in a short time. Binary options are limited risk, short-term contracts. 

To trade successfully in binary options, you need to have your own strategies and plans. The process of trading in options comprises five steps. You have to earn and follow these steps to succeed as a binary options trader. The steps include:


1.     Knowing The Market Trends

Trading in binary options is a straightforward process. All you need to do is choose a strike based on how you expect the prices to move. If you think the price will increase, you can buy it. If you feel the prices will fall, you can sell. 

However, it would help if you learned how to predict market trends to know when to buy or sell to earn some cash. When you are still new to binary options trading, you may need someone to hold your hands to help you in this step. You also need to stay up-to-date with financial news, world affairs and learn how these affect financial markets. 


2.     Picking A Market To Trade

Once you’ve studied the market trends, you have to decide which market to trade. The market to choose will depend on factors such as:

l  Contract duration: That’s how long the contract will last. Markets have weekly, daily, or intraday option contracts. 

l  Choosing the perfect level: You need to find an ideal strike. This means you have to choose a market that suits your trading strategy. There are many binary option brokers accepting US clients.

l  Personal interest: Your interest also plays a role in the market(s) you’ll choose. Do you like US politics, or are you interested in the demand and supply of oil? Wherever your interest lies, that’s where you should invest. 


3.     Selecting The Expiration And A Strike Price

This is the most challenging step in trading in binary options. The contract may look simple, but the trading process itself is a little complicated. You need to have a strategy and a plan so you can predict price movements accurately. This is because if you buy at the wrong time, you might lose.


Choosing a strike boils down to two main factors: risk and probability. You have to balance the two carefully, so you can choose a strike where the outcome is likely to be positive. 

Expiration is another important factor to consider. Binary options contracts can last for between five minutes to a week. So you have to pick a market whose contract duration is favorable to you.


4.     Placing Your Trade

After picking the best strike, the next step is to place your trade. This is now a simple step. You need to pick a strike from your trading platform, click on it, and you’ll see an order ticket popping up. If you are buying, you click on “buy”, if you are selling; you click on “sell”. You can choose to place a market order or a limit order. You must also choose the number of contracts to buy or sell by filling the size box. If you are trading on a good platform, you’ll see the maximum expected loss or profit indicated. When you are ready, go ahead and place your trade.


5.     Wait For Contract Expiration

As stated earlier, contract duration varies from a few minutes to a week. Depending on the duration of your contract, you have to wait for it to expire. Trades can go either way – you can earn or lose. That’s why you need to invest only what you are ready to lose. If the markets are favorable to you, and they go as you predicted, you’ll earn big. But if the markets are going against you, you can choose to close the contract before it expires. This way, you’ll not lose the whole amount but just a fraction of it. 

Again, if the markets are favorable, you can still choose to close early to make a small but confirmed profit. 



Trading in binary options has its risks. That’s why you need to start slowly and increase your investment as you get to learn more. You also need to choose the right broker with the right tools to make it easy for you to trade. Some brokers even have educational materials and videos on their platforms.

Just like all other financial instruments, you have to approach binary trading with an open mind, knowing very well that sometimes you can make losses. You can diversify your investments so that you can gain from the other instruments even if you lose on one side.

Olivia Wilson

Olivia Wilson is a digital nomad and founder of Todays Past. She travels the world while freelancing & blogging. She has over 5 years of experience in the field with multiple awards. She enjoys pie, as should all right-thinking people.