Forex Brokers Offering Binary Options

One of the innovations of the last decade in the forex market was the development of new trading applications compatible with MT4 and MT5. One such innovation was the creation of binary options plugins for forex brokers. These plugins gave traders the ability to trade binary options on those platforms. While it is rare to see forex brokers offering binary options, it is possible, and forex brokers are offering it. The essence of this article is to showcase the forex brokers offering binary options.

Traditional Binary Options Trading vs Binary Trading with Forex Brokers

Traditional binary options trading is conducted on web-based platforms. They feature a front-end interface that allows traders to choose a preferred asset, select an expiry for the trade and set investment amounts to trade one of two available options.

Traditional binary options trading is built on a skeletal model where anything considered surplus to the trader's requirements is stripped off the platforms. This has allowed traditional prediction options providers to provide very rudimentary charts with few indicators if any. There is no facility for using expert advisors, leaving the onus of successful trading 100% on the trader's abilities and intuition, both of which must be top-notch. Even at that, using rudimentary charts does not allow for very effective analysis, making it difficult to make informed trading decisions.

So what is involved in trading with forex brokers offering binary options?

The forex broker offering binary options trading facilities has to deploy a client-side program that communicates with the MT4 and MT5 platforms without requiring .dll or executable files within the platform terminal. This allows the forex broker to offer Yes/No binary options as a different product, separate from the FX and CFD products already existent on the trading platforms. This facility allows the trader to trade binary options from the forex broker's platform, using the various tools, indicators and resources available to the FX trader and ordinarily not available on a conventional binary options platform.

What are Binary Options?

The word "binary" means "two." So binary options refer to "two options". This explains the essence of the trade contract. Two options are provided to the trader (High or Low, Yes or No) of which there can be only one correct option. This option comes with a payout of 70% to 90% for a correct answer. The entire investment is lost if the chosen option ends up wrong.

You can trade FX, commodities and indices as binary options. Binary options can be traded using various assets. Success in binary options depends on ensuring the correct direction and predicting if the asset will achieve the objectives within the trade's stipulated time.

Features of binary trading

1. Fixed payout: The payout in binary options trading is fixed. No matter how many pips the asset moves in the correct direction, the trader cannot earn more than the payout percentage.
2. Trading contracts: Binary trading is a form of CFD trading. Positions are contracts for an agreed duration and price – no physical assets exchange hands during the trading process.
3. Fixed timing: Binary trading is a time-bound activity. Every trade has a deadline. When the trade expires, the contract must be settled according to the correctness of the trader's selection. Usually, it is between 5 seconds to 365 days. The contract must be within this time frame.
4. Percentage of returns: The expected returns for binary options range from 70% to 85%.

Trading with Forex Brokers Offering Binary Options: What You Gain

What do you stand to gain when trading with forex brokers offering binary options trading?

1. You can profit in two directions by choosing a call option to benefit from rising prices or a put option to gain from falling prices.
2. You can trade different asset classes depending on which is showing better market performance. You do not have to be stuck trading an asset class with no volatility.
3. Unlike FX trading and other forms of trading, your success in a trade does not depend on the number of pips made in the correct direction. A single pip in the right direction when the trade closes is all you need. You need 70 pips of a mini-lot trade to make $70 in a forex trade. In contrast, you only need a pip in the right direction to make 70% or 80% of a $100 investment in a binary option for $70 profit.
4. Your chances of profiting in a binary options trade on forex platforms are enhanced due to the availability of various tools and resources. The resources on a binary options platform are too basic and do not offer any trading edge to the market participant.
5. There are more trading opportunities with binary options than with other forms of trading. You can use this to your advantage to make good profits if you know what you are doing.

Best Practices When Using Forex Brokers Offering Binary Options

Trading binary options requires that the trader brings into play some best practices to ensure that the trading results are profitable.

a) Proper Risk Management

Risk management is the key to surviving the vagaries of the market, especially when losses have been sustained. Remember that the profitability factor in binary options requires the trader to win two trades for every one lost, assuming the investment amount into each trade remains constant. Therefore, there is more pressure to ensure the longevity of the trading account than you would see in FX trading or other forms of trading. Do not use trading methods such as the Martingale system that aims to double or triple trade amounts to recover from losses. These methods could compound your losses and quickly take you out of the market.

b) Avoid Ultra Short Expiry Trades

If we must be truthful to ourselves, this point must be highlighted. Market behaviour (buying and selling around specific prices leading to greater demand or supply) is represented as the price action in a candlestick. There is no way to gauge market behaviour over short time frames successfully. Trying to trade very short expiry options is akin to gambling, and you may not be able to achieve sustainable results. Remember, trading is not about making one or two massive home runs but consistently making profits.

c) Use Expert Advisors and Other Tools if You Can

The advantage of using forex brokers offering binary options is that you can deploy the tools, charts and other functions such as expert advisors that are provided for you. These resources are meant to give you an edge if you know how to use them properly.

d) Stick to Assets with Fundamentals You Understand

When trading binary options, use assets whose fundamentals you understand and are at home with. This ensures you can use the news to trade appropriately.

Conclusion

Now that you have been introduced to the concept of trading binary options on forex broker platforms, the list of forex brokers offering binary options trading is presented here. Go through this list and pick the ones that will give you the best trading conditions available for your trading venture.