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BINARY OPTIONS

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Table of Contents

BINARY OPTION ................................................................................................. 2

SCAM IN BINARY OPTION ................................................................................ 2

HOW TO IDENTIFY SCAM BROKER ................................................................... 2

THINGS TO LOOK FOR BEFOR CHOSING A BROKER ....................................... 3

REASON WHY PEOPLE LOSE IN BINARY OPTION ............................................... 4

RULES THAT GUIDES A SUCCESSFULL TRADER ............................................. 4

SOME USEFUL STRATEGY TO USE WHILE TRADING .......................................... 5

REASONS FOR EDGING A TRADE .................................................................... 6

THINGS THAT MAKE THE MARKET TO REACT ................................................. 7

EMOTIONS ....................................................................................................... 8

LUCK ............................................................................................................... 8

TIME ................................................................................................................ 8

TERMINOLIGIES IN BINARY OPTION ................................................................ 9

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BINARY OPTION
What is a binary option? A binary option is a financial option in which the payoff is either fixed monetary
amount or nothing. there are differences between binary option trading and forex trading, while in binary option
the risk and profit are fixed ,in forex trading the risk and the profit are not fixed and you can lose more than you
invest but in binary option you cannot lose more than the invested amount.

TYPES OF BINARY OPTION


We have different kind of binary option but not all binary option brokers offer all the types of options.

ONE TOUCH OPTION: One touch option is a type option in which the trend line has to touch an expected
line before the expiring period to win the trade.
NO TOUCH OPTION: Unlike the other type of option NO TOUCH option is when the trend stays within
the line without touching the line till the time expires.
CALL OPTION: This is one of the most popular type of binary option in which the trend is expected to go
higher than the strike price,
PUT OPTION: This is the opposite of the CALL OPTION, in PUT OPTION the price must move down
below the strike till the expiration of the time to win the trade.
RANGE/BOUNDARY: In this type of option you will have to predict that the trend will stay within a
particular range till the expiration time. This type of option is the newest type of option and is offered by
few brokers.

SCAM IN BINARY OPTION


Just like every other financial market, binary option also have scams an many unregulated brokers, and many
novice traders fall victim of most of their scams and we will discuss in this session. The frauds are clever and
they have some mode of operation that makes them to catch many victims.

HOW TO IDENTIFY SCAM BROKER


There are some ways to know if a broker is a scam or legit before deciding to join.
UNREGULATED: A broker which is not regulated to operate is a scam and any transaction you enter with
such company is at your own risk. many new brokers are denied operational license because it is not fit to
operate and many of such company will want to force it way into the market and offer some recruit deals
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just to get victims, some company even go to the extent of claiming that it is regulated and putting a fake
license number just to deceive some unsuspecting customers but the good news is that there is a way you
can check if truly it is regulated or not.
NEW BROKERS: please dont get me wrong not all new brokers are scam but some of them are scam and
are not fit to operate so if you want to join any new broker you have to make your research to make sure
your investment is secure with them.

THINGS TO LOOK FOR BEFOR CHOSING A BROKER


REGULATED: like I said earlier, before you choose a broker you have to make sure it is regulated by the
regulatory bodies in their countries like USA, CYRUS have a regulatory body that regulates the operations
of the brokers to make sure it is safe for the citizen of her country.
TRANSPIRENCY: Legit and regulated brokers will always be transparent in it operation an all the
information about the company are shown for everybody to see.
SUPPORT: This is one of the most important factor to look for when choosing the broker you want to join,
many brokers are legit but it's support is not encouraging, why its important that you dont join a broker
with a poor support team is because when you have problems with your account or you need their answers
on some matter, you will get stuck with the problem because nobody will be ready to help you and that can
be very frustrating.
SUPPORTED COUNTRY: Many brokers dont offer services to some countries for some reasons so before
choosing your preferred broker first check if it allow citizens from your country, e.g. in USA many brokers
dont offer service to citizen of USA and if you are a citizen of USA you have to look for broker that accept
USA citizens.

A mind of a common binary trader is to make profit and make a living from trading binary option and to never
want to think about losing and this makes it hard for such trader to make a living from it, yes binary option is
full of opportunities to make good and steady income but also one can incur much loses from trading, and that
calls for questions if its possible to make a living from trading binary option and if Im to answer that question
I will say YES but with that in mind, one needs a lot of work, study and research to be able to profit from trading
binary option, there are adverts we see every day about binary option but without a proper knowledge about
what you are going into it is suicidal, I have seen and heard traders complain about losing so much money in
the financial market, and I ask myself why is it so? And what is the way to go about it, then I found out that
100% of the problem is their fault.

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REASON WHY PEOPLE LOSE IN BINARY OPTION
GET RICH OVER NIGHT MINDSET: Many novice traders think that binary option is a get rich
overnight market and that is where they get it all wrong, and if you are such a person, you cannot make any
impact in trading.
NO FINANCIAL KNOWLEDGE: Going into trading without any financial knowledge is like walking in
darkness in an unfamiliar area, you will surely fall.
NO RULES: Even if you have some financial knowledge but dont have any trading rule that guides you,
you will end up not making any impact in the market.

RULES THAT GUIDES A SUCCESSFULL TRADER


PLANNING: Just like every other thing in life, to be successful there must be a plan that guides you to be
able to achieve your objective, just like the saying goes IF YOU FAIL TO PLAN THEN YOU PLAN TO
FAIL.

STRATEGY: Strategy is the way you follow to help you carry out your plans in a more effective way.
TARGET: If you have plans to trade in the financial market then you will have a target you set for yourself.
Without a target you are just trading like a blind man walking in the market place without any body to
guide his movement, he will surely miss his way.
RESEARCH: Before you can enter into anything in life you must know about what you are trying to involve
yourself in, and its by research that you can know more about what you are getting into.
DISCIPLINE: This is one of the most important rules that guide a trader; once you are not disciplined you
cant succeed in trading the financial market.
PATIANCE: To be successful in trading the financial market you must be the patient type because its takes
only a patient trading to be able to notice a good trading opportunity, but if you are not patient you will also
make mistakes that will make your account to suffer, e.g. falling for fake candle breakouts.
STUDY: There is always a new finding every day and you cant get to find out if you dont read or make
research.
the simple truth about trading is that it is very lucrative but many people still fail to make profit from it while
some make a living from it and the difference between a successful trader and an unsuccessful trader is that the
successful traders do those thing that the unsuccessful traders fail to do, an research shows that 99% of traders
fail in the financial market and this is why many trader quit after losing money instead thinking about why they
lost the money, and because they fail to make impact in the market they find it hard to believe that someone can
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make a living from trading in the market and the failed traders keep discouraging novice traders from take up a
trading career.

SOME USEFUL STRATEGY TO USE WHILE TRADING


There are many strategies to use that will make you win most of your trades but to some extend is not about
the strategy you use that makes you a successful trader but how you use the strategy. Two traders can be using
the same strategy but you find out that one is making profit while the other is losing with the same strategy so
its more about how you use the strategy and how well you understand the strategy that makes you successful
or unsuccessful.
BOLLINGER BANDS STRATEGY: This is a strategy were you apply the Bollinger band indicator. What
are Bollinger bands? This is three lines consisting of upper line, middle line and a lower line. The middle is
the moving average that is usually set at 20 periods. When there is market volatility the bands expand but
when the market is quite the bands contracts. The logic about this strategy is simple, when the trend moves
up an breaks the upper bands there is a high possibility of a MOVE down words and when the trend moves
an breaks the lower bands there is high possibility of the trend to move up,
RSI STRATEGY: The RSI {relative strength index} is the momentum indicator; the RSI proves a relative
evaluation of the strength of a security recent price performance. the RSI is and indictor that allows you to
monitor the trend movement and possibilities, The RSI has over bought and over sold function, when the
trend is on over bought there is a possibility that the trend will move the other and if the trend is over sold
zone then there is a possibility for the trend to move back.

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MARTINGALE STRETEGY part [1]: This strategy is more effective when used with other indicators
like the Bollinger bands or the RSI to determine your entry point. martingale strategy is a strategy were
you put a trade after making your calculation an if you calculation is wrong you put another trade in the
same direction an increase the investment mount in your second attempt, why increasing your investment
in the second attempt you may ask. the reason why you increase your investment amount is that you will be
able to win back your previous lost investment, increasing your investment make you win back you lose or
loses and still make some profit
MARTINGALE STRATEGY part [2]: Just like I have explained in part [1] it is the same the only
difference is that while in part [1] you place trade in the same direction till you win e.g. you place a CALL
OPTIN and its loses your next trade will have to be on the same direction {CALL} but in the part [2] if
you place a CALL OPTION AN it loses your next trade will be on PUT OPTION. Many people have
testified that the martingale works well and they have been using it to make much profit and if it work for
them then it will surely work for you.
TREND DIRECTION STRATEGY: This is a situation reverse and also have it in mind that nobody
knows 100% when market trend will reverse we can only make a calculated guess and that technical. make
this strategy very where by you place trade following the direction of the trend e.g. if the trend is going up
you place CALL till it reaches the point where it will
HEDGING: This is a way of locking your profit and reducing your lose in the market. To edge a trade is
when you put double trades so that even if one loses the other one will win, is not just to place a double but
to place a trade that one or both will win but if you edge a trade in an improper way you may end up incurring
more loses.

REASONS FOR EDGING A TRADE


There are so reasons that can make someone to think of edging his trade
SUPPORT LINE: when you place trade on a support line an expect the market to reverse but unfortunately
the trend breaks the support line an continual to trade down words then it is important for you to edge the
trade.
RESISTANCE LINE: Just like the support if the resistance line is broken after you have entered a trade you
should edge the trade so as to minimize your lost.
EMARGENCY NEWS: If there is an emergency news update after you have made your trade and the news
is against your trade then you can edge the trade.

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THINGS THAT MAKE THE MARKET TO REACT
They are some factors that contributes to the market reaction, the market has no emotion an those not move
base on emotions and that make it had to predict but having in mind that the market those the same thing over
and over again one can always make a calculated prediction of the market movement.
ECONOMIC NEWS: whenever there is news about the economy the trading world standstill till the news
is over because the news update can turn the market movement around e.g. when is that for London to rate
the unemployment in her country many traders stay out of the market till the news is over and after the
news is there is increase in the employment rate then dollar will go up an is employment rate decreases
dollar will lose value why is it so you may ask, and I will tell you, if there is increase in employment that
means they will be increase in productivity and investors will be willing to come an invest in such country
which will boost the economy of such country an her currency will be strong against other currencies and
if there is decrease in employment rate reverse will be the case.
BANK NEWS: Sometimes banks will announce increase in loan interest rate and that can affect the currency
of such country e.g. if there is hake in the interest rate that means people and organizations will not get
enough loan to finance their productivities causing decrease in production and that will make some investors
not to find it attractive to invest in such country since it will be hard to get financing and the currency of
such country wont have power against other currencies.
NATURAL DISASTER: This is another factor that decides the direction of the trend, when there is a
natural disaster like earthquake, flood, tsunami ETC then many thing will be lost like life, properties, ETC
and that will make many investor to withdraw their investment and that will affect the economy of that
country and the currency will get weaken.
WAR: In a country where there is war the economy of such country will be affected because they will be
many casualties and many citizens will run from such country and no investor will want to invest in such
country and that will make the currency of that country weak.
ELECTION: In time of election in any country it affects the economy stability of that country and many
investors will want to wait and see the outcome of the election so as to know if it is profitable to invest in
that country and that also take away some values from the currency of such country.
WORKERS PROTEST/RIOT: When the work force of a country is not moving then it is the economy of
the country that will suffer and in times like this it is wise to hold your investment till everything have been
settled and there is improvement in making sure that the economy pick up again.
SECURITY: When the security of a country is being threaten then such country cannot attract investors
and many business will close up because of the insecurity in the country and the economy will suffer.

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EMOTIONS
Like we all know emotion is that feeling attached to something, this factor is one of the factor that determine if
a trader will be successful or unsuccessful in the financial market. There is emotional feels we feel anytime we
make a right or wrong trading decisions and both the emotion feel have place trade rightly or wrongly will not
make us successful. One of the characteristic of a successful trader is the ability to remove every emotional
feeling whenever he is trading. How do sad emotions affect your trading decision? I will explain this with some
example for better understanding, for instance you deposited USD100 into your trading account and after
making your calculation is see an opportunity to invest and you invested USD50 but unfortunately you lost and
as a human you will surely feel bad about losing your money and because you want to get back the money you
have lost you will be making more wrong decisions because you have attached emotions into your trading
instead of getting back the money you have lost you will end up losing more money. The best thing to do after
you have lost is to wait and think about why you lost and try to wait for the right moment to invest. Feeling
you have when you have a winning trade, as humans when the going is good we feel good an confident, that
also applies to trading, when you are winning your trades you feel happy an confident and that can make you
crash your account very soon, why so you may ask; because the trading have been going well for you, you will
be willing to take risk you wont normally take and when you make a wrong trade decision you dont feel it
because in your next trade you will win it back and before you know you have lost everything, in conclusion to
be successful you have to do away with any emotion when you want to trade in that way you will make more
calculated guess and also that will help you to stick with your strategy.

LUCK
This is a concept that many traders depend on but those not exist in the trading world, research have shown
that if you are trading on luck you have 99% of losing everything.

TIME
Like everything in life have time so is also the trading the financial. The financial market is open 5 days a week
but because the financial is open all the time those not mean that you should trade all the time of the day, choose
the time where there is more market volatility. In the financial market you have to know that there is time the
market is active and times the market is silent, so when planning your trade you also have to consider the time.
The financial market is divided into session, what do I mean by that? In the whole world we have different time
zone that means when you are sleeping in your country some other country are working so for that reason there
is time there are more traders in the market. Because the time some people start trading that time some people
are closing there trade mind you the market volatility are controlled by the number of active. We have few time
sessions we will talk about below

FOREX MARKET CENTRE TIME ZONE MARKET OPEN MARKET CLOSE

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FRANKFURT GERMANY EUROPE/BERLIN 8:00AM 4:00PM

LONDON GREET BRITAIN EUROPE/LONDON 9:00AM 5:00PM

NEW YORK AMERICA/NEW 1:00PM 9:00PM


YORK

SYDNEY AUSTRALIA/SYDNEY 1:00PM 6:00AM

TOKYO ASIA/TOKYO 12:00AM 8:00AM

Is binary option gambling? Life its self is a gamble depending on how you live it, to a large expend binary
option is not gambling but it can be considered gambling if you just dash into trading without any proper
preparations.

TERMINOLIGIES IN BINARY OPTION


TREND: For the newbie I know you must be wondering the meaning of trend of trend line we have been
mentioning, trend or trend line is a line that is used to measure the movement of the market at any giving
time, is with a help of the trend line that you will know if market is going up or down e.g. up trend, down
trend and sideways trend
JAPANESE CANDLESTICK/CANDLESTICK: candlestick or Japanese candlestick is used to measure the
open, close, high and low of the market and is also represent a time frame an also it can be used to measure
if the market is moving up or down.
RESISTANCE LINE: This is an upper line or area where the market often reverse and this can tell much
about the trend an its likely reverser point.
SUPPORT LINE: This is the opposite of the resistance line. It is low areas were the trend tend to reverse
and goes back up.
RESERSER POINT: This is a point where the trend tends to turn or reserve to the opposite direction.

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