Binary Options Overview

Simple but Powerful Way to Trade

A binary option asks a simple yes/no question: Will this market be above this price at this time? You buy the option if you think yes and sell if you think the answer is no.

When the trade expires, if you’re right, you get the full $100 value. If you are wrong, you’ll get zero. However, you can never lose more than you paid.

Nadex binary options offer you more. You can exit a trade any time prior to expiration, to lock in profits or cut your loss. A simple 4-step process lets you apply all the analysis, intuition, and discipline as any other kind of trading.

You don’t limit yourself to just forex, stock indexes, or futures. Nadex lets you trade multiple markets from one account, always with guaranteed limited risk.

How Do Binary Options Work?

A binary option asks a simple yes/no question:

Will this market be above this price at this time?

If you think yes, you buy the binary option.

If you think no, you sell.

Either way, your price to buy or sell is between $0 and $100. Whatever you pay is your maximum risk. You can’t lose any more.

Hold the option to expiration and if you’re right, you get the full $100 and your profit is $100 minus your purchase price.

And with Nadex, you can exit before expiration to cut your losses or lock in the profits you already have.

That’s pretty much how binary options work.

Successful Trades Take 4 Simple StepsNadex web-based and mobile platforms let you trade binary options and spreads on a wide range of global markets. Few if any other platforms let you trade forex, stock indexes, commodities, and more from one screen.

Trading binary options is as simple as choosing a market, expiration, and strike price. How you make those choices involves the same analysis, intuition, and discipline as any other kind of trading. Nadex binary options are a new—in some ways better—way to trade your way.

Choose your market and expiration1. Choose your market and expiration

Once you login, you have two ways to find markets to trade: the Finder and the Market Filter. The Finder is a menu of all the markets currently available to trade. Use the search box or browse the dropdown menus.

The Market Filter lets you drill down to find markets that fit your criteria. Find gold binaries expiring in the next hour or 24 hours. Find forex binaries priced between $10 and $30. Find the markets that fit your strategy.

Different traders choose trades in different ways: reading charts, looking for the biggest movers, or just staying with a favorite asset class or market. Whatever your approach, you can easily select a market and choose an expiration and time frame. Nadex has binary options with expirations from five minutes to one week.

Choose your strike price2. Choose your strike price

A binary option is based on the question: Will this market be above this line at this time? If your answer is yes, you buy the option. If no, you sell.

To decide on that answer, you bring your skills of analysis and your intuition. What price levels are significant? What range will the market cover? What is the prevailing trend?

The Nadex platform helps you decide, with robust charting and technical analysis tools, popular indicators, and drawing tools. Our powerful ladder charts, with buy and sell buttons aligned with the strike prices, let you place orders direct from the chart.

Place your order3. Place your order

The order ticket makes placing trades simple and safe. Click on the contract and strike price, or the buy or sell button on the chart, and an order ticket will pop up.

The ticket shows the live bid and offer prices, which change as the market moves. Click buy if you think the option will be above the strike price at expiration, sell if you think it will be at or below the strike. The matching bid or offer price will be auto-filled.

You can adjust the price and pick the number of contracts. The maximum profit and loss automatically update so you know your risk/reward up front.

Once the trade looks the way you want, click Place Order. Your order will be filled when another exchange member (not Nadex) takes the other side, and you will have an open position.

Manage your trade until expiration or exit early4. Manage your trade until expiration or exit early

You have two ways to close your open position: hold it until expiration or exit early. The choice is yours. The platform makes it straightforward to act on your decision.

If you decide to hold until expiration, you just need to wait. Your options will settle at either zero or $100 each.

If you choose to exit early, either to cut your losses or take profits early, a second order ticket makes it simple to do.

Let’s say your position is losing money. Your binary options can never lose more than you paid for them, but in some cases, you may want to get out with a smaller loss. To do that, click on that contract in the Open Positions window.

A new order ticket will pop up that is opposite to your opening trade. Click Place Order to close your position. As with the first order, you can take the current market price or set the price you want to pay.

Limited Risk, Better Protection Than a Stop-Loss, and Virtually Limitless Trading Opportunities

Binary options offer individual traders a new, innovative way to participate in the markets with limited risk, protection against volatility, and the ability to profit from short-term market moves—up, down, or sideways.

With Nadex binaries, you know your maximum potential profit and loss before you enter the trade. This allows you to calculate risk/reward with precision. Since the trade is fully paid for up front, you never get a margin call.

And if the market suddenly makes a huge move against you, you know that your losses are limited and, even better, your option is still active, meaning you are still in the trade if the market turns back in your direction. You get better protection than a stop-loss order, without getting stopped out.

Leave a Reply