Binary Options is a rapidly expanding market which straddles both the finance and gambling markets. Offering traders the opportunity to speculate as to whether an asset will rise or fall over a given time period, binary options brokers offer the exhilaration of stock market trading without the complexity. This is a one-stop guide to all things binary options, taking you through key terminology, types of analysis, trading strategies and more.

1. A one-stop guide for everything you need to know about the world
of binary options.
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2. Table of Contents | Binary Options Guide
 Introduction to Binary Options: 3–7
 Key concepts for beginners: 8–21
 What are assets: 22–26
 Types of Analysis: 27–33
 How to set up a free demo account: 34–38
 Industry Regulations: 39–45
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3. Introduction to Binary
Options
BINARY OPTIONS GUIDE

4. Introduction | Binary Options Guide
 Binary options are known by many names,
including digital options, fixed odds trading,
binary trading and binary betting.
 When you buy a binary option, you are
betting on whether the price of an asset
will fall or rise in the future.
 It’s called ‘binary’ because there’s only ever
two outcomes – win or lose.
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5. Trading or Gambling? | Binary Options Guide
 Binary options are at times referred to as both
trading and gambling.
 The reason being that binary options stand on
the border between the world of stock market
trading and the world of gambling.
 Binary options and stock market trading deal
with the same subject matter – assets and
the market value of those assets.
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6. How Easy is it? | Binary Options Guide
 In comparison to other types of stock
market trading, it is simple, this is how the
brokers market it.
 However, compared to other types of
gambling, for instance a slot machine, it’s
much more complicated.
 This raises a debate itself, in whether
binary options are more akin to
investments or really just a fancy way to
gamble.
 Binary options, however, become easier the
more you learn.
 Once you get a hang of the vocabulary and
the basic trends to watch out for when
trading, you’re good to go.
 Another advantage of binary options is that
you can make money when the economy is
doing well and when it’s struggling.
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7. Is it Legal? | Binary Options Guide
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 Of course! In the UK binary options have been legal
and regulated since 2012
 This means brokers must possess a certain license
and follow a strict charter imposed by the regulator.
 The license is a very important guarantee and
something which should be checked before you sign
up.
 In the UK as well as using sites with licenses issued
by UK authorities, you can also use any sites with
licenses issued by any EU country, as they must
conform to the same regulations and laws.

8. Key Concepts for Beginners
BINARY OPTIONS GUIDE

9. Broker | Binary Options Guide
 To trade or gamble with binary
options, you’re going to need an
online broker.
 Binary options brokers provide an
electronic platform for
betting/trading to take place.
 If you browse various binary
brokers, you’ll see that the binary
options look different depending on
the software they use.
 To make matter worse, terminology
varies between brokers. But don’t
let this put you off. While the words
and appearances may vary, the key
elements remain the same.
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10. What is an Asset? | Binary Options Guide
 An asset is simply a resource of
economic value. Examples of assets
include: gold, oil, shares in a company
and currency pairs. The asset shown in
Figure 1 is the currency pair –
EUR/USD. To read more about assets,
look out for our future article: What are
Assets?
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11. What Does a Binary Option Look Like? |
Binary Options Guide
 In Figure 1 (right) you’ll see a screenshot of
a binary options trade from Binary.com,
with key features labelled. Binary.com is a
well respected broker that’s regulated by
the UK gambling commission, and has
been around for 15 years. It was first
established under the name
BetOnMarkets.com in 2000. We’ll be
referring back to this screenshot,
throughout the article.
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12. Rise/Fall | Binary Options Guide
 As you can see at the top left of
Figure 1, Rise/Fall is selected.
 Rise/Fall is the most common type
of binary option and is also known
as the High/Low option or
Up/Down option.
 It involves answering the question
– will the price of this asset be
higher or lower than its current
price, after a specified period of
time (e.g. 15 minutes)?
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13. Spot Price | Binary Options Guide
 The Spot Price is the current
price of your chosen asset.
Spot Prices are constantly
changing, and trying to predict
what this price will be in the
future is what binary options
betting is all about.
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14. Price of the Option | Binary Options Guide
Once you’ve chosen which option you want to purchase (aka which bet you want to place)
you pay the price of the option to your broker.
As you’ll see, when we discuss probability later in the guide, the price of the option is
directly related to the probability of the option being successful.
The price you pay for the option will be your maximum potential loss for your bet. In other
words, if your bet is unsuccessful, you won’t lose any more than the sum you paid for the
option. With some brokers, you may receive a small refund if your bet is unsuccessful.
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15. Time-Frame | Binary Options Guide
 Time is a key concept in binary options
trading, as when you’re trying to predict
whether an asset’s price will rise or fall,
it’s always with respect to a particular
time frame.
 Being able to choose the start of your bet
is very useful as it allows you to take
advantage of influential events in the
wider world.
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16. Entry Spot/Exit Spot | Binary Options Guide
 To determine whether your bet
has been successful, the spot
price at the start of your time
window – which is sometimes
called the entry spot – will be
compared with the spot price at
the end of the time window –
which is sometimes called the
exit spot.
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17. In the Money/ Out of the Money/ At the
Money | Binary Options Guide
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 If your bet is successful it’s sometimes described as being in the money.
 When your bet is unsuccessful, you’re out of the money.
 There’s a 3rd possibility. What happens if the exit spot is exactly the same
as the entry spot?
 Brokers sometimes describe this situation as being at the money.
 Brokers will have a particular policy that they’ll refer to if you end up “at the
money”. Make sure you check what your broker’s policy is for “at the
money” options before placing a bet.

18. Early Exit and Extension | Binary Options
Guide
 Certain brokers – including binary.com – allow early
exits.
 An early exit is when you exit your bet before your
pre-specified time for a reduced percentage return.
 This is a useful option if you find that the market has
taken a sudden turn for the worse, and you want to
lower your chances of finishing “out of the money”.
 Some brokers – such as Banc de Binary – allow
trades (or bets) to be extended. At Banc de Binary
you can do this up until 10 minutes before expiry.
 This function is useful if the price of your asset is
moving slower than you thought it would, and you
want a bit more time to see if it will make a profit.
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19. Payout and Profit | Binary Options Guide
 You need to select your payout –
this is the amount of money you’ll
recieve if you win. Payouts could
range from £1 to £100000,
depending on the broker.
 Your payout includes the price of
the option, and you can work out
the profit you’ll make by subtracting
the price of the option from your
total payout.
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20. Odds and Probability | Binary Options
Guide
 When you calculate the odds and probability
of some event taking place, you’re using two
instruments that gauge how likely it is that an
event is going to happen.
 Knowing this information will help you assess
the level of risk associated with placing
certain bets.
 The price of the option is directly related to the
probability that the bet will be successful
 The percentage return is directly related to the
odds that it will be successful
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21. Key Concepts Conclusion: Binary Options
Guide
 In conclusion, by grasping key concepts such as “spot price”, “profit”,
“return”, “odds” and “probability”, you’ll be in a much better position to
trade wisely.
 Remember, however, that understanding the figures quoted by binary
brokers is not the whole story.
 Consider horse racing. Some people make decisions about which horse to
bet on simply by looking at the odds.
 But experienced horse race gamblers take other things into account, such
as the track record of each horse, and the weather on the day of the race.
You can do the same thing with binary options.
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22. What Are Assets?
BINARY OPTIONS GUIDE

23. Commodities | Binary Options Guide
‘Asset’ is a financial term which simply
means a resource of economic value.
Assets are the things that are worth money
within a trade. There are four main types of
asset that you will encounter in binary
options; commodities, indices, stocks and
currency.
 A commodity is a raw material which can remain
uniform across all producers and therefore can be
traded on an exchange.
 Commodities fall under three categories; energy,
metals and agriculture products. So examples of
commodities could be crude oil, gold, or wheat.
 Commodities are a good place to start for novice
traders because there isn’t too much terminology to
get to grips with.
 The most traded commodities are gold and oil.
These are a good choice to place binary option bets
on because there’s a whole wealth of knowledge
about certain trends and correlating factors.
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24. Stocks | Binary Options Guide
 Stocks is the general term used to describe
the ownership certificates of any company.
Shares refers to the ownership certificates of
a particular company.
 However the distinction between the two is
usually ignored, and most of the time the two
terms can be used interchangeably.
 When you place binary option bets on stocks,
you’re essentially assessing the company’s
success and whether this will make for a rise
or fall in the market.
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25. Indices | Binary Options Guide
 Indices is the plural of index.
 An index, in general, measures the value of a
section of the stock market and therefore
denotes a country’s economic state.
 Famous indices include the American Dow
Jones Industrial Average Index (DJX) or the
British Financial Times Stock Exchange Index
(FTSE).
 It is basically a compilation of the largest
tradeable stocks in a country or sector. Indices
fall or rise based on the individual
performances of the stocks which make up
the index.
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26. Currencies | Binary Options Guide
 Currencies are always traded in pairs. The first
currency is called the ‘base currency’, and the
second is called the ‘quote currency’. The
‘quote currency’ refers to the amount of that
currency which can be purchased with one
unit of the ‘base currency’. Currencies are
traded on the Foreign Exchange Market
(Forex).
 Forex recognises major currencies and these
include the British Pound, US Dollar, the Euro,
Japanese Yen, the Australian Dollar and the
Swiss Franc.The major pairs for these
currencies is to be traded against the US
dollar.
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27. Fundamental Analysis | Binary Options
Guide
 Fundamental analysis is used to work out
the likelihood of a rise or fall of the price of
an asset. By looking at the economic
conditions affecting the market one can
make informed predictions about the rise
or fall of a given asset. These conditions are
informed by:
1. Geopolitics
2. Economic reports
3. Politics
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28. Geopolitics | Binary Options Guide
 Geopolitics is the study of geographical
aspects to predict international politics and
relations. This is one factor that is crucial to
fundamental analysis when trading
commodities. You can easily identify which
countries are exporting the largest amounts of
certain commodities, for example oil.
 Both Mexico and Canada are large oil
exporters to America. This means that
watching what news is coming out of both
countries is important, not only to oil prices,
but also to how this affects the currency of all
countries involved.
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29. Politics | Binary Options Guide
 In a similar vein, international relations can
have a major effect on the price of assets.
 Elections can have large impact on the
markets if potential new leaders are
suggesting new economic plans.
 Political stability encourages confidence in
the markets, so any uncertainty can cause
disrupt.
 This can affect stocks, indices and currency
prices.
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30. Economic Reports | Binary Options Guide
Article, stocks and indices should not be
traded everyday. This is because it’s
important to watch economic data when
trading these types of assets. With stocks,
it’s important to look at the company’s
quarterly earnings reports.
Public companies are required to release
earnings reports four times a year. These
reports show if a company is exceeding its
expected profit, or failing to reach targets.
This can help predict trends within that
company, as people are more likely to
invest in a thriving company.
However, as a binary option trader, you
have the chance to also profit when the
company is failing to meet its projected
profit.
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31. Gold Prices
 Gold has a special relationship with
stockbrokers compared to other commodities,
meaning the fundamental analysis can be
treated differently.
 Stockbrokers are drawn to investing in gold
when things are looking a bit rough in the
markets.
 Gold is something that retains it’s value, as it
doesn’t go rusty or tarnish.
 This means that when the economy seems
unstable, it’s something people can invest in
and know that they won’t lose out.
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32. How Commodities Correlate With Stocks
 A very safe correlation is that between the price of a commodity itself
and the price of stocks within the companies who distribute it.
 So, for instance, if the prices of oil rise, it’d be pretty wise to place a bet
on a rise in the price of Shell’s stock.
 The correlation here is pretty much common sense; if oil is more
expensive, Shell is making more money, people want stocks in a
successful company.
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33. Technical Analysis
 Technical analysis involves studying
charts and graphs that show asset
price movements.
 It’s believed that by careful analysis
of asset price behaviour from the
recent past, you can spot trends
and patterns that will enable you to
predict what an asset’s price will do
in the future.
 In fact, when it comes to asset
price movements, there are no
new trends.
 Trends are always repeating
themselves, because the market
moves in predictable cycles.
 This is the guiding assumption
behind technical analysis.
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34. Setting Up Your Free Demo
Account
BINARY OPTIONS GUIDE

35. Types of Demo Account
 Accounts that require real-money deposit (some
platforms take a commission if no real money is
played before withdrawing)
 Accounts with an expiration date
 Accounts with no restrictions
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36. How to Sign Up
 Once you’ve weighed up the pros and cons
of different broker sites and selected a
broker you want to use, you’ll need to sign
up to begin to trade. Some brokers refer to
demo accounts as ‘virtual trading’ or
‘virtual money accounts’.
 Unless you’ve selected a broker who
requires an initial deposit, demo accounts
can be set up just by giving a few personal
details such as your name and your email
and then creating a password.
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37. Check Your Statement
 After you’ve created an account, it’s useful
to check your account statement to see
how much virtual money you have to trade
with.
 Some brokers offer unlimited virtual funds,
whilst some offer a set amount.
 It’s also handy to familiarize yourself with
accessing your statement as this is where
all trading activity will be shown and how
you can keep track of your wins or losses.
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38. Start Trading
 The final step is to start trading!
 Demo accounts have no restrictions on
what type of trade you make, so make
sure you check out our Types of Trades
article to see what you think suits you
best.
 But what makes a good trader and how
can you can maximise success?
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39. Industry Regulations:
Avoiding Scams
BINARY OPTIONS GUIDE

40. Know Who You’re Dealing With | Binary
Options Guide
 Look up the company in question and find
out all the basic information such as the
physical address and name of the
underlying company.
 Many scam brokers will conceal this
information for obvious reasons: if their
outfit is a scam, they would rather you
didn’t come knocking on their door for your
money back.
 Look up a company’s URL with easywhois.
If they relate to this site in any way its
possible they are using some form of
protection. Always be suspicious of sites
wishing to conceal their true identity!
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41. Are They Regulated? | Binary Options
Guide
 Binary options are perfectly legal providing the
site you use has the relevant licences for the
country where the company operates.
 This is because on non-regulated platforms,
client money is not necessarily kept in a trust
account, as required by government financial
regulation, and transactions are not monitored
by third parties in order to ensure fair play.
 Always ensure that the broker you are dealing
with is regulated by a major regulatory body- if
you are a citizen of an EU state then it is
essential the company is regulated by a body
within the EU itself.
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42. Consider the Bonus Conditions | Binary
Options Guide
Consider the Bonus conditions:
 Almost all binary options brokers will grant
you a cash bonus depending on the amount
you choose to deposit with them.
 This incentive can go as high as 100% of
your initial deposit and might sound great
at first, but it is vital for you to understand
why it is given to you: it’s to make the whole
thing more appealing and to induce you to
deposit more.
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43. Read the Terms and Conditions | Binary
Options Guide
 It may sound tedious, but if you
value your money you will read
the entire Terms and Conditions
document and you will need to
accept all terms and conditions
before you can open an account.
 Once accepting these tricky T’s
& C’s there’s no going back.
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44. Learn from Other’s Experiences | Binary
Options Guide
 Perhaps the most important aspect of
speculating online: take your time and
visit specialized websites such as ours,
which are highly informed regarding
the ins and outs of the business and
will provide you with unbiased reviews
of binary options brokers.
 The key word here is “unbiased,”
because there is a multitude of
websites which offer positive reviews in
return for money.
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45. Which Depositing Methods can you use?
 Credit Cards / Debit Cards – Nearly all
brokers allow you to deposit via VISA,
MasterCard and Maestro.
 Wire Transfer – Commonly, brokers will
allow you to use wire transfers to deposit
into an account. However, often wire
transfers can take up to 5 business days in
order to complete.
 E-Wallets – A lot of brokers allow money to
be deposited using e-wallets, the most
common of these being using Skrill/Ukash
or Neteller.
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