Experienced binary options traders are aware that trading in binaries is highly speculative and involves substantial risks. . This raises a big question, why are most binary options brokers advertising that making money from trading binaries is easy?

Binary options scammers are the individuals who bait traders with the line “simple and guarantees to make you high profits.” A binary options scammer will press a trader into opening up a trading account with their brokerage firm. These scammers use a high-pressure sales tactic on their unsuspecting targets.

How Do These Scams Work?

1. Other than coming across a scammer on social media and online advertisements, a trader might get an unexpected call. During the phone conversation, a trader is informed of a high-returns, secure investment that awaits him/her
2. The scammers then lead the trader to a professional looking website. The reason the broker guides you to their website is to look legitimate. Usually, the type of website a trader is guided to has both a personalized account details section and a trading platform
3. After an unsuspecting trader invests money in his/her account, they are expected to predict the price movement of the available financial instruments. Typically, the trader is asked whether the price will go up or down at short intervals.

4. If a trader is lucky enough with the prediction they make, a small sum is credited to their account. If they misread the price movement and provide a wrong prediction, they lose the entire amount they placed. And since rouge brokers stack the odds against the player, the amount invested gradually reduces to zero.

5. Additionally, If a trader attempts to withdraw their investment from the platform, they find it impossible, this leads to the entire loss of investment.

6. A rogue binary options broker will ask a trader for personal information to either transfer funds or for anti-money laundering purposes. By providing this information, the trader opens him/her self to identity theft as these traders use this information to access other services or on fraudulent activities.

Protect yourself

The best way traders can protect themselves from binary options brokers out to defraud them is ensuring that they only transact with traders that are licensed. The license a binary options broker provides on their website should be verifiable.

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But who is a retail trader?

Retail traders are individuals who trade on financial products despite not being professionals. Ideally, a retail trader has no substantial knowledge or experience when dealing with financial products, making him/her a newbie in binary trading.

Most retail traders venturing into trading binary options come with high hopes and expectations. The marketing strategies in use by most binary options brokers convey a message of being able to profit fast. Such strategies deceive traders that trading in binaries is easy and needs no previous experience. Binary options trading is profitable but not easy, and this is what retail traders aren’t told.

The binary options trade is littered with tons of scammers. As a novice trader, trusting anyone in the industry can come with a hefty price since the scammers can take the form of a broker or another trader. What this means is that most of the times, the odds are stacked against the trader. The only way a trader can make sure that they don’t fall victim of these scammers, is finding as much information about a binary options broker. Since getting a broker’s details may not be enough, we are going to discuss other options available to a trader.

Trade with Regulated Binary Brokers

Before you can set up an account with a binary options brokerage firm, the first thing a trader has to do is ensuring that the broker they are about to use is regulated. Trading with regulated brokers ensures that a trader can withdraw funds from the account they have set up with ease.

All regulated brokers are issued with a license from a regulatory authority. If you are about to sign up at a binary options brokerage firm and you notice that the broker does not have a license, chances are that you are dealing with a rogue broker. Having this in mind, the first thing you should check for before signing up at any trading platform is whether it is regulated and the presence of a valid license.

Never Base Your Decision on What Others Say

Making your decision on a particular trading broker should not be informed by word of mouth, hearsay and reviews alone. Unlike Amazon, positive reviews alone will not help you since most reviews on binary options brokers are false. A trader should search for a broker’s information widely and especially on forums.

Most brokers are aware that traders will embark on searching for reviews about their services before signing up at their platform. Equipped with this, the brokers run different sites and forums where they pay individuals to write exceptional reviews. Having this in mind, traders should never search for a broker’s review first but ensure that they are regulated and licensed. You can compare different brokers by reading our unbiased broker reviews.

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A lot of unsuspecting traders are losing their investments to binary options scams. The types of binary options scams, how to avoid them, how to get a trustworthy binary options broker are some of the topics we are going to discuss. And since binary options is all about timing, we are going to show you how to get a reliable and trustworthy broker.

To get away with your investments, rouge binary options brokers will either do one of the following:
1. Keep your money
2. Steal your identity
3. Manipulate the trading platform you are using

Keeping your money– Even though these types of rogue brokers are rare, they still exist. These brokers deny a trader from accessing his/her funds by declining a withdrawal request. A trader is then told that the withdrawal failure is a result of technicality. In some instances, no communication is made to the trader regarding the declined withdrawal. To avoid this scam, make sure that your broker is subject to regulatory oversight by a reputable body.

Steal your Identity– During the registration process at a brokerage firm, traders have to verify their identity; submitting an identification document and proof of address. Rogue brokers can use this information to steal your identity. To protect yourself from this scam, ensure that your broker’s business is subject to government regulation.

Manipulating the trading platform– are you doing everything right and by the books but still do not break even? Chances are, your broker is manipulating the trading platform to make it impossible for you to profit. They do this through;
1. Manipulating the price you get
2. Manipulating the platform itself
3. Charging traders hidden fees
Traders can evade this by registering at binary options traders whose services are under the regulation of the European Union or the United States.

Are All Binary Options Scams?

From the onset, binary options trading has been and will continue to be a legitimate business. Despite the challenges that rouge brokers pose in the industry through scamming, binary option can and will work for traders who smartly put in work.

A large percentage of binary options brokers adhere to government regulation and free-market competition. Additionally, there are independent firms that audit broker’s services to determine whether or not they are legitimate.

How Can I Find a Legitimate Broker?
Government legislation protects a trader’s interests. With this in mind, only opt in for the services of a broker whose services are under government regulation (EU or the US)

How do you find a trustworthy broker in the United States?

The stringent laws governing the United States option’s market makes it hard for EU trustworthy options providers from accessing the American market. Nonetheless, there is a solution. Nadex is currently the only binary options broker that legally has access to the American market. We use “legally” because they are the only option brokerage firm that has been licensed by CFTC.

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Although it may sound easy, keep it in mind that you have to accurately open trading positions by considering trade entry and exit times. Well, that’s when automated trading comes in handy.

Automated trading is a trend that is slowly catching up with binary options trading which has made the industry even more appealing to beginners. Simply put, automated trading involves using a software to generate trading signals and automatically trading the signals. Sounds easy, right?

Why automated trading is for you

More accurate- getting quality signals is one thing, but trading the signals is an entirely different thing. Success of signal trading is usually hinged on how precisely you trade the signals. Meaning that the trade entry and exit times have to be perfect. A second early or a second late can be the difference between an “in the money” outcome and “an out of the money” outcome. Automated trading, however, solves this problem by automatically opening trading positions at exact trading times.

Beginner friendly– Even though trading binary options is pretty simple, it is not a “lesser” financial markets and there are risks, albeit fixed. Beginners may be at a disadvantage due to poor charting and analysis skills. Using trading software gives beginners an edge and sort of levels the playground and if used optimally, can be a vital building block of a successful trading career.

Eliminates risks of emotional trading– Well, emotions are part of us and there is no way we can eliminate them from our lives. Have you ever made a substantial profit in a trading session only to get greedy and lose it all in minutes? Emotions can easily push you to making uninformed decisions which can negatively affect your trading career. For instance, it’s a common occurrence in binary options trading where traders invest heavily on a single trade after making a loss in an attempt to recoup the loss in a single trade . Revenge trading can have disastrous effect on your bankroll.

Whether you are a part time or full-time trader, auto trading can always come in handy. To that end, we have featured one of the best auto trader in the market today.

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Straddle is one of the most common binary option hedging strategies. It involves identifying the highest and lowest levels of the price of an asset during trading. The two binary options for this case are making a CALL on the highest level and a PUT on the lowest. The ideal period is when the price moves symmetrically. Depending on the chances, traders may bet on two options moving in the same direction and not the opposing directions. This works when the price movement trends strongly.

Or, the trader may choose to involve a pair of currencies. The currencies should move in opposite directions. The price of one asset will rise when the other lowers. This puts the trader in a position of earning profits from either of the assets.

Hedging can also involve a binary touch option. The inherent risk of a one-touch, touch or non-touch option is high. But, the gains can get up to 600 percent. This strategy works best when the market is trending strongly. So, when you buy a pair of options, you will get two trigger values of a single financial asset’s price. Three results await you; profits on both positions, losses on both and loss on one and win on the other.

Traders may want to purchase binary options that expire in the same or different periods when coming up with a hedging strategy. For instance, based on the dynamics of the market indicators, the trader can predict a rise or fall within a given time. Thus, the pair of binary options purchased is likely to expire in two different periods.

The rule of the thumb in choosing a binary options hedging strategy is to make close observation of the market before investing. This may feel like betting, but; it should be based on analysis as opposed to luck. The hedging strategy helps mitigate the losses while increasing the chances of making profits.

– The options should have the same expiry period
– You can hedge when the first option is out-of-the-money, and the price continues to go towards that direction
– You are at liberty to hedge different amounts
– To restrict the loss percentage, you can buy an option ahead of the other. Then, you can gain the money from the first option and invest it in the second. This boosts the profit percentage.

Choosing the Best Binary Options Hedging Strategy Broker

After creating an account with a legit trusted broker, you can start trading online. Ensure you find a broker who you can trust. Also, the binary options accounts should have the features that allow hedging. Liaise with your broker to know whether you need to upgrade your account to gain such functionalities.

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Success rate

First things first, before even entertaining the thought of registering with a signals provider, you have to consider the success rate. You don’t want to leave a trail of losses in your wake, or do you?

Usually, the success rate is displayed openly by a signal provider but in most cases, you have to evaluate the success rate yourself. If for instance a binary options signal provider offers signals with 80% success rate, it means that for every ten signals, there is a likelihood of losing 2 trades while winning 8 trades.

Cost

Unless you are not after making money, which defeats the reason to engage in binary options trading in the first place, the cost of delivered signals should be an important factor to consider when choosing a binary options signals provider.

The cost of signals delivered should of course go hand in hand with signals frequency. In addition, comprehensive signals are likely to cost more.

However, it is imperative to note that scam signals providers are more likely to request for a big one-off payment of let’s say over $500 after which they cut ties with you.

Signals frequency

A binary options signals provider tends to offer specific number of signals for any given day. Therefore, the number of signals delivered per day should suffice when choosing binary options signals provider.

If let’s say you are a full-time trader, a signal delivery service offering multiple signals in any given day should be the best fit. Also, if you are a part-time trader, you can work with a provider offering 1 signal per day.

Obviously, as mentioned earlier, the number of signals delivered goes hand in hand with the cost . Therefore, you will find that binary options signals providers who delivery multiple signals per day are pricier compared to their counterparts.

Trial Duration

From experience, if a signals provider does not offer trial duration, they are simply a scam. Well, a trial duration is a specific period where a binary options signal provider deliver trading signals at a lower cost or for free after which you can decide whether to use the provider or not. In most cases, providers charge at most $1 per day till the trial duration lapses.

If you know what you are doing, you can use the trial duration to evaluate the success rate of the delivered signals.

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The first thing we’d need to know is what a Pinocchio bar is. It’s known as a pin bar due to its small body and a short nose. The bar looks like a candle that has a tip at the top- similar to the wick. As the price goes up, the wick gets longer in a single direction before retracing. If the wick is long, then; there is a probability that the price will follow the opposite direction. This will prove that the initial course was a lie- hence the ‘Pinocchio’ perspective. So, a bullish Pinocchio looks like an inverted lighted candle or pin bar.

The bearish candle has a short upper wick, a candle body in the middle and then a long lower wick. The extended lower wick shows that there was a time during the candle’s ‘lifespan’ when the bears took the price of binaries to the lowest point. Then, later, the bulls entered the market and took the price a little higher. So, Pinocchio has a long lower wick and a small body. This projects an increase in price due to rejection.

When using the Pinocchio strategy, you need to buy PUT option when the wick is up, and the CALL if it is down. Well, it gets a little complicated when you want finer analysis- you should combine the Pinocchio strategy with price action as well as other technical indicators. All the financial trading strategies combine to deliver good results.

When used correctly, Pinocchio binary options strategy can have high accuracy. The first part shows bulls pushing the price higher. Then, the bears come strongly and make the price lower.
It ends up in a bearish Pinocchio bar. The opposite is a bullish pin bar.

When you are using the Pinocchio strategy, you can easily identify a false price break out of the trend line. You can also find support and resistance price levels. For instance, when watching an hour’s candle, if the price breaks a resistance level, and the price rises above resistance in half an hour, it’s wise to wait for the candle to close. This is because if it happens to become a Pinocchio bar, then it’s likely that consequent candles will follow suit. You see, by waiting to see if the wick becomes a Pinocchio, you can avoid a false break out and understand the trends in the market.

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This strategy is able to yield profits without putting the trader’s investment at risk. But, it is not the kind of approach that newbies are encouraged to use as it involves complicated considerations during use. Savvy and experienced traders, however, prefer the risk reversal strategy when making binary options because it guarantees profits in the end.

When you choose to use this strategy, you first need to identify assets with dominant up-trends or downtrends. The majority of traders will readily place a CALL option on a bullish asset. But, you need to consider the PUT option as well to ensure that you make a profit. You, therefore, open two opposite positions on the same asset as this reduces chances of getting at a loss.

The bullish value of the asset can activate if you purchase an call option and then, simultaneously, sell a put option. You need to make sure that there are three constants; the amount invested, the item and the expiry time. Thus, you need to ensure that the three are the same for each wager.

So, you will execute the trade with the chosen asset but spend barely anything like the cost of the call option is equal to the amount you receive for selling the put option. When the asset’s price rises, the call option will go even high, and; simultaneously, the put option will decline to near zero at the expiry period. Thus, you will get profits from the CALL option and get a zero refund from the PUT option. This means that you will have traded your money without taking any risks.

The profit-friendliness nature of the reversal strategy in binary options makes it a favorite for many experts as it allows them to earn profits without necessarily having to go at a loss. Then, the strategy’s profit potential is unlimited.

Trading using the risk reversal strategy

Now, how do you put the risk reversal strategy into use? Well, the risk reversal strategy is worthwhile as it allows traders to open multiple trading positions on the same asset. It also helps in hedging trades. The trader purchases a CALL option and sells a PUT option if the market is bullish. Then, when it is bearish, the trader buys a PUT option and sells the CALL option, and this activates the hedge.

To benefit from the risk reversal strategy, ensure your brokerage account supports the processing and editing of pending orders. So, when you want to put the approach into practice, you should check whether your broker offers a full sell feature. This is an important function when selling the PUT option back to the binary options broker. Some brokers may need you to upgrade your account to access such features.

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There are a wide range of binary options strategies based on trade signals, gambling theories and reading charts among others. While some strategies aim to analyze and minimize risks, others focus on money management yet others focus on leveraging market trends.

A key consideration when choosing the right strategy is the type of binary options one is trading in. The three major binary options are call/put options, one touch options and ladder options. The call/put option is the most common. A strategy for call/put binary options should focus on precisely predicting whether and at what point market price will either rise or fall over a given period of time.

In the case of one touch binary options, a target price is defined and the trader predicts whether the market will reach the target price. An ideal strategy in his case would involve price charts and trend studies to be able to make right predictions.

Ladder options strategies incorporate strategies appropriate for both call/put options and one touch point options strategies to be able to determine whether the market will reach or surpass the target price.

Ladder options trading is riskier than call/put option. As such, a trader can be strategic about the type of option they choose. For instance, risk averse traders could do better in trading high low options and vice versa.

Markets are volatile. A trader should be able to appropriately study the market environment and plan their wagers accordingly. The market may offer lower payouts for seemingly obvious market uptrends and downtrends; and offer higher payouts for an outcome that seems unlikely. Traders should pay attention to such payouts to determine the viability of trading on the option with lower likelihood for a higher payout.

Novice traders can identify a number of strategies that appeal to them and practice them on demo mode before applying them to trade for real money. That way, they will be able to identify strategies that work and eliminate those that do not so as to lower the risk of losing. Experienced traders can also use this approach to test a new strategy. As a trader practices the various strategies they will also be able to determine which ones they prefer.

In spite of the numerous advertisement for “perfect”, “best” “100% gurantee” “sure fire strategies” and many more there is no one perfect strategy. While one strategy may work well for one market situation, it may flop in another. The best way for traders to find the right binary options trading strategy is to try new ones on demo mode until they find those that work.

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The nature of market trends is that they are constantly changing, from highs to lows and vice versa. The assumption is upon hitting a low, the market trend is bound to make a rise. Similarly, upon striking a new high, at some point the price will come down. This creates a pattern that has points of extension and retraction. The big question therefore is whether a trader can be able to predict the actual points of extension and retraction so as to use a retracement to their advantage. Fibonacci tool can be used as retracement tool to track these points.

The most common application of Fibonacci tool in retracements is to identify levels. To do so, one starts by establishing a move. Usually, it is a top point of a rise and the bottom of a low. The charting software allows one to connect the two points. In reference to the highest and lowest levels, the Fibonacci tool then calculates the ratios of variance and plots them as levels on the chart. The five most common Fibonacci ratios are 23.2%, 38.2%, 50.0% and 61.8% and 100%. These are the levels where either support or resistance is most likely to occur.

The logic behind the ratios is that following an uptrend, it is anticipated that the price of the asset will drop to at least the 50% level before resuming to the original trend. However, in the case that it does not resume, it is assumed that it will take a full retracement to reach the 61.8% level. The 61.8% level would be the ideal point to enter the market whereby one would trade towards the original move.

Effective use of Fibonacci tool in binary options trading

To optimize success in using Fibonacci tools, it is essential that a trader selects a strongly trending asset. Ideally, the indicator should be used within a select time frame that is relevant to the market trends at the time. As one gets accustomed to suing this retracement tool, they may be able to slightly adjust the percentile levels accordingly to be able to make more precise predictions. However, this requires high level of experience and expertise.

While Fibonacci tool plays a critical role to enable traders to identify potential entry points, it is important to keep in mind that these levels are just indications and not absolutes. They should only serve as a guide and not the final decision. The market is volatile, therefore predictions made are not 100% warranted.

Fibonacci tool can seem to be a complex concept. Nonetheless, it is integrated into tracking software in a way such that beginners can comfortably use it to make retracement predictions. Beginners can practice application of the tool on a demo account before applying it to actual binary options trading.

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