This lesson provides a quick overview of Binary Options trading and how it has evolved into a modern, highly liquid market. This lesson should leave you with an understanding of binary trading.

Binary options trading: A brief description

Binary option traders are basically those who purchase the right to sell and buy an underlying asset. Before entering into the contract, buy and sell options are agreed upon. This transaction is binary because it has two possible outcomes. A trader may earn high returns on a successful prediction or they can lose their investment. Binary Options are both a high-yield investment and high-risk investment.

 The binary trade depends on the performance and value of the underlying assets.   Lessons in this course may overlap with other financial instruments and assets. Later in the course, you will learn about currencies, stocks, futures and cryptocurrencies.

A Brief History of Binary Options Trading

It began about 50 years ago, 1973, when the Chicago Board of Exchange (CBOE) began to offer trading in financial derivatives. This move played a significant role in making binary options the way they are now. However, trading in binary options have become very well-known after it was launched in 2008, as public traded investment assets. The year when the markets for financial instruments crashed across the United States as a result of subprime mortgage crises.

Large companies that went under like Lehmann Brothers and Bear Sterns led to many investors suffering massive loss. The need to invest in investments that had less risk was pursued by investors. At the time the binary option market became well-liked by traders of all levels as a brand-new method of investing, primarily due to its low risk profile.

Binary options existed even before their entry on marketplaces, but, they were considered semi-official and trading these instruments was limited to individuals with high net worth as well as banks and institutional investors.

Furthermore, trading these instruments could only be done through Over The Counter markets. The method by which binary options were traded during this time was very like the way currency was traded prior to the deregulation of 1997.

Trading Binary Options Online: Benefits and simplicity

Online trading can be as easy as it gets. Profits can be made if you select the right direction. The best part is that you are able to trade at any time and from anywhere.

  • Flexibility: Online trading allows you to trade on multiple markets. Forex, commodities, cryptocurrencies and indices are all available to trade. You can trade all four depending on the trading style you adopt.
  • Transparency: Online trading is a great way to avoid surprises. You can monitor the status of your trades and know exactly how much money you could make or lose. You can trade in a relaxed and easy manner. This is how you should be trading.

Binary Options Trading Hours

Binary Options traders should be aware of when they have the highest chance of profiting from each underlying instrument. This section examines the different markets and when they are at their most liquid. Best hours to trade Binary Options are determined by the market conditions and the asset that is being traded. 

The best times to trade different markets include:

  • Trading in the Japanese Yen: Binary Options trading on a pair of currencies that include the Yen is best done during times when the Yen has a definite move. Prices of the Yen are closely linked to Japanese market open hours. The hours are between 1900hrs and 0300hrs. Trading hours are best during the first and the last market hours.
  • Trade US Company Stocks: Trading stocks, just like currencies such as Yens, is best performed during the final hour of trading. Trading in the first half hour can be a little tricky, as many binary platforms and brokers do not permit trading during this time. At 1600hrs, the volume of stocks traded is at its highest.
  • Trading Commodities: Commodities can be the most difficult to determine an optimal trading time. They are not dependent on any specific market and therefore, they can be traded at anytime. To time binary trading with commodities, the best thing to do is trade major economic and news events.
  • Trading Cryptocurrencies: The crypto markets are open non-stop, 7/24. Most of the trading takes place between 8am and 4pm GMT and this is best time interval to trade cryptocurrencies.
Pau Ivorra

By Pau Ivorra

12 Years of Experience in Trading Forex and Binary Options. Triathlete. Tech Reader. Author.