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The Basics of Binary Options Trading and Features
 
A Binary Option is a relative new type of a financial instrument that was introduced in 2008. What characterize a binary option is that it has a fixed payoff if the option is-in-the money when expires, or nothing if it is out-of-the-money when it expires.
 
Binary options are also referred as digital options or as ‘all-or-nothing options’ or Fixed Return Options (FROs) in the US (» American Stock Exchange). A common Binary Option offers also a Refund Rate which is compensated to traders in the case of loss.
 
Average Payout and Refund Rates
 
Payout and Refund Rates of binary options are varied, based on their underlying instrument. For example, as concerns Forex Trading, EUR/USD enjoys better Payout Rates than other less popular currency pairs. The reason is that popular assets tend to attract more competition among brokers and thus returns are better for traders.
CommonPayoutRateRange: 70-90%
CommonRefundRateRange: 5-15%

Binary Options Advantages
 
The main advantage when trading using Binary Options is simplicity. When you trade you are just either in-the-money or out-of-the-money. There are just two possible results (0/1). If you predict that a financial asset deserves to go up, you select the Up arrow. If you predict that a trading asset will decrease, you select the down arrow. Binary options platforms nowadays are purely web-based and not desktop based, that means that you don’t have to install and to configure any software. You may trade Binary Options using any kind of computer devices (Desktop PCs, iPads or Mobile Devices). If you are a Mobile Trader and you want to optimize your trading experience, make sure that the binary broker that you have chosen support your mobile device with a special application.
 
1) Binary Options provide easy (many offer 1-click trading) to beginners.
2) Binary Options trade both sides of Financial Markets (Bull or Bear Markets).
3) Significant profits may be actualized just by tiny changes of the price of a Financial Instruments.
4) All popular financial instruments are offered today when trading Binary Options (Forex, Stocks, Indices, Metals, and Energy).
5) Usually, Binary Options Brokers offer high deposit bonuses up to 50%.
 

MT4 Trade Signals Generator

 
 

Binary Options Trading Features

Binary Options Platforms provide a wide variety of features covering all trading styles. These are the most important binary options features reviewed in this article.

(1) Early Closure Feature

(2) Rollover (Extending the Expiry Time)

(3) Double-Up the Investment

(4) Options Builder Feature

 

(1) Early Closure

The Early Closure feature allows closing trades before the original time of the expiry. Early Closure offers flexibility to all binary options trades. These are the two ways you may benefit from this feature:

■ Using the Early Closure Feature to Realize Early Profits

This tool is particularly useful in cases when news or events are expected to change the current market conditions. You can early close a trade and realize a smaller part of your future profit.

■ Using the Early Closure Feature to Prevent Upcoming Losses

The early closure feature can be used also in cases when a trade is losing money. If a contract is out-of-the-money the early closure feature provide traders with the chance to close it and recover a part of the initial investment. Most commonly, traders can recover 50% of their initial investment.

Note:

(i) The Early Closure Feature can not be applied to all Binary Options Types (High-Payout Options are Excluded)

(ii) There are time periods when the early closure feature can not be applied at all, that depends on the binary broker’s policy

(iii) The Early Closure Feature can also be found as the Option Buyback Function or the Settle Now Function

Early Closure Zone

The Early Closure Zone indicates the beginning of the time period at which the Early Closure can be applied.

 

(2) Rollover–Extending the Expiry Time

The Rollover Feature and with the Early Closure are the most commonly used binary option tools. Rollover offers traders the chance to extend the expiry time of a binary options contract. This tool is particularly useful when the price of an asset is very close to the strike price but it appears that the trade will close with a loss. Using the Rollover Feature traders can extend their options expiry period to the next period and save their investment.

Note:

(i) Most commonly, contracts can be extended from 1 to 10 minutes

(ii) The broker in order to provide this feature demands an extra 20-30% of the initial investment value

(iii) Trades can only get a single Rollover, not more

(iv) Trades can not get a Rollover during the last expiry time of the day

 

(3) Double Up –Doubles the Investment Amount

This feature allows traders to double their initial investment amount in already active trades. In the case when traders are almost certain that a trade will end profitable they can use this feature to increase their profit potential. The Double-Up provides the chance of enhancing your trading strategy with advanced money management. This is because you can enter a trade with a small initial investment and increase it later when you will be almost certain about the final outcome.

Example: You may enter a trade early and wait for the technical analysis confirmation to double-up your investment. For example, you may wait for the breaking of an important support or resistance price level to apply a trend-reversal strategy.

 

 

 

(4) Options Builder Feature

The options builder feature is very useful and provides the framework for building your own binary options contracts. Traders using the Option Builder can create trades by choosing:

(i) Financial Assets

(ii) Expiry Time

(iii) Payout / Refund Rate

(iv) Investment Amount

The Option Builder Feature adds extra flexibility to any binary options trader while it may enhance the use of any trading strategy.

 

 

Using these Features –Final Conclusions

All binary Option Features are important as they add extra levels of flexibility in the binary trading process.

Timing is Everything

The factor that determines if those features will prove profitable (or not) is timing. The right time is everything when trading the financial markets. Therefore you should know when it is really worth it to extend your expiry using the Rollover Feature and when you will be absolutely sure that a trade will end profitable in order to Double-Up your position.

Flexibility always comes with a cost

Don’t forget that flexibility always comes with a cost, so if you use these features in all your trades you will probably lose, as you will be forced to pay an annoying ‘premium’ in all your trades.

Final Conclusions

1) Don’t be afraid to use these features when the odds favor you

2) Use them wisely, don’t use these features in all your trades (maximum usage 40% as a percentage of the number of all your daily trades)

3) Do your math with accuracy in order to be aware of the extra cost that you will pay a premium for using these features

4) Learn how to use the Option Builder, it may prove very useful in the future

5) Incorporate these features in a broader trading strategy and follow some basic rules that will define the usage with precision

6) Diversification is rule number one in Financial Investing. Don’t forget that and don’t let the use of any feature to disturb your portfolio diversification process.

 

Read also: » Major Types of Binary Options

 

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Binary Options Trading Features

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