How to Trade Binary Options


Binary options trading is a simple, easy to grasp trading format, and therefore ideal for both amateur and professional traders. There are several types of binary options, but the concept is the same for each mode of binary trading. Traders first choose one of two different outcomes of a particular product’s (or pair of products’) position in the market. After a specified amount of time, if the outcome is in accordance with the trader’s prediction, the trader will receive a pre-determined amount of profit. However, if the outcome does not align with the trader’s initial prediction, the trader will lose the total deposit they placed to open the trade.

How Much Should I Trade?

How Much Should I Trade?

Binary_Options_How_Much

How Much Should I Trade?

Binary options trading lets you choose how much capital you would like to place on a trade. Profits are measured as a fraction of a trade’s value, so the greater the amount you place, the greater your returns will be. For example, if a trader places £15 into a binary options trade that is offering a 70% return – in the case of a winning trade, the trader’s payout would be £25.50. Alternatively, if the trader had placed £150 into the same trade, the payout would have increased to £255.

Nonetheless, it should be kept in mind that trades with outcomes that are not in the trader’s favour lead to loss of the trader’s entire proceeds for that trade. The trader in our first example would have only lost £15, whereas the loss would have been £150 in the second instance.

In Which Direction Should I trade?

Binary_Options_Which_Way

In Which Direction Should I trade?

Once traders have reached a decision on the amount of capital to place on a trade, they must select their position on the trade. For example, when trading high/low options, a trader has to decide whether a product’s value will increase or decrease within a defined period of time. High/low binary options trading can be applied to forex currency pairs, financial indices, equities and commodities. For instance, one could proceed with a trade on whether EUR/USD, the FTSE100, Vodaphone, or platinum will be at a higher market value two days from now. If the outcome is positive, the trader comes out in profit, whereas if the trader’s prediction is incorrect, they will lose the trade.


Paired options - The ETX Binary platform enable traders to estimate which currency in a pair will perform better over a set time period. For instance, taking the US Dollar and Japanese Yen, which will perform better over a specified length of time? In a similar way to high/low binary options trading, an outcome in alignment with the trader’s estimation results in profit, whereas the wrong outcome will result in a loss.

How Long Should I Place a Trade for?

Binary_Options_How_Long

How Long Should I Place a Trade for?

So how do you decide the expiration period of a trade? With binary options trading, some products already have pre-defined expiry periods for traders to choose from. For example, at 13.00 today, there may be three different time periods in which one could trade the same security, with closing times at 13.15, 13:30 and 13:45.

For many products that ETX capital offers, there are also both short- and long-term options available, enabling you to choose a time period that best fits you. This means that you could proceed with a trade a mere 60 seconds in length, or up to a day if this suits your strategy better.

In some cases, traders have the ability to end an open position, either resulting in a smaller sized profit, or a lower level of loss, based on the current position of that option at the time of the early closure.

When approaching binary trading, the three stages described above: the amount of money to place on a trade, the way to position yourself in the market, and for how long you want your trade to run for – are key points to take into account when thinking about trading binary options.

For more information on binary options trading, do have a look at our Binary Options Strategies page.


Binary Options are not regulated by the Financial Conduct Authority

Apply for our

Apply for our