Binary options are instruments common among foreign exchange market brokers Forex, investment banks, individual exchanges and companies with a narrow specialization in this type of contracts. High competition in this area forces the participants of this market to develop a lot of profitable and unusual offers, but according to the established practice, traders search for a broker based on the requirements:
- the minimum deposit size;
- the ability to trade on the Metatrader 4 platform;
- American type of contracts (return on investment or accrual of part of the premium in case of early closure).
Opening an account with a minimum deposit size with a binary options broker
The amount of profit when trading binary options depends on the trader's skills in predicting the market. Despite this dependence, contracts are in demand among beginners who place bets on the principle of gambling. The reluctance to risk big money has led to a high demand for binary options brokers ' accounts with a minimum deposit.
The minimum deposit size and a gambling approach eventually leads to a fairly large amount of lost funds, as a beginner seeks to earn quickly by making transactions for the entire account size.
The competition has led to a wide spread of the deposit conditions from $1, but a number of companies have "gone further" by offering cent accounts for binary options.
American-style binary options brokers
Traders often use the American type of options to minimize losses and increase the number of profitable trades. The contract form allows you to close a position ahead of time, which allows you to fully adapt existing market strategies to option contracts.
Working on a trading system, it is difficult to accurately predict the time of signal processing, it is impossible to react to an unexpected change trend, when the expiration is far enough away. By closing the contract ahead of schedule, you can stay with a part of the profit or investment, without waiting for 100% losses.
When choosing a broker with an American-type binary option, the trader should carefully read the conditions of return in case of early closure. Some brokers may not accrue profit, in general, at any closing before expiration, compensating only for the investment.
To hedge risks requires a mandatory reservation of the OTM and ITM conditions of the price position relative to the point entry (or range), linking the premium amount to the remaining time before expiration.
In addition to early closing, some brokers provide a "rolling" service - extending the expiration period, with the possibility of increasing the size of the investment. The option is ambiguously perceived by traders, as it is associated with the risk of "sitting out" in a position – a useless extension of the transaction in the hope of a price return associated with the emotional component of trading, and not technical analysis.
Brokers with the implementation of binary options trading on the Metatrader platform
The Metatrader platform has been improved by developers and traders for 18 years, combining the optimality and convenience of trading on the Forex market. This is facilitated by the built-in package indicators for technical analysis, the mql programming language that allows you to implement algorithmic trading.
In less than two decades, the Metatrader project has grown into a social community with a huge number of ready-made user strategies and indicators.
Binary options trading via the Metatrader platform allows you to:
- Adapt strategies, perform deep technical analysis, run complex trading algorithms of Expert Advisors, receive signals and alerts, have accurate quotes.
- Simultaneously trade a binary option and an underlying asset.
- Set pending orders for certain types of contracts at price.
- Work with a large licensed broker.
Large Forex brokers have launched binary options to generate additional income by organizing trading on plugins or directly in Metatrader 4. Sometimes, in one terminal, you can purchase, for example, a currency pair and a binary option on the same asset.
Traders use a binary strategy stops to reduce losses and avoid "sitting out" in the transaction. The strategy is possible if there is a service for placing binary options at a deferred price and there is a type of "No touch" or "Inside the range".
The popularity of the broker's brand removes the issue of licensing and reliability of binary options trading. It is difficult for beginners to choose a company due to the lack of unified approaches to regulating this type of financial services.
The disadvantages of working on binary options with a large broker include a small number of types, a large expiration step and the complexity of the Metatrader 4 terminal for beginners who prefer the simplicity of the interface.