Binary Options

Binary Options in

2016

An A-Z guide on everything you need to know to trade Binary Options safely.

Risk warning: Binary Options trading is high risk and can result in substantial losses. Nothing contained inside this e-book is investment advice.

Contents 1

Foreword

2

Binary Options?

2

The Gambling Myth

3

Binary Brokers

4

Business Model

5

Signal Services

6

Signs of a Scam

7

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8

What's Best for Me?

A 5 Minute Turbo Strategy

Risk warning: Binary Options trading is high risk and can result in substantial losses. Nothing contained inside this e-book is investment advice.

Foreword The $3bn Binary Options (BO) industry, relative to other financial sector niches, offers immense return potential, but unfortunately, also exposes our weaknesses as emotional, carnal creatures driven by greed for quick money and success. To generate money in BO, it takes a very careful and methodical person; a person in charge of their emotional and mental faculties. The fact is, 4-5% of binary traders make money in the long run. The lifetime-value per depositor for a binary broker is just above $1,000; meaning that 90% of clients just leave the industry financially burned, either owing to conscious submission to their own greed or by being cheated outright by their options broker. However, the few that do make money can earn disproportionate amounts relative to other professions and through thorough research and educating oneself in how to trade, one can be rewarded with a life changing personal income opportunity. It’s 2016 and after 8 years of the binary industry having been round, regulation has moved at snails pace and a big portion of BO brokers continue to run amuck preying upon unsuspecting clients. The industry remains dominated by affiliate marketers and the sheer volume of of client conversion tools created and delivered under the guise of money making machines, auto-traders, signal services and many more, has only increased. However, some signs of  clampdowns on unregulated and unethical brokerages has begun in Israel, France and Belgium. This trend is likely to continue thereby cleaning up the asset class over the coming half-decade. Binary options is a beautiful and relatively simple asset class that can be exploited for significant financial gains, if one takes the time to do their research. We have already done this research and with that in mind, the goal of this ebook is to concisely deliver the findings of our research, so that you can navigate BO profitably and truly attain financial freedom and autonomy. Kind regards, Team Blue Sky Binary www.blueskybinary.com

1

Risk warning: Binary Options trading is high risk and can result in substantial losses. Nothing contained inside this e-book is investment advice.

Binary Options? Binary Options are bets that a trader takes on the direction of where an asset will head over a certain amount of time. For example, a trader has the view that the price of Euro, relative to the Dollar (EUR/USD), will rise between now and the sixty minutes. He/she may wish to bet $25.00 on this. If they are right, even if only marginally by 1 micropip (the smallest movement possible in the currency price), he she can expect a high 70-85% return on that bet. If they are wrong, they lose the $25.00 invested. Hence the outcome is, indeed, binary. There are more exotic types of binary options, such as pair-trades, no-touch options, barrier options and a range of others; however these are the minority and for the purposes of this book, we will focus on the mainstream and most frequently traded category. The trading of Binary Options is strictly not gambling as the outcome of  where price lands, either above or below your entry, is not random. By researching the underlying asset, for example the EUR/USD, you can significantly increase your odds of winning. Random outcomes, however, occur on a roulette wheel where the black or red occurrence is truly random. Market prices follow technical geometries and market fundamentals; all of which are a direct functions of market and human psychology. The currency market is made up of  hundreds of thousands of traders who are either work for institutional trading desks at investment banks, sovereign nations or corporations who buy and sell currency for a range of transactional and hedging reasons. Currency movements or for that matter, movements in stocks as well (on which binary options are based as well), can be explained by news and technical factors. Binary option trading, however, can  be classified as betting as you never really buy or sell any underlying asset; you merely bet on its movement.

= 2 Risk warning: Binary Options trading is high risk and can result in substantial losses. Nothing contained inside this e-book is investment advice.

Binary Brokers Binary Option brokerages offer binary options. Their trading platforms, however, are white-labelled versions of generic trading platforms offered by Binary Option technology firms called platform providers. Therefore, Binary Option brokerages are not platform providers themselves. There are only a handful of recognised platform providers such as Israel based Spot Option (c. 65% market share) and other providers such as Marketspulse, London listed TechFinancials, Tradesmarter, Panda, Airsoft and others. In rare instances, technology oriented Binary Option brokerages will not opt for one of these aforementioned white-label platforms and instead create their own trading platform. Examples include Binary.com’s own API based platform or Optie/365 Trading’s Pipinvest platform. It is also worth noting that in the instance of white-label technology providers, companies like Spot Option who provide the trading platforms, also own a stake in the Binary Option brokerages. In essence then, many Binary Option brokerages are ‘brands’ of the the technology platforms. Blue Sky Binary has been an education, technology and signals provider in Binary Options for years and in our experience, we have tested a wide range of  binary option brokerages. We partner only with the ones that meet our high quality benchmark from the standpoint of regulation, client fund safety, ease of  withdrawals and platform transparency. The following Binary Option brokerages, in our view, are safe long term options; Binary.com, Optiontrade, Bull-Binary, 365 Trading, Optie and ETX Binary. These brokerages are well regulated either by Cy-SEC, their local country regulators in Europe, the MFSA or have their parent companies governed by the FCA, UK. Some of these brokerages even offer EU-State-backed depositor protection guarantees in the event of insolvency on the broker side. This is by no means an exhaustive list.

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Business Model There are two ways Binary Option brokers make money. They either match your bet with an opposite bet or in the instance they cannot find another client to take your offsetting position, they take on the balance sheet risk themselves and when you lose, they make money. If you win, the broker directly loses money. The larger the broker in terms of client base, the more easy it is for them to match trader’s trades so that there is no conflict of interest; in other words, one client’s wins are paid for by the losses of another client who took the opposing trade minus the broker’s commission which is usually 20-30%. So far there is no conflict of interest. The conflict of interest arises, however, when unregulated brokers get their staff (known as account managers) to coax the client to deposit more and and for the client to relinquish control over their account and let the account manager trade on their behalf. When this happens, investment advice or trading actions undertaken by the broker on your behalf pose a grave conflict of interest and are one of the primary reasons why clients lose money.

& Trade Matching

Trading vs. House

4 Risk warning: Binary Options trading is high risk and can result in substantial losses. Nothing contained inside this e-book is investment advice.

Signal Services A signal service provides trade recommendations for clients to follow on their Binary Brokers. It gives precise instructions on which direction to bet on and for what expiry. An auto-trader trades a client’s account on his/her behalf  requiring no input from the client. In an increasingly busy world, a growing amount of clients seek out such ‘hands-free’ services. 1 out of 10 signal services or auto-traders will work in Binary Options. This means that those new to the sector need to exercise great caution in committing capital to services as statistically 90% will destroy value, not create. Signal services and auto-traders that offer free-trials that do not require deposits at Binary Option brokers and work with demo money accounts are most likely the ones that are legitimate. Furthermore, legitimate signal services will provide an updated historical and real-time record of signal outcomes without altering losses with the view to bolster results. Examples of legitimate signal services and auto-traders include Signal Hive (www.signalhive.com ) and Signal Push (www.signalpush.com). It is strongly  advised to use demo money when using any service and if moving to real money, to only trade with amounts you can afford to lose.

5 Risk warning: Binary Options trading is high risk and can result in substantial losses. Nothing contained inside this e-book is investment advice.

Spotting a Scam As Binary Option brokers pay what is known as CPA (cost per acquisition), a one-off payment of $200-500 per depositor that marketers sends to them, there is a swathe of such products and services in both the Binary Options and FX industry. If the product or service in question forces you to deposit at a Binary Option broker in order to receive access, it is most likely not a real service but instead an affiliate marketing ‘funnel’ created by an affiliate marketer or Binary Option broker with the view to lure depositors. However, note that certain services will allow free-trials without the need to deposit and these are, generally, legitimate services. Another giveaway of a scam is if a high-production value video is created that depicts people who were in financial trouble, but now are multimillionaires by using a miracle software which they wish to now give away to you, for free. Promises of exuberant amounts of money in short periods of time, along with falsified bank account statements, are often shown to get the person watching the video, excited and ready to deposit. Sometimes the videos are, however, smarter in that they denigrate other known scam services claiming that this one is different and may even use obfuscation techniques such as reference to extremely scientific terms with the view to give the impression that some magical, scientific holy grail has been discovered. The final giveaway is if the win rates or amounts promised are too good to be true. In Binary Options you need around a 58-62% win rate or so called ‘ITM’ (in-the-money) in order to grow your capital over time. Win rates of 63-65% are world-class and any thing touching 70% is rarely sustainable. Scam services may promise win-rates of 70-90%, however, these are either falsified or derived from a very small sample set of data and not representative of long term results.

6 Risk warning: Binary Options trading is high risk and can result in substantial losses. Nothing contained inside this e-book is investment advice.

What's Best? If you are serious about your long term career in Binary Options, put away your real money or take out your lunch-money which should be no more than $200-500 and start learning how the market functions. At first you need to learn what the market is, how complex it can be and then how to navigate it. There are technical and fundamental aspects to be learned. Blue Sky Binary is a leading binary options education provider that has a 12-week course known as BSB Trader University (www.blueskybinary.com/university). It takes newbies to intermediate level clients and transforms them into semi to fully professional traders in Binary Options. The process involves theoretical learning of cutting-edge strategies, exams, one-on-one tutor lessons and live trading. It covers both technical and macroeconomic fundamental aspects. Last but not least, it provides you access to a trading tool known as the Binary Dashboard, which finds trade opportunities for you. If you do not have time to learn, you are dramatically reducing your long term potential in Binary Options, however, you can try out our signal service, Signal Hive (www.signalhive.com), which is a highly transparent signal service with both robotic and human senior traders. All our services offer zero-risk free trials and do not require broker deposits. By all means we are not the only transparent education and signals provider in Binary Options; a mere Google search may reveal competitors who share our ethos of transparency and quality. Feel free to do your own research and come to your own conclusions. But we hope this primer has helped heighten your senses before you enter Binary Options. As a thank you for taking the time to read this, we are giving you a Binary Options trading strategy which should be practiced first on a demo account and then when you experience stable win-rates, feel free to move to a live account and practice good money management when you trade it.

7 Risk warning: Binary Options trading is high risk and can result in substantial losses. Nothing contained inside this e-book is investment advice.

Turbo Strategy A key facet of binary options is the concept of expiry. The Binary Option trader determines when the bet will expire and only when it has expired, does the trading platform determine whether or not the bet was a winner or loser. Binary Option brokerages provide a wide gamut of expiries; right from a few seconds to a few days and even months. This strategy will focus on expiries of  5 minutes and is outlined over 8 steps.

Get access to a free chart provider like www.freestockcharts.com or www.netdania.com or www.oanda.com (FX Practice account). Select either EUR/USD, AUD/USD, USD/JPY, AUD/JPY, GBP/JPY, EUR/JPY or USD/CHF on your chart provider, zoom-in to the 5-minute chart time frame and switch to Candlestick charts making sure to add Bollinger Bands (14,2 setting). Finally add RSI (Relative Strength Index) and the Slow or Fast Stochastic Indicator to your chart (both should have periods of 9 set). Look for a flat Bollinger channel.

Once located, glance at the RSI level and ensure that the RSI reading is in between 40 and 60. Ensure that there is no news that is about to happen. Generally speaking, there is little to no news between 16-22pm GMT making this time zone the safest for this strategy. Wait for the current 5-minute candle to close and if it closes up (green colour) and creates a sharp spike up on the Stochastic indicator as well, then take a PUT for 5 minutes, betting that the price over the next 5 minutes will drop. If the candle you were observing closed down (red colour) and created a sharp spike down on the Stochastic indicator, then you would consider taking a CALL for 5 minutes. This is how the setup should look!

8 Risk warning: Binary Options trading is high risk and can result in substantial losses. Nothing contained inside this e-book is investment advice.