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How to Trade Binary Options

Binary Options are a simple and fast way of taking a view on spot forex rates, stock index futures, commodity futures and economic events with strictly limited risk. Here's a quick guide to trading the financial markets with Binary Options.

Quick guide to Binary Options

Binary Options express simple ‘Yes/No’ propositions. Do you think Gold will be valued above $1427 at 1.30pm ET today? If ‘yes’ you Buy the option. If ‘no’, you Sell it.



If the conditions of the option are met and Gold is valued above $1427 at 1.30pm ET, the option settles at 100; if it doesn’t, the option settles at 0.



The price you buy or sell the option at dictates your profit or loss. Here if you buy one contract at 18.50, your potential profit is $81.50, while your maximum possible loss is $18.50 (profit/loss figures exclude Nadex’s trade fees).


Conversely if you sell one contract your potential profit is $13.50 while your maximum possible loss is $86.50 (profit/loss figures exclude Nadex’s trade fees).


You buy one contract at 18.50. You can wait until the option’s expiry at 1.30pm ET to realize your
full profit or loss or close your position early. To do that, click the trade in the Open Positions window and place an order opposite to your opening order. In this instance, you would place an order to Sell. You can monitor your position in the Open Positions window.

However, you keep your position open and by lunchtime Gold has risen above $1427 and your option expires, settling at 100, giving you a profit of $81.50 (excludes Nadex’s trade fees).
Join Nadex to trade with limited risk on Gold and a wide range of markets.



For an in-depth introduction to trading Binary Options, other derivatives available on Nadex and trading strategies, please visit the Nadex Academy for a series of video guides.

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Nadex is subject to U.S. regulatory oversight by the CFTC.

The maximum risk for any trade is fixed and required in advance so you cannot be called upon for further funds. But please remember these are volatile instruments and there is a high risk of losing your initial investment on each individual transaction.