Remember those early days of binary options when you could really only place one type of trade, High or Low? Those days are long gone. While every binary options broker under the sun still offers basic High/Low binary trading, most of them now offer a number of other ways to trade. Brokers everywhere are expanding their options (literally), and that opens up doors of opportunity for you as a trader. You no longer are confined to the same strategies and techniques you were in the past. With other types of trades available, you can potentially make money in many different ways.

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Here are some of the most common types of trades offered by binary options brokers:

  • High/Low: Predict whether a given asset is going to go bullish or bearish by the time the trade expires.
  • One Touch: Predict whether the price of a given asset is going to reach a particular trigger price by the time the trade expires.
  • No Touch: This is just like One Touch, only you are predicting that the price of a given asset will not reach a certain trigger value by the time the trade expires.
  • Boundary/Range: Profit if price keeps trading in a certain channel.
  • Pairs: Profit off of the relative performance of one asset vs. another (usually stocks).
  • Ladder: Profit in increments as price gradually rises or falls. This is the most complex type of binary options trade available right now.
  • 60 Seconds/Short Term: Win or lose a High/Low trade in just 60 Seconds. Other Short Term options are also available ranging from around 30 seconds to 5 minutes. These trades are not for the faint of heart!
  • Long Term: These High/Low trades last for weeks or even months. You may even find expiry times as far as a year away.

On one hand, it is exciting to have so many different types of trades available! On the other hand, it can be kind of overwhelming, especially if you are still brand new to binary options trading. With so many different types of options to explore (and hopefully profit from), which ones are right for you?

The answer to that question hinges on the types of markets you want to trade in, the strategies you want to use, your personality as a trader, and other factors. Here are some questions you should ask yourself:

  • How experienced am I? If you are just starting out, it is best to start out with the more basic types of trades like High/Low, One Touch, and Boundary, and stay away from more complicated types of trades like Ladder (for now!). You also probably want to avoid Short Term trades if you are a newbie and stick with standard trades lasting several hours or days or even Long Term options. Check out MarketsWorld if just starting out.
  • What timeframe am I comfortable looking at and trading? Most traders will be most comfortable to begin with in trades lasting several hours or several days. You may eventually discover that you lean toward Short Term or Long Term trades. Always trade the options which you are comfortable with. There is nothing “better” or “cooler” about one type of trade over another. Short Term options are aggressively marketed. If you enjoy them and are profitable, excellent. If not, do not force yourself to trade them!
  • What kinds of market situations am I interested in? What types of systems and strategies do I like? Do I enjoy trading trends? Reversals? Do I want to make money in flat markets? If you want to use a system that profits off of price movements, you probably should go with High/Low, One Touch, and other types of options which rely on price movement. Systems designed to predict lack of price movement would do well for No Touch or Range trading. Those types of trades are designed for relatively flat markets, which is very cool, since there really is nothing like that available for traders outside the binary options world.
  • What types of assets do I want to trade? It makes no sense to pursue stock pairs trading if you only want to trade currencies (though we are starting to see some brokers offering other types of pairs using different types of assets).

Since there really are a lot of different ways to make (or lose) money on binary options, I suggest that you start with one and only one type of trade and learn a trading system that will help you profit with it! As a beginner, you should go with one of the “easy” types of options I mentioned earlier. Start by playing around with different trading systems (on paper, not with real money!) until you find one that you like. Ask yourself which type of trade it would logically be best suited for.

Then start going through old charts on MetaTrader. Open a spreadsheet, and begin testing your strategies. You can only estimate at this point, because there is no way for you to know the historical expiry times and prices which were offered, but you should be able to get a grasp on whether or not you would have been profitable. If you determine you would have been, it is time to start demo testing your chosen strategy in real time on a binary options platform that offers the type of trading you are interested in.

At that point, you will finally have a chance to bring it all together and find out whether your system will be profitable. You may actually want to try more than one type of trade at this point. You could discover the system you developed for High/Low is actually more profitable for One Touch or vice versa, or One Touch suits your trading personality better.

The main points I want to get across here are these:

  • There are many different ways to trade binary options nowadays, far more than there were in the past. That does not mean you need to try them all. You can if you want to, but it all comes down to what is best for you. You may be a trader who excels at many different types of options, but you may not. You may do best just choosing one or two types of trades you are really comfortable with and becoming an expert in those.
  • A single trading system may or may not be profitable for different types of trades. Maybe you will discover that your trading system is great for No Touch and Range trading—or maybe it will only work for one or the other. The only way to find out is by testing. Your trading system will probably determine the types of options you trade and not the other way around.
  • There is no “best” way to trade, and no type of trade which is superior to another or objectively more exciting. A certain type of trade may be more exciting to you, but this all comes down to individual preference.

At the end of the day, it is your own preferences, strengths, skills, and strategies which will determine how you trade. I recommend you decide on a trading system to demo test before you select a binary options broker. That way you can choose a broker that offers the types of trades that are right for you. If you choose your broker first, you may be tempted to try and “fit” your strategies to the types of options the broker offers. Learning a trading system that you can use effectively is the single most technically challenging aspect of binary options trading. Master that first, and then decide what you want to trade based on how that trading system empowers you to profit!