Five choices that put you in control

1. Before the click: five choices

Every binary trade is made of five choices. Most platforms let you make them in a few seconds. Make them on purpose.

1. 1

   The asset

   What you are trading: a currency pair such as EUR/USD, gold, a stock index, a share or a cryptocurrency. Each asset has its own rhythm. EUR/USD is most active when London and New York are both open. A share barely moves outside its exchange’s hours. Choosing an asset is also choosing when it makes sense to trade it.

   What to checkIs this asset active right now, and is it a real-market asset or an OTC one? (More on that in section 5.)

2. 2

   The amount

   How much you invest in this trade. It is the most you can lose on it, and it is decided before anything happens. That is one of the real strengths of binary options: your risk is known to the cent.

   What to checkIs this amount consistent with your rule? We come back to sizing in Chapter 3. For now, remember one thing: the amount is decided by your plan, never by your mood.

3. 3

   The direction

   Up or down. Higher or lower than the price at the moment you click. This is the only decision most people think about. You now know it is one of five.

   What to checkCan you say in one sentence why you choose this direction? If not, you do not have a reason yet, you have a feeling.

4. 4

   The expiry

   When the trade closes. Depending on the platform, you set a duration (5 minutes) or a fixed closing time (14:30). The price at that exact moment decides the result.

   What to checkDoes the expiry match your reason? A reason based on a trend over the last hour rarely plays out in 30 seconds. A reason based on a scheduled news release needs time for the market to react.

5. 5

   The payout

   The percentage of the amount invested that you earn if you are right. It is shown next to the asset, often between 80 and 92%, and it changes with the asset, the time of day and market conditions.

   What to checkThe exact figure, every time. Section 6 shows why this single number deserves more attention than most strategies.

2. The click: your trade is locked in

From here, a trade lives in three moments.

1. 01The clickThe entry price and the expiry are locked in.
2. 02During the tradeThe price moves. Nothing is decided yet.
3. 03At expiryOne price, at one moment, decides the result.

When you click Higher or Lower, the platform records two things: the entry price and the expiry time. From that moment, the question is fixed. It is no longer “will the price go up?” but “will the price at 14:35:00 be above 1.0850?”

This is worth saying plainly because it changes how you read the screen. Your trade does not care about the price at 14:31, 14:32 or 14:34. Only one price counts: the one at expiry.

3. During the trade: the only price that counts

While your trade is open, you will see the price move around your entry line. Above it, your trade is in profit for a moment. Below it, in loss. Then above again.

Watching every tick pulls your next decision toward emotions. Looking at the trade when it opens and when it closes keeps your head clear for the next one. The price in the middle of the trade is information, not a result.

4. At expiry: the result

At the expiry time, the platform compares the price with your entry price.

A worked example. You invest $10 in EUR/USD going up, with a 5-minute expiry and a 90% payout. The entry price is 1.0850.

Compare the first and the last rows. A move of 3 hundredths of a cent and a move of a full cent pay exactly the same. In binary options, the size of the move does not matter. The direction at a precise moment does.

This is the opposite of classic trading, where you need a big move to earn a meaningful amount. It is what makes binary options open to small accounts. It is also why timing and the choice of expiry matter so much.

5. Real market or OTC: know what you are trading

Most platforms list two kinds of assets, and they can look identical.

• Real-market assets follow prices from the financial markets. They are available when those markets are open.
• OTC assets (“over the counter”) are priced by the broker. They are usually marked “OTC” next to their name, and they are the ones still available at weekends.

Why it matters: the tools you will learn in Chapter 2, news, market sessions, chart reading and indicators, are built on the behaviour of the real market. On an OTC asset, there is no economic calendar driving the price, and its history is the broker’s, not the market’s.

6. The number that decides: the payout

Here is the most important example in this course.

Imagine a trader who is right on 55% of their trades. Over 100 trades of $1:

Same trader. Same decisions. Same 55%. One ends below zero, the other above, and the only difference is a number displayed next to the asset. That is good news: the payout is a number you can check, and choose, on every trade.

Move the two sliders below: you will see the line every binary trader has to beat.

That line is the subject of the next lesson: the break-even rate, the one figure every binary trader should know before clicking. It is also the idea behind the name of this course. Your edge is the gap between your win rate and that line.