If you have read what I have already written about this issue it would be easy to understand that binary options are not my favourite asset for trading.
What is more, in my opinion we should not trade them at all due tothe fact that it is almost impossible that a trader can win here in the long run.
Binary options brokers
The binary options we should avoid the most are those of 1 minute to 1 hour, which excludes the vast majority of those products, so keen on short term trading.
The only difference between one minute and one hour binary options is that it will be easy to lose in the former.
Someone who deposits 500 USD and try to do 20 one minutetrades a day, I do not think that can last more than a week, normally, if using 25 units bets.
If you are able to last more than a week it will probably due to luck.
If you are able to survive for three weeks like that you can consider yourself a hero.
In one hour bets as the market does not allow to do as many as the shorter ones, it will take more time for us to blow up our money.
Besides, in this kind of bets, we will be able to try to take some of the primary trend of the market.
It would be better if we could try to do even longer bets, like daily or weekly trades.
Therefore our life expectancy increases considerably and we are in conditions to take advantage of the market trends.
But it is better if we do not get carried away.
If the payouts are of 70 and 80% we will not be able to go too far.
For the people that still are keen on opening accounts with binary options brokers and try some short term bets, which is the only thing those brokers are meant for, it is better that you look providers that offer the minimum possible trade.
Many of the brokers only offer 25 USD or GBP minimum trades, which is not very good to start, especially for those with small savings.
However it depends on every case because someone that saves up 2.000 USD opening a 600 GBP/USD is not a big deal.
On the other side those who only save up 100 or 200 GBP per month and open 1.000 GBPs accounts, it is not recommendable to trade 25 GBP bets.
Other case is when we only dispose of a small amount of money, like 500 USD. In a case like this it is better if we choose the most flexible brokers.
In other words, the broker that permits the smallest possible trade. If it is 1 USD bet better for us.
But do not take me wrong; do not forget that even taking all precautions we will not be able to succeed there.
Day trading and Binary Options
Binary options bets and high frequency day trading in futures, stocks, forex or CFDs exist with the sole purpose of stealing the traders from their money.
That is why choosing a broker that allows us to do 1 USD bets is better because it is likely that we will notice earlier that we are not suited for binary options trading.
In other words, if we do 25 units trades, we will go bankrupt sooner.
In the strange case that we open an account and we start winning, for instance going from 600 to 800 USD, we will be able to apply some management rules and increase the bet from 1 to 2 USD. In this case we will bet more when we are doing the things well.
Binary brokers payouts
Besides, there is another key question related to this problem of choosing a binary options broker.
It is the simple fact of choosing the broker with the best payout.
In this regard the vast majority of brokers offer payouts that will hardly ever go over 85%, being of 70 or 75 in many cases.
It is very strange to find brokers that pay a 90% payout.
Although most people never think about it 70 or 80% payouts in binary options do not differ too much from a futures trade that last a few minutes. This is because when we trade the future we do not only pay commission but spread also, and not only once, but twice.
For example, for a 10 ticks move in the oil futures contract we need the price to move 11 ticks for us to make 10 and we need 9 ticks move for our trade to lose.
The bid and ask thing is very tricky.
If we add a commission for example of 6 USD, we have that we have won 8.4 and lost 11.6 for the same price move.
This would be equivalent to a 72% payout in binary options.
That is why I say that binary options trading is equivalent to short term futures trading.
The difference is not that big.
In other words, people cannot win doing short term trading in futures normally. That is why it is the market makers the ones that are keen on people trading so much. The more the better.
Then there comes the quid of the matter.
If we want to have some opportunities in this kind of markets we will have to go for the longer time frames.
For us to succeed in that kind of trading we need a better payout than the one that binary options offer nowadays.
70% payout for a trade that ends in two weeks time is not enough.
If we want a better chance we should aim to 90% payout trades or more.
If one day we see the binary options brokers offering more than 90% payouts then we will be able to do something.
For the moment being, it is better that we avoid binary brokers but especially big bets and focus on trying to get the better payouts.
Regards and good trading.