Please contact us if you are interested in trading Binary Options, and we will guide you every step of the way.

Binary options belong to a category of investment products called exotics, because they are not mainstream. You can easily find information on the internet about this asset class, but very often you see terms which brand binary options as “risky”, “scam”, or “gambling”. Well we were curious what this was all about and wanted to test it ourselves.

Why trade Binary Options using MT4?

Firstly, we wanted to trade using Metatrader 4 because we trade currencies from MT4, and thought it would be wonderful if there was a plugin of sorts which will allow us to also trade binary options as well. After hunting high and low, we finally found a forex broker which offers such a function.

What to look for when selecting a Binary Options broker

We select a broker with the following qualities:

• The broker must be regulated
• The broker must be contactable via live chat, phone and email, and must be responsive to our queries
• The broker must have a physical office and this we visit personally
• The payout of the binary option should be about 80% or more
• The minimum trade size are within our risk appetite; some brokers allow you to trade with as little as $1

Functional check on MT4 Binary Options Trading

After opening an account with the forex broker, we downloaded their Metatrader 4 platform, as well as the Binary Options plugin. When you open the MT4, it will run as per normal:

How to execute a Binary Option trade on MT4

Our broker gave us a $500 demo account to try the software. Select your preferred currency pair from the Market Watch window which appears on the top left hand side of the terminal. For trading binary options, the list of currency pairs appears with “bo” suffixed at the end. To see the entire list go to Symbols → Right-click → Show All.

Select your preferred currency pair , say EURUSDbo. You can either double-click on it or select EURUSDbo → Right-click → New Order.

Money management on Binary Option Trading

Once you double click on “EURUSDbo”, the will be a pop up screen as shown below. Select the amount of currency you’d want to bet under INVESTMENTS.

Let’s say you think EURUSD will go up in the next 60 seconds – your investment amount is $5, you select an expiry as 60 seconds, and then click on UP button. This means you are betting that the currency value will go UP from the current level within 60 seconds.

Which Time Frame to use on Binary Option Trading

In order to determine what time frame to watch on your chart, you must first assess how much time you actually have each to look at your charts. If you only have 20 minutes to check out charts after you have worked a full day and most of the major markets are closed, day trading isn't a viable option. Therefore, you'll need to focus primarily on 4-hour or daily charts which allow you to see longer term trends so you can base your trades on those. You'll most likely have to be a swing trader, or longer-term trader, with trades lasting several days to a few weeks in the latter case.

If you have a few hours during the day to dedicate to your charts, while major markets are open, then you have a few more choices. If you like sitting in front of your computer and actively trading with "your finger on the trigger" so to speak, then a watching a short-term time frame, such as a 1 or 2 minute chart is likely ideal. This time frame will give you the most trade set-ups for the time you have.

If watching every tick of the chart drives you crazy, then you'll likely want to use a 5 or 15 minute chart. You'll still likely get some trade signals, but not as many.

The examples in this article use the 60 second time frame. You can see a timer running on your left hand side of the pop-screen. The timer will notify how much time is left for the option to expire. And the graph on the right hand side shows the price movements of the currency (in red).

What is the Risk to Reward on Binary Option Trading

On completion of 60 seconds the option automatically gets expired. On a Long trade, if the currency value went UP, then you WIN and have made a profit. You will be paid your winning amount which will vary between 70%-85% of the investment depending on the time period chosen for the trade.

You will see the details of the option (profit on that option, your initial investment, etc) right below the graph. If the currency price moves in the opposite direction of your trade, then you lose the entire investment amount. Note that when you lose, you lose the ENTIRE investment, but when you win, you win about 70% – 85% of your investment.

You can enter both long and short positions in Binary Option Trading

Similarly you can also bet on the currency price going DOWN within 60 seconds.

In the event the currency price doesn’t drop, then you lose your entire investment and you see LOSS on the screen.

On the other hand, if your prediction about the currency price going DOWN is right, you automatically make a PROFIT.

Contact us if you are interested in Trading Binary Options on MT4

Please drop us an email on this page.