What are binary options and how do they work?

In the previous article, we discussed what binary options are, how they function, and what makes them unique. Today, we’ll dive deeper into the specifics of this topic.

Why is this important? To ensure you fully understand what you’re dealing with and to prepare for any challenges you might face in the future. Additionally, as I promised, my goal is to gradually provide all the essential knowledge that will ultimately help you become financially independent and successful as a trader.

Two Types of Binary Options: Bookmaker and Exchange-Traded

As we already know, binary options are available to a wide audience, but they are essentially divided into two types:

• Bookmaker Binary Options
• Exchange-Traded Binary Options

The distinguishing feature of bookmaker binary options is that, when you place a trade, you are not buying any actual asset but simply betting on the direction of the price—much like a wager. In exchange-traded binary options, it’s different—you actually purchase the asset, and your profit depends on its movement in the market.

Bookmaker Binary Options: Advantages and Risks

Bookmaker binary options have gained popularity, and the previous article focused on this type. One of their main advantages is simplicity—allowing for quick earnings based on price predictions. However, these options also come with risks since the trader does not own any real asset.

Exchange-Traded Binary Options: How Do They Work?

Unlike bookmaker options, exchange-traded binary options allow you to directly buy assets. This means you are participating in the price movements of real assets, such as stocks, currencies, or indices. This type of option is more complex but also more reliable since trades occur on regulated markets, not against a broker.

Differences Between Bookmaker and Exchange-Traded Binary Options

The primary difference between bookmaker binary options and exchange-traded binary options is that, with the former, you are betting on price movements without acquiring an asset, while with the latter, you buy the asset and your profit depends on its rise or fall on the exchange.

How to Choose Which Type of Binary Options to Trade?

When choosing between bookmaker binary options and exchange-traded binary options, it’s important to consider your goals and experience level. If you’re a beginner and want to quickly learn binary options trading, bookmaker options might be the best choice. However, if you’re aiming for long-term investments and are ready to dive into market mechanisms, exchange-traded options might offer more stable opportunities.

Exchange-Traded vs Bookmaker Binary Options

If bookmaker binary options allow you to earn by predicting price movements with pre-determined profits, where you simply select a direction, exchange-traded binary options involve real market participation—directly influencing the asset price.

Another significant advantage of exchange-traded binary options is that traders compete against each other, unlike bookmaker binary options, where traders always trade against the broker.

So, are exchange-traded binary options better and more secure? Why aren’t we all trading on the exchange yet?

The problem lies in access—most people are unable to trade on binary options exchanges due to legal complications or the need for significant capital.

CBOE Binary Options

CBOE — the Chicago Board Options Exchange, where you can trade two assets:

• SPX Index (S&P 500)
• VIX Volatility Index (CBOE)

The trading platform at CBOE looks as follows:

As you can see, the CBOE interface is significantly different from the typical binary options platform. Additionally, CBOE only allows trades to be opened with a CALL option (buy), and sales are processed through a specific algorithm.

NADEX Binary Options

NADEX is another broker offering real binary options trading. The NADEX platform differs from binary betting platforms, but unlike CBOE, it allows trading a wider range of assets, including currencies:

Cantor Exchange Binary Options

Cantor Exchange also offers services for trading real binary options. Their platform more closely resembles traditional binary options platforms:

Features of Exchange-Traded Binary Options

As you now understand, exchange-traded binary options differ significantly from binary betting. Unlike bets, exchange-traded options:

• Do not allow you to know the exact profit beforehand for a correct prediction
• Require two participants—buyer and seller—to complete a trade

Opening an account with a binary options broker on the exchange can be challenging, as it involves going through a complicated registration process, often in English, which may also be subject to taxation. Additionally, these options require deep trading knowledge, making them far more complex than binary bets.

Moreover, some American binary options brokers do not allow accounts from certain countries. In general, the process is complex and rarely justified.

Bookmaker Binary Options

Bookmaker binary options are, in essence, the type of options you are likely to encounter. 99.9% of all ads you see for binary options are promoting binary betting.

In many cases, this can be an advantage:

• You don’t need a large bank account to start trading binary options
• No need for complicated registration procedures—everything happens within minutes
• These options are far simpler than Forex or other binary options
• You can consistently earn with them

What do we actually get? Binary options brokers simply display quotes of certain assets on their platforms, and traders make predictions about the price direction.

At the same time, binary options brokers often obscure the real nature of their business by presenting themselves as exchange brokers, which creates confusion among clients.

Even if you contact a broker’s support team to ask how trades are processed, they will likely tell you that your trades are executed on the real market. However, in reality, nothing of the sort happens.

Traders with these brokers do not trade against other traders—they trade only against the broker. Experienced traders can profit at the expense of less experienced peers, but the broker always takes the majority of the profits.

Again: bookmaker binary options have nothing to do with real exchanges—all trades happen solely within the broker’s system. The platforms can be described as "gaming" because they display real-time asset prices and allow bets on price predictions.

Interestingly, despite their "pseudo-components," the quotes provided by such brokers are genuine, taken from real quote providers. What does this mean? We can compare asset prices across different platforms, even those unrelated to binary options.

Comparison of Exchange-Traded and Bookmaker Binary Options

So, how do exchange-traded binary options brokers compare to bookmaker binary options brokers? Let’s break it down.

Exchange-Traded Binary Options Brokers:

• Regulated by the government
• Require large dollar deposits
• Limited selection of tradable assets
• Official market trading with real market orders
• No fixed payouts
• Account funding via bank transfer
• Complex account opening procedures
• Require significant trading experience
• Official quotes from providers

Bookmaker Binary Options Brokers:

• Regulation is optional (more of a downside)
• Deposits from a few dollars
• Numerous ways to deposit and withdraw funds
• Simple registration and verification
• A wide range of assets to trade
• No market orders
• Relatively easy to learn
• The payout percentage is known before placing a trade
• Official quotes from providers
• Often registered in offshore jurisdictions

When you trade with an exchange broker, you are competing against other traders, companies, and banks. With bookmaker binary options, you are always trading against the broker. This leads to issues such as account blocks, withdrawal problems, reduced payout percentages for successful trades, etc. However, many binary options brokers have long since overcome these "growing pains."

The History of Binary Options

The history of binary options dates back to 2008 when binary betting emerged. The simplicity of this financial instrument attracted many people, and its popularity quickly soared.

Since then, demand for binary options has spurred growth in the number of brokers, and many trading platforms emerged. Early platforms were basic, with limited features, but the low entry threshold (deposits from $10) attracted a massive influx of clients.

However, by 2013-2014, the binary options market became chaotic: the number of brokers increased, competition intensified, and many brokers began employing unethical practices such as blocking successful traders’ accounts and refusing to pay out earned funds.

Reliable Brokers for Binary Options Betting

As the binary options industry evolved, more honest and transparent brokers emerged, clearly explaining the nature of their platforms to clients from the start. One such broker is INTRADE BAR, which provides real quotes and does not mislead clients.

Why Binary Options Are Disliked by Many

Many people, after experiencing initial failures in binary options trading, do not attempt to fill the gaps in their knowledge and instead begin writing negative reviews. They blame brokers, quotes, and everything else except their lack of preparedness.

Moreover, binary options are often portrayed in advertisements as gambling, misleading new traders. They come to the market expecting "easy money," but reality turns out to be far more challenging than anticipated.

Common Misconceptions About Binary Trading

Let’s discuss the most common misconceptions among beginner binary options traders:

1. Profit from a correct prediction is always less than 100%
   This is true, but even 80% profit from a correct prediction is considered a good result. Furthermore, earning less than 100% does not necessarily mean you will lose your deposit. It simply makes trading more challenging and requires that you achieve at least 58-60% winning trades to break even.
2. Asset quotes differ from stock and Forex markets
   Forex has two prices—buy and sell. In binary options, there is only one price, which is an average between buying and selling prices. Additionally, quotes may vary slightly depending on the provider. Overall, the difference is minimal and only becomes noticeable on short-term options (from a few seconds to a minute).
3. Withdrawal problems
   Many brokers require account verification for withdrawals. This procedure can usually be completed before making a deposit, avoiding unnecessary hassle. Issues may arise if the terms of service are violated, such as having multiple accounts or attempting fraud.



4. You can profit with a minimal deposit
   Some brokers allow you to start with a deposit of $10 or even $5. However, a small deposit is often insufficient for effective trading, which leads to traders frequently losing money, albeit in small amounts.
5. I will quickly learn profitable trading
   Unfortunately, it is impossible to master stable binary options trading quickly. The minimum learning period is six months to several years. This is normal because you need to absorb a lot of new information and adapt to the trading process.

Real Binary Options Without Scams: It’s a Reality

So what do we get from binary options in practice? Above all, it’s an opportunity to achieve financial independence. However, this requires significant time and effort to study both theory and practice.

In the beginning, you’ll need time to master basic trading skills. Gradually, you can add new knowledge and improve your results. Ultimately, you can earn money with binary options, but you should expect a realistic profit of 10-30% of your trading balance.

Larger amounts can be earned, but this increases risk, which is unnecessary in this business. It’s better to move slowly but steadily.

Today, many brokers offer binary options trading services. It’s best to work with brokers who have a good reputation and have been in the market for a long time. Don’t look for "quick earnings"—prepare for long and diligent work that will eventually pay off.

Trusted Binary Options Brokers for Beginners and Professionals

To make it easier for you to choose a trusted broker for binary trading, we have compiled a list of the best binary options brokers that offer excellent conditions for both novice traders and professionals. Choose a broker with optimal conditions for earning with binary options.

INTRADE BAR — Fast Payouts and Reliability

INTRADE BAR is a relatively new player in the binary options market that has quickly gained traders' trust thanks to a user-friendly platform and fast payouts. The broker’s main advantages include:

• Platform available in both Russian and English
• No account verification required
• Instant payouts
• Unlimited demo account for learning
• Minimum deposit of just $10
• Minimum trade of $1
• Trade profitability from 77% to 94%
• Real-time quotes from top providers

Try binary options trading with INTRADE BAR and experience the platform’s convenience for yourself!

Binomo — A Trusted Broker for Binary Trading

Binomo is a popular binary options broker with a solid reputation among both beginner and experienced traders. Its advantages include:

• Fast and stable payouts
• Unlimited demo account for strategy testing
• Minimum deposit of only 500 rubles or $10
• Minimum trade of 100 rubles or $1
• Profitability for successful predictions ranging from 60% to 96%
• User-friendly and functional trading platform
• Positive user reviews

Quotex — A Promising Broker with High Returns

Quotex is a promising broker offering competitive conditions and high returns. The main advantages include:

• Stable payouts with no delays
• Unlimited demo account
• Minimum deposit of $10
• Minimum trade of $1
• Profitability of up to 120% per successful trade
• User-friendly trading platform
• Quotes from top providers

Pocket Option — Great Conditions for Binary Options Trading

Pocket Option offers the best conditions for both beginners and experienced traders. The key benefits include:

• Guaranteed withdrawals
• Unlimited demo account
• Minimum deposit of $50
• Minimum trade of $1
• Profitability for successful predictions ranging from 60% to 96%
• User-friendly platform interface

Binarium — A Convenient Platform for Binary Options Trading

Binarium offers an intuitive platform and high profitability on longer-term trades. The broker’s benefits include:

• Guaranteed payouts
• Unlimited demo account for learning
• Minimum deposit of only $10
• Minimum trade of $1
• Profitability from 60% to 90% for successful predictions
• Excellent user reviews

Deriv — The Oldest Binary Options Broker with a Solid Reputation

Deriv is one of the oldest binary options brokers, operating since 1999, and offering advantageous conditions for binary options trading. Its key advantages include:

• Stable payouts
• Unlimited demo account
• Minimum deposit of $5
• Minimum trade of $1
• Profitability for successful predictions ranging from 60% to 90%
• Excellent user feedback
• One of the market leaders according to traders' assessments

IQ Option — One of the Best Platforms for Binary Options Trading

IQ Option is one of the most reputable brokers on the market, offering an advanced trading platform and high profits. The key benefits include:

• Fast and stable payouts
• Unlimited demo account
• Minimum deposit of $10
• Minimum trade of $1
• Profitability for successful predictions ranging from 60% to 800%
• One of the best platforms for technical analysis
• Positive user feedback

Profit from Binary Options Trading — What Affects Profitability?

In the world of online trading, binary options offer attractive profit percentages for correct predictions. Traders can earn between 50% and 96% of their investment on a successful trade, depending on the broker and chosen asset.

The average profit per trade ranges between 70% and 95%. The higher the percentage of profit per trade, the fewer successful trades are needed to break even. However, profits depend on several factors, including the type of asset, the time of trading, and the strategy for predicting price movements.

Key Factors Influencing Profitability in Binary Options

To maximize profits, it’s essential to understand the factors that affect earnings in binary options trading. The main factors include:

• The binary options broker you choose and their trading conditions;
• The trading assets involved (currency pairs, commodities, etc.);
• The time of day and activity of trading sessions (European, American, Asian);
• The predictability of the asset and market volatility.

How Binary Options Brokers Influence Profitability

Every binary options broker sets their own profit percentages for different assets. In most cases, profit percentages range from 70% to 96%, ensuring that traders remain motivated to trade on the platform. It’s important to choose a broker with high profit percentages to increase overall profitability.

Profitability Depends on Assets and Time of Day

Profitability in binary options varies depending on the asset being traded. Before important economic events or news releases, brokers may reduce profit percentages on predictable assets, such as currency pairs or indices, to minimize risk.

Additionally, the time of trading plays a crucial role in profitability. During active trading sessions in Europe and the US, especially for currency pairs like EUR/USD or GBP/USD, the market becomes more predictable, allowing traders to make more accurate forecasts. At night, during the Asian session, volatility decreases, leading to lower profit percentages.

Asset Predictability and Reduced Profit Percentages

Some assets are easier to predict, especially if they are in a stable trend or moving within a narrow range. Brokers often reduce profit percentages on such assets to balance risk and prevent traders from earning too easily.

Who Earns from Binary Options: Myths vs Reality

Many beginners in the binary options world wonder, "Is it really possible to earn with binary options?" The answer isn’t straightforward. To understand who and how profits from this trading platform, let’s explore several important points.

How Binary Options Work and the Broker’s Role

First, let’s highlight a few key features of binary options:

• Trades are not sent to real financial markets—you trade within the platform;
• You don’t buy or sell assets; you make predictions about their price movement;
• Trading is conducted against the binary options broker, who acts as a counterparty.

In essence, binary options do not involve traditional stock, currency, or commodity trading. It’s more of a speculation on price movements. As a result, binary brokers aren’t brokers in the traditional sense, although the term is often used for convenience.

Who Earns from Binary Options?

Is it possible to earn money from binary options? Yes, but it’s not as easy as it seems. In most cases, brokers make the most money, as around 95% of traders lose their investments for the following reasons:

• Belief in the illusion of easy and fast money;
• The mistaken assumption that binary options trading is simple;
• Expectations of instant profit without effort;
• Lack of market analysis skills and prediction strategies;
• Insufficient experience and capital management techniques.

Most beginners lose money due to insufficient knowledge of financial markets and a lack of risk management skills. These novices become a source of profit for brokers.

Successful Traders: How to Earn with Binary Options

However, it’s possible to earn money with binary options. About 5% of traders actually make profits by capitalizing on less experienced participants. The secret to success for these traders lies in:

• A deep understanding of financial markets;
• Skilled analysis of charts and market indicators;
• Effective capital management strategies;
• Practice and experience that enable accurate predictions.

The more knowledge and experience you have in binary options trading, the higher your chances of joining the successful 5%. Brokers act as intermediaries and earn their share, but you can also claim yours if you play it smart.

Risks and Responsibility in Binary Trading

It’s important to understand that losing money in binary options is not the broker’s fault—it’s the result of incorrect decisions by the trader. Ignorance doesn’t absolve you of responsibility. Successful traders earn their profits through knowledge and experience. If you don’t earn, someone else will, or the money will go back to the broker.

What Are Binary Options and Why Start Trading?

Have you ever wondered why you started trading binary options? Why do you need this, and how can it affect your financial future? Understanding the answers to these questions will help clarify your goals and motivations behind binary options.

Reasons to Start Trading Binary Options

I’ve spoken with many traders at different stages of their journey, and everyone had their own reasons for starting binary options trading. Here are some of the most common goals:

• Using binary options as a stepping stone to more complex financial markets;
• Achieving financial independence through short-term investments;
• Creating a financial safety net for starting a business;
• Earning seed capital for trading Forex or the stock market.

These goals show that binary options can be an effective tool for those looking to start a career in trading and achieve financial stability.

Why I Chose Binary Options

My motivation was simple—I was striving for financial independence, and binary options helped me achieve it. However, my interests have now shifted to creating helpful projects for traders like you. I continue to work in the binary options space because I understand the importance of psychological preparation, which plays a key role in successful trading.

Binary Options as the Key to the Financial Market

Why have binary options become such a popular choice for many beginners? The answer is simple: they provide an easy and accessible way to start trading in financial markets.

Accessibility of Binary Options for Beginners

For many, Forex seems complex and confusing. Many believe that deep knowledge and experience are required to trade in this market, so they don’t even try. In contrast, binary options offer a simpler and more accessible path, attracting traders with varying levels of knowledge and experience.

Binary Options — A Step Toward Greater Market Understanding

For many traders, binary options have been the first step into the world of financial trading. Some experience disappointment, while others gain their first experience and profits, pushing them to further explore the markets.

Binary options trading isn’t just about pressing buttons. Successful traders quickly understand the importance of chart analysis, market movement forecasting, and strategy development. These skills lay the foundation for successful trading in both binary options and more complex financial instruments.

Earning and Learning with Binary Options

Binary options offer the opportunity not only to earn up to 90% profit on a correct prediction but also to become the foundation for further professional development in trading. With minimal risks, you can learn how prices behave, analyze market data, and forecast asset movements, opening up new prospects in financial markets.

Pros and Cons of Binary Options: What You Should Know Before Trading

Binary options continue to attract many traders due to their accessibility and simplicity. However, like any financial instrument, binary options have their advantages and disadvantages. Let’s take a closer look at them.

Main Advantages of Binary Options

The main advantages of binary options trading include the following factors:

• High accessibility — the minimum deposit of just $5-10 makes binary options accessible to most people;
• Simple registration and verification — the process of creating and verifying an account doesn’t take much time;
• High profitability for correct predictions — you can earn up to 90% profit from a single trade;
• Real price charts — brokers provide access to up-to-date market charts, helping with market analysis;
• Profit from even small price changes — you can earn even if the asset price changes by just 1 point;
• A large number of tradable assets — hundreds of assets, including currency pairs, stocks, indices, and commodities;
• Convenient deposit and withdrawal methods — dozens of options for depositing and withdrawing funds.

Disadvantages of Binary Options

Despite the advantages, binary options have their downsides, which are important to keep in mind:

• Trading against the broker — you are betting not against the market, but against the broker, which creates additional risks;
• Fraudulent brokers — there are dishonest brokers and "fly-by-night" companies on the market that can scam traders;
• Lack of regulation — not all binary options brokers are regulated, making trading riskier;
• Misleading PR and advertising — advertising often exaggerates the profitability of binary options and creates false expectations.

Is It Worth Spending Time on Binary Options?

Before deciding to trade binary options, it’s important to realize that this is not a way to get rich quickly. To succeed in this field, you will need to invest a lot of time and effort into studying the market and developing a strategy.

Why Most Traders Fail

Statistics show that about 95% of binary options traders lose their money. This usually happens for the following reasons:

• Low wages and the desire to find quick earnings;
• Mountains of unpaid debts and the desire to resolve financial problems quickly;
• Dreams of quickly buying a car or house;
• Illusions of fast and easy money.

If you entered binary options trading with these expectations, be prepared for the fact that success will not come overnight. Brokers and experienced traders profit primarily from inexperienced beginners who are not willing to spend time on learning and developing a thoughtful trading approach.

Risks and Responsibility in Binary Trading

Binary options trading offers high returns, but also enormous risks, especially for inexperienced traders. It’s crucial to understand that all responsibility for success or failure lies solely with you. Are you ready to accept these risks and do everything you can to increase your level of knowledge?

Legal Status of Binary Options: What You Need to Know

Many traders wonder: are binary options legal? There is no straightforward answer to this question, as the regulatory status of binary options varies greatly from country to country.

Regulation of Exchange-Traded Binary Options

Exchange-traded binary options are regulated and recognized as legitimate financial instruments. They are available on major exchanges and adhere to strict regulatory rules, making them a safe and legal way to trade for those who want to invest in options through a regulated platform.

Bookmaker Binary Options: "The Grey Zone"

In contrast, bookmaker binary options fall into a so-called "grey zone." In some countries, they are classified as gambling, while in others, they are considered a financial instrument. However, their legal status often remains unclear.

In some countries, binary options are banned or subject to strict restrictions. However, brokers find loopholes by offering alternative types of options that do not fall under direct bans. This creates legal challenges for regulators, who may not always be able to effectively monitor this form of trading.

Legal Challenges in Regulating Binary Options

The problem with regulating binary options is that they don’t always fit into existing categories of financial instruments. This complicates the regulation process, as brokers continue to develop new types of options to bypass restrictions and attract new clients.

Conclusion: Exchange-Traded vs Bookmaker Binary Options

Let’s summarize what we’ve learned about binary options:

• Exchange-traded binary options are a complex and inaccessible instrument for most traders due to registration and document requirements.
• Bookmaker binary options offer a simple and accessible way to trade, although trades are not executed on the real market. However, they can be a profitable tool if approached correctly.
• Negative reviews about binary options often come from those who don’t understand this instrument and fall into the trap of promises of easy money.
• Binary options trading is not only an opportunity to earn but also carries significant risk, especially for inexperienced traders. There is no place for illusions here—only careful analysis and a thoughtful approach can lead to success.
• Binary options can serve as a springboard to more complex financial markets or help you build the capital needed to achieve other goals.
• Price charts are the same everywhere, and binary options are an excellent way to study market movements and learn how to analyze price movements for successful trading.

In conclusion, bookmaker binary options are not as bad as critics often claim. This tool offers many opportunities for experienced traders, but it can also lead to losses for those who are not prepared for the risks. The choice is yours: approach this market wisely with knowledge or become part of the statistics of those who failed.