Welcome to our binary options portal! We pride ourselves to be the best Binary Options Trading Guide in South Africa. Here you will find everything you need to know about trading binary options.
Binary Options South Africa
We explain in detail how binary options work, we present you with a step by step guide and we provide you with the very best binary options brokers for South Africa traders.
Please find for further reading in the main menu to your right and further down this page you’ll find an introduction to binaries as well as lots of other trading related information.
What is Binary Options
Binary Option Definition
A Binary Option is a derivative instrument and a type of option where the objective is to predict if a currency (forex), a commodity, a stock share or an indices will move up or down during a specific time period.
With binary options you decide which underlying asset you would like to speculate with, set a time frame, decide the stake and then decide if you think the asset will be moving up or going down. If you are correct you will win a specified amount. If you are wrong you loose the amount that you’ve bet.
When trading binary options you can never loose more than what you have bet. Your bet is your investment. And you always earn a fixed payout should you make a winning trade. As the term binary implies there are only these two possible outcomes. A ”win”, where you earn a fixed payoff or a ”loose” where you loose the amount you’ve bet.
Binary Options Trading
One of the main benefits with binary options trading is that you always know before hand how much you stand the risk of loosing. Which means that your risk assessment is much easier with binary options than say with forex trading and trading CFDs.
The other main benefit of trading binary options is it’s simplicity. Forex trading has a larger potential payout. But the same is also true for the losses and trading forex is a complicated process. Binary options on the other hand is very simple in theory. The real challenge is, as with forex trading, to predict the movement of the underlying asset. And though this might look easy enough at times, in reality it is not. It takes a lot of investigating and keeping track of all the variables that influence the asset.
But if you do your homework and study your assets, the theory of trading binary options will not stop you from making money. Here’s how it works.
How Binary Options Work
Trading binary options is quite simple. We will guide you to the process with a step by step guide to binary options trading.
Binary Options Trading - Step by Step Guide
1. Choose your Underlying Asset
You can choose from a vast variety of different underlying assets. The assets are divided into four categories:
Currency pairs is the most popular asset when trading binary options. You can choose from a wide variety of currency pairs, including the majors EUR/USD, GBP/USD, USD/JPY, CHF/USD and several other combinations with CAD, AUD, NZD, MXN, SEK and others.
Some brokers do also offer binary trading with the South African Rand - the ZAR. EUR/ZAR and USD/ZAR are available for trading in South Africa with these binary options brokers.
Commodities is another popular asset. Trading gold, oil, copper, silver, coffee, wheat, sugar and many other commodities is an exciting part of binary option trading
Mostly this refers to stocks listed on the major stock exchanges in the United States. You can trade stocks like Google, Apple, IBM, BMW, BP, Facebook, Netflix etc at most brokers.
But also smaller stocks listed in other countries can be found depending on which brokers you choose for your trading.
Major stock indices like Nasdaq, S&P 500 and Dow Jones (DJIA). But also stock indices in other countries are available like NIKKEI (Japan), DAX (Germany, DJ UK (United Kingdom) as well as South Africa 40 (JSE) and many others.
2. Set your Timeframe
With binary options you have a wide selection of different timeframes. And the exact amount depends on which binary broker you trade with. The most common time fram is 5 minutes. But you can also trade with timeframes of as low as 60 seconds or 2 minutes. Or, if you prefer longer time frames, there’s 10 minutes, 20 minutes, 1 hours, at the end of the trading day, several days up to weeks and even months.
3. Decide the Size of Your Bet
Here you decide your stake, meaning, how much you want to bet. The minimum and maximum bet depends again in which broker you choose, but usually the min bet is somewhere between 1 USD up to 25 USD. The max bet however can vary a lot depending on which binary broker you choose, it can be 3000 USD or it can be as high as 100 000 USD depending on the broker.
Once you decide how much you want to bet you will also directly see the potential profit, your ”win”. So, the entire risk with one single trade is the size of your bet, your stake. The outcome is always twofold, either you loose your stake or you win a fixed amount. This is one of the reasons binary options are so popular.
4. Decide if you think the asset will go up or down - Call or Put
If you think the price of an underlying asset will go up, the you choose a Call Option. This means that you think that the price after the timeframe that you’ve set will be higher than at the time of purchase. Call options are sometimes also referred to as Buy options.
If you think that the price of the asset instead will go down, then you choose a Put Option. This then means that you think the price after the timeframe will be lower than it was at the time of purchase. Put options are sometimes also referred to as Sell options.
Different Types of Binary Options
There are a couple of different options when trading binaries. The most common one is the classic binary option, also sometimes referred to as Over/Under, and that is the one used for the step by step guide above. But lets explore the variety.
This is the classic binary option and the one usually referred to when using the term binary option in general. Here the objective is to decide wether an underlying asset will go up or down during a specific timeframe.
The objective here is to decide if an asset will reach a certain price during the timeframe. If the asset reaches the price, even if only for a few seconds, the one touch options pays out.
Pairs is a type of binary option where two underlying assets compete against each other. The most common pair option is Gold vs Silver. Here the objective is to predict which of the two assets that will perform the best during the timeframe.
A classic binary option (over/under) with longer time frames. The time frame can be everything from ”the end of the business day” up to several days, weeks or even months.
A classic binary option (over/under) but with shorter time frames. Here the time fram can be as short as 60 seconds or longer as in 1 minutes, 2 minutes or 5 minutes or even 10 to 20 minutes up to an hour.
A ladder options is a slightly more complicated binary option. Here you can choose several levels for your underlying asset. A ladder option works in a similar way as with odds in betting. Less likely outcomes holds a higher payout and more likely scenarios provides a lower payout.
Depending on the volatility on the market you and which levels you choose you can affect the size of your payout. With higher payouts, naturally a higher risk will follow. But the risk is still limited to your stake and a ladder option is an interesting alternative for a trader looking to increase the odds.
Binary Brokers South Africa
When trading binaries you need a broker. And this broker needs a license for trading financial instruments in South Africa. We have collected the best binary brokers for South Africa here. And on this page you will also find a more thorough explanation of what to look for in a broker. But we will present the main points right here.
1. Make sure the broker is fully licensed.
This is the most important point. The legal situation in South Africa is that trading binary options is indeed legal but not yet regulated. So, to make your trading safe you have to find a broker that is fully licensed for trading binary options and that also have a license for offering their services in South Africa.
Now, we have done this job for you. But in the end its your responsibility to make sure of this. So, always make sure to check the license ot the broker site before signing up. That said, all brokers presented on this page are licensed and regulated to trade binary options and to offer their services to clients living in South Africa. Meaning it is indeed legal and you will be trading with a licensed broker.
2. Which underlying assets are you planning to trade
If you are looking to trade the most common assets like the major currency pairs or most common commodities like Gold and Oil this is not the main issue as basically all brokers provide this service. But if you are interested in trading not so common assets, as for instance the ZAR, then make sure that the broker offers this specific asset. A list of assets can be found at the broker website.
3. Binary Options Platform
This is the software where you will make your trades. A good binary platform is easily understood and you can make your trades knowing the payout (both percentage and actual payout). You also want to be able to follow the price of the assets you which to trade. You want highs and lows and of course a graph where you can follow the movements both live and historically.
If you’re new to binary options trading this is an important factor. A good educational program explains binary options and also presents and explains the binary platform. Most educational programs are free once you create an account. So, this is actually a smart way to also evaluate a broker - create a free account and check out the educational material. if you like what you see, this might be the broker for you.
5. Customer support
This is also an important factor. A good broker has a great customer support. You are the customer and if you feel that you are not taken care of properly, it’s time to change broker. We have tried out the customer support of every single broker on this site. And all of them passed. But, things can change and it’s also somewhat an subjective opinion. So, it’s not a bad idea to make sure for yourself.
6. Signup bonus
Don’t stare yourself blind on the bonus offer. Longterm this holds no real value as the other factors are far more important. But that said, a good signup bonus is still a good signup bonus. So, if it’s there use it wisely.
Risks With Binary Options
As mentioned before, with binary options you can never loose more that you have put into the bet. Meaning your stake is your entire risk. This makes binary options a very clear and controllable way of speculating. That said, obviously there are risks also with binary trading.
The most common trap that beginner traders fall into is that they think, due to the simplistic theory of binary options, that it’s easy to make money. It’s not. Everyone can get lucky sure, but to be successful longterm you have to do your homework and base your decisions on a well thought out strategy.
Never trade for money you can’t afford to loose and always have a well thought out plan for every trading session. And stick to it. Always. If you can stay true to these simple guidelines you have a good chance of becoming a successful trader.