With Range Binary Options you need to pick whether an asset will finish In or Out of a defined price range. At expiry the price of the asset must be inside the range to have a winning trade if you selected In.
If you selected Out, the asset must be outside the prescribed range at expiry in order for you to win.
If you win your payout will typically be between 60% and 80%–if you bet $10 you will receive $16 to $18. If you lose, you will lose your $10.
If you look through several different brokers’ trade screens you will immediately see that payouts or returns vary between brokers. Some payout are as high as 80% while others are more toward 60 or 70%. The “fine print” can sometimes shed some light on these varying payout levels.
Some brokers offer a small rebate on losing trades, such as 5% or 10%. So if you place a $100 trade and lose, you don’t lose your entire investment, you get $5 to $10 back in this case. No all brokers do this, but some do, and may be why payouts are a bit lower. With this losing-trade-rebate your risk is a bit smaller, but likely your payout will be too.
Also, binary options are largely unregulated, which means most binary options brokers can create all sorts of products which will vary from broker to broker. This means comparing one broker to another isn’t exactly like comparing oranges to oranges. Even basic binary options can vary between brokers.
Some brokers also provide additional tools you can use to help with your trades. “Sentiment” indicators are a popular one. When you pull up an asset in the trade screen you may see a green and red indicator named “Call/Put” or “Bulls/Bears” or “Traders Choice.” What these indicators tell you is what percentage of traders (currently trading that option with that broker) have bought calls and puts. The green percentage is usually Calls and the red percentage reflects Puts. Figure 4 shows Cedar Finance’s sentiment indicator for the EUR/GBP called Trader’s Choice.