Trading Binary Options in the UK – A Comprehensive Guide

Binary options trading has become increasingly popular in the UK in recent years. This high-risk, high-reward form of investment offers UK traders the opportunity to speculate on the price movements of various assets.

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An Introduction to Binary Options

Binary options get their name because there are only two possible outcomes for each trade – either the trader wins a predefined amount or loses their entire investment. The trader simply predicts whether the price of an asset, such as a stock, currency pair, or commodity, will rise or fall over a set period of time.

If their prediction is correct, the trader receives a payout which is typically between 75% to 95% of their initial investment. If their prediction is wrong, they lose their full investment. Binary options are also referred to as ‘all-or-nothing options’, ‘fixed return options’ or ‘digital options.

Some key advantages of binary options trading include:

  • High potential returns – Payouts up to 95% are possible on each trade
  • Short expiry times – Some expire in just 60 seconds
  • Defined risk – The maximum loss is always the initial investment
  • Accessibility – Little trading experience required
  • Availability – Can be traded 24/7 on multiple global markets

Some risks to consider:

  • High risk – Complete loss of capital is possible on each trade
  • Volatility – Prices can change rapidly as expiry approaches
  • Overtrading – The ease of trading can lead to quick losses
  • Unregulated brokers – Many fraudulent firms operate illegally

Overall, binary options offer exciting opportunities for traders who take the time to learn the markets and manage their risk properly.

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How Binary Options Work

There are four main steps involved in making a basic binary options trade:

  1. Choose the asset you want to trade – stocks, currencies, commodities and indices are commonly available.
  2. Decide on the expiry time – options can expire anywhere from 30 seconds to one year. Popular times include end of day or end of week.
  3. Determine your investment amount – most brokers have minimums of $1 to $10 per trade.
  4. Choose your position – decide whether you think the price will rise or fall by the expiry.

Once these steps are complete, you simply wait for your option to expire. If your prediction was correct you take home the payout. If not, you lose your initial investment.

Some brokers also allow you to close your position early if the trade is moving in your favour. This allows you to lock in profits before the expiry time.

The Best UK Binary Options Brokers

There are several quality brokers based in the UK and regulated by the Financial Conduct Authority (FCA) that offer binary options products:

IQ Option

  • Minimum deposit of just $10
  • $1 minimum trade size
  • Award winning platform and trading app
  • Demo account with $10,000 in virtual funds

IQ Option offers over 350 underlying assets spanning stocks, cryptocurrencies, forex and indices. The expiry times available range from 60 seconds up to one month.

Expert Option

  • $10 minimum deposit
  • $1 trades available
  • Responsive trading platform with technical analysis tools
  • Range of learning resources for beginners

Expert Option provides traders with fixed time trades, short term options, and a wide selection of over 100 assets. Popular assets include commodities like gold and oil.


  • Low $10 minimum deposit
  • Demo account provided
  • Easy to use web and app trading platforms
  • Helpful range of educational resources

Olymp Trade has been operating since 2014 and offers trading on currency pairs, cryptocurrencies, commodities, stocks and indices. The expiry times range from 60 seconds to 3 hours.

Strategies for Success

There are several binary trading strategies that can be applied to improve your chances of success:

  • Follow the trends – Analyse historical charts to identify patterns and trends. Open positions in the direction of the prevailing trend.
  • Use technical indicators – Indicators like moving averages and Bollinger bands can identify opportunities to trade reversals.
  • Focus on volatility – Volatile assets like Bitcoin provide opportunities for quick profits during periods of high fluctuation.
  • Trade the news – Scheduled news events and earnings reports can lead to increased volatility and trading opportunities.
  • Use candlestick patterns – Candlestick formations like ‘doji’ and ‘hammer’ can indicate potential reversal points.
  • Manage your risk – Effective risk management is key. Never risk more than 2% of capital per position.

With the right broker, effective strategy and good risk management, binary options trading can offer exciting opportunities for traders based in the UK. Just remember to do your research and never risk more than you can afford to lose.

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Taxes on Binary Options Trading

The tax treatment of binary options trading in the UK depends on whether it is performed as part of your trading business or solely for leisure as a hobby.

For business activity:

  • Gains made from binary options trading are taxed as business profits.
  • Losses can be offset against future profits to reduce your tax liability.
  • You must declare this income on your tax return.

For hobby activity:

  • Profits are subject to Capital Gains Tax at your marginal income tax rate.
  • You have a tax-free allowance of £12,300 per year (2022/23).
  • Losses cannot be offset against future hobby profits.
  • No need to declare gains under the allowance on your tax return.

It is important to keep accurate records of your trading activity to calculate potential tax liabilities. Reputable UK brokers should be able to provide you with a statement of your trading history upon request.


Binary options offer an exciting way for UK traders to speculate on financial market movements across a range of assets. While the profits can be high, it is important to only risk capital you can afford to lose as large losses can be incurred in a short period of time.

By selecting a reputable broker, implementing an effective strategy, managing your risk and understanding the tax implications, binary options trading can potentially yield strong rewards. However, like any high risk investment, caution is required.

Author: Dominic Walsh

I am a highly regarded trader, author & coach with over 16 years of experience trading financial markets. Today I am recognized by many as a forex strategy developer. After starting blogging in 2014, I became one of the world's most widely followed forex trading coaches, with a monthly readership of more than 40,000 traders! Make sure to follow me on social media: Instagram | Facebook | Youtube| Twitter | Pinterest | Medium | Quora | Reddit | Telegram Channel

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