Trading Digital Contracts

Intraday investors often aim to make a high volume of fast-paced trades to maximize potential profits, and trading digital contracts is an innovative financial instrument that can meet their needs. These derivatives pose a simple question – will the price of an asset go up or down over a specific timeframe? Whether the day trader bets the correct way or not, they will profit or lose an amount that is determined before the digital contract begins, meaning they can quickly move onto the next trade.

This guide will explain how trading digital contracts works with examples and outline tips for getting started. We also rank the top digital contract trading brokers in 2024, as well as provide guidance on how beginners can follow a strategy and design their own system for trading digital contracts.

Digital Contract Brokers

  1. Pocket Option - Pocket Option offers ultra-short-term binaries from 5 seconds on one of the simplest web platforms for beginners. Payouts rival alternatives at 90%+ while the ‘Double Up’ and ‘Rollover’ features provide further opportunities to profit. Considering the negatives, the suite of 130+ assets trails binary brokers like Quotex, which offer 400+.
  2. IQCent - IQCent offers binary options with above-average payouts up to 98%. The broker supports an online platform with basic analysis tools but a wide range of timeframes, from 1 minute to 1 month, catering to short and long term trading strategies. Considering the negatives, there are no binaries on stocks.
  3. Videforex - Videforex continues to offer binary options with 20% payouts on crypto and up to 98% on less volatile assets, beating many competitors. A wide range of contract lengths are also supported from 5 seconds up to 1 month. New users will appreciate the welcome deposit bonus.
  4. RaceOption - RaceOption offers 100+ binaries with decent payouts up to 95% and ultra-fast expiries from 5 seconds. With a $250 minimum deposit, clients can enjoy free deposits, fast withdrawals and a range of trading bonuses.
  5. CloseOption - CloseOption offers binary options trading on 30+ fiat and digital currencies through an easy-to-use web-based platform. 15 contract timeframes are available from 30 seconds to 1 month, suiting both short-term and long-term traders. New users also get a joining gift.

#1 - Pocket Option

Why We Chose Pocket Option

Pocket Option offers ultra-short-term binaries from 5 seconds on one of the simplest web platforms for beginners. Payouts rival alternatives at 90%+ while the ‘Double Up’ and ‘Rollover’ features provide further opportunities to profit. Considering the negatives, the suite of 130+ assets trails binary brokers like Quotex, which offer 400+.

"Pocket Option excels for its easy-to-use web platform which provides a best-in-class user experience for short-term binary traders. The $50 minimum deposit is also accessible for beginners while opening an account is really easy. Looking at the negatives, Pocket Option still trails alternatives in its market offering and regulatory credentials."

- DayTrading Review Team
  • Minimum Deposit: $50
  • Payout %: 92%
  • Expiry Times: 5 seconds - 4 hours
  • Bonus: 50% Deposit Bonus
  • Copy Trading: Yes
  • Platforms: Web, MT4, MT5
  • Instruments: Stocks, Forex, Crypto

About Pocket Option

Established in 2017, Pocket Option is a binary options broker offering high/low contracts on forex, stocks, indices, commodities and cryptocurrencies. With over 100,000 active users and a global reach, the platform continues to prove popular with budding traders.

Pros

  • The MetaTrader platforms offer integrated analysis with helpful technical summaries for short-term traders
  • Well-funded traders who deposit $1000+ can qualify for a 2%+ payout boost, more tradable assets and exclusive perks
  • The web platform shines for its straightforward design and usability that will appeal to beginners looking to speculate on popular financial markets in a few clicks

Cons

  • Despite offering competitive payouts up to 92%, binary brokers like IQCent offer higher returns up to 98% based on tests
  • Pocket Option offers a slimmed down iteration of the MT4 and MT5 that doesn't provide the full charting package for advanced traders
  • You need to deposit $1000 to access the extended list of 250+ assets, otherwise just 130+ assets are available

#2 - IQCent

Why We Chose IQCent

IQCent offers binary options with above-average payouts up to 98%. The broker supports an online platform with basic analysis tools but a wide range of timeframes, from 1 minute to 1 month, catering to short and long term trading strategies. Considering the negatives, there are no binaries on stocks.

"IQCent will appeal to day traders looking for a straightforward binary options and CFD trading platform with low fees, a range of accounts, and copy trading. Getting started takes less than 1 minute and a $250 deposit. "

- DayTrading Review Team
  • Minimum Deposit: $250
  • Payout %: 98%
  • Expiry Times: 5 seconds - 1 month
  • Bonus: 20% to 200% Deposit Bonus
  • Copy Trading: Yes
  • Platforms: Online Platform, TradingView
  • Instruments: Forex, Crypto

About IQCent

IQCent is an offshore binary options and CFD broker based in the Marshall Islands. The brand continues to offer a range of unique account types with bonuses and perks, including payout boosts, TradeBacks and free rollovers. With 100+ assets, around-the-clock trading and 98% payouts, the firm is popular with aspiring short-term traders.

Pros

  • The broker offers up to 98% payouts on binary options, which is more than alternatives like Pocket Option, only offering up to 92%
  • Keen traders can take part in trading contests with cash prizes
  • The broker's 24/7 customer support is fast and reliable, responding within 1 minute during tests

Cons

  • The market analysis is very basic with limited technical summaries and insights from analysts
  • The broker is not overseen by a respected regulator, though this is common among binary options firms
  • There's no automated trading support for algo traders

#3 - Videforex

Why We Chose Videforex

Videforex continues to offer binary options with 20% payouts on crypto and up to 98% on less volatile assets, beating many competitors. A wide range of contract lengths are also supported from 5 seconds up to 1 month. New users will appreciate the welcome deposit bonus.

"Newer traders will find a lot to enjoy about trading binary options on Videforex's easy-to-use proprietary platform, as well as the broker's copy trading solution. Payouts also remain higher than most alternatives climbing to 98%."

- DayTrading Review Team
  • Minimum Deposit: $250
  • Payout %: 98%
  • Expiry Times: 5 seconds - 1 month
  • Bonus: 20% to 200% Deposit Bonus
  • Copy Trading: Yes
  • Platforms: TradingView
  • Instruments: Stocks, Forex, Crypto

About Videforex

Launched in 2017, Videforex offers access to stock, index, crypto, forex and commodities markets via binary options and CFDs. The proprietary platform, mobile app and integrated copy trading are user-friendly and will suit new and casual traders, and the market analysis tools and trading contests provide good ways to improve your trading skills.

Pros

  • Global clients can make free and fast transfers via a wide range of payment types, from credit cards to cryptocurrencies
  • The firm facilitates both day trading and binary options which is great for those looking to diversify their portfolios
  • Traders can earn up to 98% payouts on 100+ assets with the broker’s binary options, which is in line with competing brands like IQCent

Cons

  • US clients aren’t accepted due to legal restrictions
  • The broker isn’t overseen by a trusted regulatory agency
  • No MetaTrader 4 integration

#4 - RaceOption

Why We Chose RaceOption

RaceOption offers 100+ binaries with decent payouts up to 95% and ultra-fast expiries from 5 seconds. With a $250 minimum deposit, clients can enjoy free deposits, fast withdrawals and a range of trading bonuses.

"RaceOption will appeal to traders new to binary options looking for copy trading, contests and 24/7 customer support. Experienced traders will also appreciate the account-based perks and bonuses."

- DayTrading Review Team
  • Minimum Deposit: $250
  • Payout %: 95%
  • Expiry Times: 5 seconds - 30 days
  • Bonus: 20% - 200% Deposit Bonus
  • Copy Trading: Yes
  • Platforms: TradingView
  • Instruments: Stocks, Forex, Crypto

About RaceOption

RaceOption is a binary options broker operating from the Marshall Islands. With over 1,500 clients, the broker aims to offer fast funding, low fees and a secure trading environment. Traders can access over 100 binary options and CFDs, plus copy trading and weekly prizes.

Pros

  • Flexible weekend trading available plus 24/7 multilingual customer support
  • Free and instant deposits via bank cards and cryptos, plus guaranteed withdrawals processing within 1 hour
  • Beginner-friendly copy trading opportunities in the broker's proprietary trading platform

Cons

  • $250 minimum deposit is higher than other binary options brokers
  • Limited educational resources
  • Unregulated broker with lower safety score

#5 - CloseOption

Why We Chose CloseOption

CloseOption offers binary options trading on 30+ fiat and digital currencies through an easy-to-use web-based platform. 15 contract timeframes are available from 30 seconds to 1 month, suiting both short-term and long-term traders. New users also get a joining gift.

"CloseOption is a good pick for traders seeking a user-friendly binary options platform with high payouts and joining bonuses."

- DayTrading Review Team
  • Minimum Deposit: $5
  • Payout %: 95%
  • Expiry Times: 30 seconds - 1 month
  • Bonus: $10 Welcome Gift
  • Copy Trading: No
  • Platforms: Own
  • Instruments: Forex, Crypto

About CloseOption

CloseOption is a Georgia-headquartered broker with over a decade in the trading industry. The brand offers high/low binary options trading on forex and crypto markets, with decent payouts, welcome bonuses, 24/7 customer support and intuitive trading software.

Pros

  • CloseOption offers weekly trading tournaments with cash prizes
  • New traders can get started with a $5 minimum deposit
  • Multiple global payment methods are available

Cons

  • CloseOption is not regulated by a well-regarded trading authority
  • Clients need to deposit $50,000+ to qualify for the best payouts
  • Binary options are only available on fiat and digital currencies

Digital Contracts Trading Basics Explained

Digital contracts are an innovation with a history of only a few years. They came to the fore after financial regulators in key trading jurisdictions placed tough restrictions on their predecessor, binary options.

Trading digital contracts works similarly to binary options, offering investors the chance to profit by speculating on the price movements of assets over a short time window – sometimes less than a minute. But while their predecessors have been restricted in the UK, parts of Europe and many other countries, digital contracts are legal to trade with reputable brokers.

Digital contracts can be based on a range of underlying assets, including stocks, commodities such as gold, FX and cryptocurrencies. Before the digital contract begins, the trader will determine whether they wish to take a long or short position, the value of the contract – essentially, how much money is being staked – and the contract’s duration.

If the trader’s bet comes good, they will earn a pre-determined profit regardless of how much the price has moved in their direction. This varies according to the broker and the type of contract, but basic digital contracts generally offer a payout slightly below the value of the contract.

For example, Quotex offers an 80% payout on some assets with their digital contracts. This means a trader who predicts a price increase correctly on a £1000 digital contract with this broker will make their stake back plus an £800 profit, whether the price has gone up by 0.5% or 5% when the contract expires.

Best brokers for trading digital contracts
Quotex – Trading Digital Contracts

This may seem like a counter-intuitive way of trading that is based more on luck than skill, but there are definite advantages for day traders, and many develop effective strategies to profit from them.

Importantly, you would usually need to hold onto classic derivatives like futures or options for a much longer period to turn a profit, and profits from shorter-term instruments such as CFDs can be limited when price movements are small. But with trading digital contracts, profits and potential losses are defined before the contract begins, and everything hinges on a simple yes/no question. This makes them a straightforward derivative that has the advantage of also being quick enough to complete a large volume of trades per day.

How To Start Trading Digital Contracts

The first step on your digital contracts trading journey is to find a suitable broker. Since digital contracts are a relatively new product, it is not always easy to find online brokers through a simple web search. However, some brokerages and exchanges that offered binary options before they were heavily regulated now deal in digital contracts trading.

How To Choose A Digital Contracts Broker

There are several important factors to take into account when you’re deciding which digital contracts broker to begin trading with:

Digital Contracts From Quotex

Quotex’s digital options offer traders a very similar experience to digital contracts with more or less the same terms related to the stake, profit margin and duration of a trade. Quotex’s popular website includes a proprietary browser-based trading platform that traders can use to access digital contracts on securities, forex pairs, commodities and indices.

The size of the payout depends on the asset traded, with a maximum payout of 98%. Traders can buy digital contracts for a variety of expiration periods, from 1 minute to 4 hours.

An advantage to Quotex is the easy-to-use website and app, available from Apple’s App Store and Google Play. Quotex also offers a demo account and has some excellent benefits, including a 30% deposit bonus, profit calculators and group user reviews online.

Spectre.ai Digital Contracts

Another website, Spectre.ai, offers trading on digital contracts with a difference – this company’s trading system is built on the Ethereum blockchain. This allows Spectre.ai traders to draw funds directly from their e-wallets, bypassing traditional brokerage cashiers and instead matching peer-to-peer trades or matching trades to a decentralized autonomous liquidity pool. Other innovations by Spectre.ai include a feature that allows the use of automated bots.

Spectre.ai’s model means the company is free from some of the fees associated with traditional trading brokers, such as inactivity fees or commission charges. Payouts are not as high as with some of the other top digital contract brokers, but traders should bear in mind that their rate of successful trades could be higher with more competitive investing conditions.

Spectre.ai offers digital contracts on a range of assets through its proprietary trading platform, including all major currencies and some 100 stocks, as well as crypto assets such as Bitcoin.

The brand has its own app, available from its website, and is set to offer compatibility with MetaTrader platforms (MT4 and MT5) soon. Spectre.ai is also fully Sharia compliant, making this a halal option for Muslim traders.

Tips For Trading Digital Contracts

Some market commentators consider trading digital contracts and similar products to be little more than gambling. Since the contracts expire in a short period of between seconds and hours, some of the factors a trader would normally consider while planning a trade are not as relevant.

However, many say it is possible to make a profit from trading digital contracts by developing a strategy and following a consistent system. For example, some traders wait until an asset’s price has been moving in one direction consistently for a certain period before betting the other way. The rationale for this is that, even if the market’s momentum is headed in one direction, it is very rare for the chart to display a completely consistent line of red or green bars.

This is just one very basic example of the broad range of strategies used by digital contracts day traders. Your system will ultimately depend on numerous factors, such as the asset you are trading and the expiration time of the contracts you trade.

For more information, you can also join a digital contracts trading forum and exchange strategies and ideas with other traders. In addition, there is a good deal of information available online about trading similar assets, so a studious trader can turn YouTube into a digital contracts trading academy.

But perhaps the most important advice for beginners is to join a digital contracts broker that offers a demo account. This allows you to develop your strategy on a variety of assets and expirations periods without putting any real money down. In other words, you will have free rein to test your theories and find the best combination of assets and expiration times for your personal investing style.

Final Word On Trading Digital Contracts

Digital contracts can be a profitable way to trade if you have the right mindset. While this is one of the fastest-paced financial products available to day traders, ironically it requires a deep amount of patience and discipline to consistently make money from. Some good digital contracts brokers can help you do that, including some that offer demo accounts and some platforms which offer innovative features related to the latest blockchain opportunity. Just remember to do your due diligence, research a good broker and take the time to develop a trading system before you start putting real money down.

Use our list of the best digital contract brokers to start trading.

FAQs

What Is Digital Contracts Trading?

Digital contracts are a fast-paced financial product that allows day traders to bet on the price movement of an asset over a short period that can be as low as seconds. Investors can use digital contracts to speculate on a range of underlying markets from stocks and shares to forex and cryptocurrencies.

How Does Digital Contracts Trading Work?

Digital contracts are one of the most straightforward products to trade because they depend on the simple question of whether an asset’s price will rise or fall in a given timeframe. For example, will the price of Bitcoin be above or below $20,000 in two hours? If the day trader guesses correctly, they will earn a predetermined payout, regardless of the size of the price movement. If they are incorrect, they lose their stake, but can quickly move on to the next trade.

Are Digital Contracts Safe To Trade?

As with any financial product, you are putting your money at risk. Meaning if the price movement goes against you, you will lose your stake. In the long run, you will lose money to brokers’ fees and other expenses unless you have a game plan that helps you consistently make winning bets.

As for security, there are some safe and reputable digital contract trading brokers out there, and your money and personal information should be relatively secure with these. Before you sign up to a broker, make sure you properly research it by checking whether it is regulated, which security measures it takes, and how existing users review it. Alternatively, we have ranked the top digital contract trading brokers.

Which Brokers Are Best For Trading Digital Contracts?

The best digital contracts broker for you depends on your personal requirements. Find a brokerage that offers both the assets you would like to trade, and the expiration times you are interested in, for example, one-minute contracts or 24-hour contracts. Also, ensure you are comfortable with the digital contracts broker’s trading platform, that it has a good reputation for security, and that its fees are reasonable and payouts competitive. We have compiled a list of the best digital contract brokers.

How Do I Make Money From Trading Digital Contracts?

You are never guaranteed to make money on any trade. What you can do is develop a strategy that helps you make enough trades that payoff to keep you in profit on average. This requires a careful plan, plenty of discipline, and the organization to keep records of your trades so you can adjust your strategy. This may not be easy, but most of the time, making money never is.

To give yourself the best chance of earning money in your digital contracts trades, sign up for a broker which offers a demo account and give yourself plenty of time to develop a strategy without putting any real money at risk.