When you buy a new or used car, do you pay the sticker price for the car, or do you do your research and haggle to get the price that you are willing to pay for the car? If your price is too low, the seller may refuse to accept your offer, make a counter-offer or field other offers. If the seller fields multiple offers without success, then he/she may come back to you to see if your offer is still on the table.
Markets behave the same way. For every buyer, there must be a seller. Each party has a vested interest in getting the best price. With binary options, buyers and sellers want the best price they can get for their opinions on where the price of a market will settle within a defined time period.
When you open an order ticket to place a binary options trade, the current bid and offer price for that contract are populated on the ticket. If you are selling, you choose the bid price. If you are buying, you choose the offer price. If you choose to buy, you will enter the number of contracts you wish to trade, and the ticket will automatically be populated with the current offer price. If you accept the order, you will have an active order on the exchange. You just bought a proposition that another trader was willing to sell. It’s like paying sticker price.
When you place a Working Order, you open up a ticket, but instead of paying the market price, you amend the price box and enter the price that you are willing to pay. When you place a working order,it will remain in a queue until it is accepted. You can check on the status of your working order by clicking on the “Working Orders” tab. You will see at a glance what your price was, and where the current market is. You always have the option to amend your order ticket, if you want to adjust your price.
Here’s an example of how to place a working order. Click on image to enlarge:
- Select the binary option market and time frame on the Finder. Click on the “Chart” icon to load the chart with that trade, complete with a price ladder to help you choose your strike price.
- To place an Active Order, click on the “Buy” or “Sell” box and accept the current market price for your proposition. Your active order will be displayed on the screen with it’s current profit/loss status, and in the “Open Positions” list.
- To place an Working Order, click on the “Buy” or “Sell” box and populate the Order Ticket with the price that you are willing to pay for the proposition. Your Working order will be displayed on the screen, but it will be “grayed out”. It will also appear in the “Working Orders” list. Your order will only get filled if the market moves to your bid/offer price.
With Working Orders, you are communicating the price you are willing to pay to get into the market, and it can be a way to align a trade with your risk/reward preferences. There is always a chance that you Working Order will not get filled, but if it does, then you took the trade on your terms.