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10 Golden Rules Of Binary Options Trading
I’ve found a very brief, but very true article online. I can not remember where I found it, but here it is. It talks about 10 rules that were written for stock market trading, which is not too different from binary option trading, so we can use these rules and apply them for our options trading.
An excerpt from this eBook:
Just because the Forex market is online twenty-four hours a day does not mean that you have to trade all that time. If you are doubtful, do not trade at all. Instead, analyse the market and use the knowledge you get to make more profitable trades in the future.
10 Golden Rules eBook
The truth about Forex is that it’s a very intense and stressful activity that requires a complete control of emotions. Forex is merely an unrealized idea of “get-rich-quick”. Learning to trade Forex will require patience. Mastering the basics will, of course, require some time. Those not disciplined enough and impulsive will soon find themselves “loosing one’s shirt”. Those of you, that don’t follow the basic investment principles or those that can’t control their emotions, will soon find themselves loosing their investments. However, those of you who will follow the given investment principles will benefit greatly on the most variable and liquid markets. 100% return on investment within couple of days,won’t be anything extraordinary and actually 1000% return wouldn’t really surprise an experienced trader. It is well-known that Forex has become the most popular way of investment. As with any other company, even Forex has its own rules. Learn Forex, strive for success and make wise decisions. Our small book will introduce you to the 10 golden rules on Forex trading that every beginner should follow, if he wants to succeed.
- The market is always changing and these changes are sometimes really hard to follow. For the start, it is not a bad thing to use these changes for your own good, until you won’t be thoroughly prepared to trade on Forex.
- There are a lot of novice traders that trade in various directions. You have a great chance to make a profit on both upside or the downside of the trade. Trading in the direction of the trends give you a chance to make the best trades and increase your chances to win.
- Set up a demo account to thoroughly understand the Forex trading. Using the demo account will give you a chance to try how the real trading works and will also prepare you for it. On the other hand, it wouldn’t be a bad thing to stay realistic and always remember that using your demo fund require the same caution as operating the real funds. Otherwise trading on the demo account doesn’t have any point.
- There are a lot of companies making various programs aimed at predicting future trends. However the question is, if this program would really work, why would these companies share it? These kind of an opportunity or a secret is not normally publicly shared, is it?!
- Trading requires a lot of nerve and you’ll come across a lot of obstacles that will set you back to the beginning. The moment your emotions take over, it’ll force you to open the trade too early and eventually lead to a loss.
- There is no need to trade 24/7, even though you can do so, on Forex. If you have any doubts, it’s better to not trade at all. It’d be better to continue your analysis of the market to get the necessary skills that will make your trades more profitable.
- Because trading is a very emotional activity, you have to prepare your strategy. It’s necessary to follow the rules to protect you from yourself.
- Avoid complicated strategies that require a lot of complicated techniques. They will only make you more confused and you’ll miss a lot of good trading opportunities.
- Leverage can make you a lot of profit on Forex, but it also brings a great potential risk to loose your capital. As a novice, never risk more than 1-2% of your margin account. In the case of a long-term trade, it’ll provide you with a great profit and minimal risk of loosing your investments.
- Learn to habitually analyse both of your trades, the successful once and the once you’ve lost. This will give you an idea what it was that made the trade successful and you’ll be able to use it continually in the future.
It is true that these are the most basic rules for trading, but they are really necessary. If you enjoyed this book, make sure to leave us a comment below the article.
More about the author J. Pro
Unlike Stephen (the other author) I have been thinking mainly about online business lately. I wasn’t very successfull with dropshipping on Amazon and other ways of making money online, and I’d only earn a few hundreds of dollars in years. But then binary options caught my attention with it’s simplicity. Now I’m glad it did because it really is worth it. More posts by this author
Rules to Trade Binary Options Consistently and Profitably
If you want to trade consistently and profitably at binary options, then you’re going to need to choose to do things differently than other traders. The vast majority of binary options traders will lose money overall and never become profitable in their trading, but that is because they are not going to use consistency in their trading methods. If you don’t apply consistency, how can you expect consistent profitability as a result?
The cards are stacked against you in binary options trading. If you don’t take the extra steps to become profitable the odds are you are going to lose money.
We’ve put together some helpful binary trading rules to get you started on the path to greater consistency.
Rule 1: If you want to profit consistently, you need to come up with rules that you understand.
Rules are what separates your trading method from trading methods which lack consistency. They give you something concrete that you can stick to when things get confusing, which often happens while you’re trading. There are many types of trade rules that you’ll need to incorporate into your trading method: entry and exit rules, money management rules, rules of discipline.
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It’s not enough to just have rules, either; you need to learn to understand how and why they work. This will help you out the day they stop working the way you think they should. All trading methods fail sooner or later, but not necessarily permanently. When that day comes, your temptation is going to be to go back to the drawing board and start all over, but more often the best choice is to stick with your trading method but make adjustments. If you understand why your trade rules worked when they did, you may have a better chance at understanding why they’ve stopped working in the time since. This can help you to make the proper adjustments more quickly and get back on the path to profit.
Rule 2: You need to actually follow the rules you come up with.
Consistency isn’t just about having a great plan, it’s also about follow-through, which for most of us is a lot harder than coming up with the initial plan. Planning takes hard work, but application takes consistent hard work over a long time period. It involves dealing with discouragement, frustration, anger, boredom, and loss in a levelheaded way. You can’t completely divest all emotions when you’re trading; you’re only human. But you will have to learn how to deal constructively with those emotions and mitigate the effect they have on your trading. Negative and positive emotions both can mess with your trading plan if you let them. You’ll need to develop the discipline to apply your rules every time and without exception. That doesn’t mean you can’t use your discretion when you apply them, but that discretion, like everything else, needs some basis in concrete theory and testing. It can never be random.
Rule 3: You need to accept the changing nature of the market.
Trading well is all about removing as much randomness from your trading as you can by removing randomness from yourself and your actions. While doing this can reduce your risk and make it far more likely that you’ll be successful with your trades, one thing you can never do is have the pride or ignorance of assuming you’ve discovered the perfect, infallible system. All systems have flaws, and many are exposed only with time and change. There are many patterns in market movements, but over time there are shifts that gradually may erode at your profits. You can liken this to climate change. It’s relatively easy to predict the weather in a given area once you’ve learned the weather patterns, but it’s much harder to get a clear vision of long-term climate change and how it can impact life in the future.
Market climate change can break a good trading method. If the market changes and you don’t, you’ll find a once profitable trading method no longer works, no matter how consistent you are. This is the point at which you have to adapt your trading method to the new market conditions. Understanding why your method worked will help you do this. No trader gets out of having to do this. Once you do adapt to the new market conditions and your method works once again, you again must follow your new, adjusted rules with discipline in order to succeed at binary options trading.
5 Binary Options Rules Not To Break
If you’re getting into binary options trading, you probably have heard that you should find ways to be consistent in your trading. Trading with discipline helps you to filter through the randomness of the market to find consistently profitable trading opportunities—and to come out of those opportunities ahead. You may also have heard though that there’s nothing wrong with trading with your discretion. Discretionary trading is contrasted with mechanical trading, where rules are followed exactly without deviation. If you’re thinking of discretionary trading, you may wonder which rules you can bend, which you can break, and which you should never violate. What are five rules that binary options traders should never break?
- The amount of money you risk on each trade, as a percentage of your trading bankroll. You should never trade 2.5% of your account and then suddenly think, “That’s a great looking setup. Just this once, I’m going to invest 10%.” Start breaking this rule and you won’t stop. Next it’ll be, “I lost 10% on my last trade, but this one can really turn it around, but only if I invest 10% again. Or let’s make it 15%.” See how quickly this can blow your account? Always risk the same percentage. As your account grows, the dollar amount will grow with it, but the percentage must stay the same. Feel free to use rollover or double up if a trade is going your way, but only if you’ve figured out a consistent approach to using it which results reliably in profit every time.
- Account exposure. Just as there should be a maximum amount you’re willing to risk on each trade, there should be a cap on the total amount you’re willing to risk at once. This is referred to as your “exposure” across all your trades. So you might have a rule like, “I’ll only ever invest 2.5% of my account per trade, and only enter up to 3 trades at a time.”
- Entry and exit rules. You don’t have to take every setup you see, but you do need consistent entry rules and a thorough understanding of context for your setups. You can’t start doing this: “I don’t have much of a setup here, but I am so sure that the price of oil is going to rise, so I’ll enter.” You also can’t start doing this: “My exit rules tell me a trade no longer exists and I should get out, but I really want to with my money back so I’m going to stay in instead of using early closure.” This sort of thing will lose you money.
- Testing requirements. You should never go live with a new trading method or an adjustment to a method without testing it first. Optimally, this should include backtesting on historical data and demo testing with virtual money. If your method needs adjusting and isn’t profiting anymore, don’t start making arbitrary changes and testing them with real currency. Instead, make the adjustments on paper and test the changes to see if they will improve your performance before you risk real money on them.
- Honesty. The number one rule you should never break is your honesty to yourself. The moment you compromise on that, you have no hope of following the other very important rules listed here.
How do you account for these unbreakable rules in a discretionary trading setup? Think about your trading as including different “rule profiles” for different possible situations. Your trade amounts and account exposure should never differ, but you might have different sets of entry and exit rules based on different possibilities. So a rule that would apply in one trading context might not apply in another—but the context-based rule governing both provides you with consistency. The last two rules should also never be broken. Good luck with your trading, and try to trade with a broker which provides you with demo testing capabilities!
10 Rules for Smart Binary Options Trader
By Markus Silvester – March 27, 2020 2:22 pm
Here are some rules for sensible investing! These rules are general guidelines how to behave when trading binary options. If you want to
1. Watch out for trading psychology
Humans are all but rational. While our analysis might be guided by clear rules how to predict binary options outcomes, it is dangerous to succumb to one’s own emotions when trading. Free and fear can both cause suboptimal trading results. Make sure to follow strategies, hunches do not help!
More on psychology in trading:
2. Plan your risk exposure
Following the first rule, try to think rationally an make sure to avoid risks that can affect your existence. Be aware that risk is part of the game and never underestimate it! Make sure only portion of the portfolio is in high risk trades.
3. Trend is your friend
There are various trends that can be seen in the market. Fundamental trends are usually longer lasting an require clear thinking when volatility ensues. Technical trends are more short term and require a more active approach. Riding a trend makes sense if there are no signs that signal possible reversions (like high RSI, late arrivals etc…)
More resources on trends:
4. Binary options trading is an art
While many strategies and technical analysis rules may look as if they can promise secure binary options trading outcomes – one thing is sure, trading is not a science that has fixed rules (at least not the ones that are easy enough for us to grasp). Binary options, as all financial markets are places where humans (and many computers) exchange. They are rules by their own logic which no individual investor can see since no one holds all the information. In binary options this means that experience is needed as well as good education provided by the broker.
5. Recognize point of entry – exit on time
See fundamental indicators as a strength that will be a signal for price move in the future. Use technical reasoning to know when the movement is done and reversion can happen. Fundamental movements result form macro factors and firm-specific news. Technicals are seen in charts of the binary options platform.
6. Patience is a virtue
As already noted in rule no. 3, while riding a trend there will come volatile times when it might look good to exit the binary options position through the early close. But even if this risk management tool is helpful, it is only useful as much as we follow rule no.1. Patience always wins over irrational thinking in binary options trading.
7. Use Stop-Loss and be Humble
It is good to overcome greed by limiting daily winning trades. Also, it makes sense to go in the opposite direction and limit losses. This system of checks and balances, together with the rule no. 2 will help long term trading success even if it looks limiting in the short term.
8. Master the Money Management
It is crucial not to make too big trades relative to the overall amount of funds on the binary options trading account. Most binary brokers will enable 8 or more minimum trades with the lowest minimum deposit. Trade size of 5% is usually the rule of thumb.
More info on money management:
9. Do not Overexpose to One Trend
It is fine to ride the trend but it should be wise in terms of the overall portfolio risk management never to invest more than 15% of existing capital in a single trend because this creates imbalance in portfolio. If risks materialize, the portfolio and capital are preserved.
10. Smart trading knows limits of financial exposure
Investments are simple when it comes to risks. The higher the risk, the higher the reward. This rule is a combination of several rules, the most notable rule being that traders never put all their money into trading. Trading is fun, but the error of trading funds one cannot afford can be very costly in terms of physical and mental wellbeing. This is a mistake desperate people often make, creating a vicious circle. Never rely on binary options trading to solve your life’s problems!
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It is always hard to be a beginner and it doesn’t matter in what area, but if we really want to achieve some really significant goals in our life we must get through it. A binary option trading is becoming more and more popular in the modern world. To become really good in this field and to make good money is rather hard but it worth it. We prepared this article especially for those who have just started such trading without wide experience but with strong motivations. Here you can find 8 “golden” rules you have to memorize to become a good and successful binary options trader. Let’s start!
8 essential tips for beginners
In conclusion we advise you to avoid complexities, especially when you start trading. You may combine some different instrument for your trading, but let them be simple. Firstly you should learn how to understand clear signals and make simple solutions. It will help you to avoid mistakes which are connected with complications and difficulties.
GOLDEN RULES for NEWBIES/NOOBS “IF YOU ARE NEW READ THIS FIRST!”
hi i m harry from INDIA
Rules to follow starting out so you don’t get scammed – These are important as this is where most fail with signing up to a new broker.
Don’t worry, we will help you to start your trading experience!
The main idea is to predict where a price of an option will go.
You can choose a type of options (Binary, Turbo, Crypto, Forex, Digital) and the asset that you want to trade.
If you think it will go up, click call.
You can use a demo account for practice and gaining experience. That will help you to find the best strategy for you without any loss.
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