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How To Trade Binary Options – 10 Step Guide to Trading Binary
This is the most basic question that individuals who are interested in the binary options market tend to ask. While binary options trading might come across as something that is very complex, it is actually not, especially once you understand the basic premise under which binary options trading operates.
The word binary – means two and binary options trading generally puts the trader in a place where they have to make a decision between two choices.
Binary options trading involves the movement in the value of stocks, commodities, assets and forex on a particular stock exchange.
The trader has to make a Yes decision – generally referred to as a Put Trade or a No decision – generally referred to as a Call Trade on a particular trade. The trader has to decide if the asset they choose will go up or down within a stipulated period of time and then decide to wager a certain amount on the trade.
Binary Options Trading
So if the trader wagered that the amount of a particular asset will go up and the asset price does go up at the end of the stipulated period, then the trader has won the trade and will receive the amount that he was promised when he placed the trader. If the trader wagered that the amount of a particular asset will decline within a stipulated period of time, and the asset price drops accordingly, then trader also wins that trade.
However if the concerned asset price goes down when the trader called up, or goes up when the trader calls down, then the trader loses that particular trade and the money wagered on it as well.
Before a trader places a wager, the trading software will give them clear instructions as to how much money is being wagered, what is the stipulated end time, what is the expected return on investment and any other terms and conditions that is attached to the trade.
The binary options trading market is exciting because the window of trading is extremely short and results are always guaranteed one way or the other. Some trading windows can be as short as 60 seconds and go up to a week or so.
Top 5 Steps To Follow When Deciding To Trade Binary Options
Choose A Good Binary Options Broker: Choose a regulated binary options broker that has a good reputation in the market and one who is willing to give you a free demo account.
Make Full Use Of A Demo Account: Do not go straight into live trading especially if you are a new trader. Make use of the demo account as it will help you get accustomed to the binary options trading platform and also allow you to play with virtual currency. This means if you make mistakes and lose a demo trade, you do not lose real money.
Best Binary Broker!
Perfect for beginners!
Free Demo Account! Free Trading Education!
Only for experienced traders!
Develop A Robust Strategy: You need to decide how much money you are going to invest initially, what commodities you would like to trade with and the average return on investment you are looking to make. More importantly stick to this strategy when you start live trading.
Start Small But Think Big: We advise you to start your binary options trading journey by investing small amounts and testing your strategy. A lot of traders go all in during their first few days, looking to make it big and end up failing. We advise you to start small and think big. Once you start winning small trades, you can increase your wagering amounts.
Withdrawals: Binary options brokers will do their best to prevent you from withdrawing your winnings. Do not get swayed by their arguments. If you have a strategy to withdraw a certain amount each week or each month, then stick to that strategy.
10 Step Guide to Binary Options Trading
Binary Options are a way to see the movement in value of a large and dynamic range of commodities, assets, stocks and shares or even Forex.
The reason why these types of financial trades have become so hugely popular is that traders have to make just one of two possible decisions when placing them, that being yes or no decision which in Binary Options trading are known as Put or Call trades.
There is no requirement to actually purchase for example gold bullion if you wish to place a Binary Options trade on the value of gold, you need to decide whether the value of gold will rise in value or fall in value over any given time period.
One major advantage of placing Binary Options trades is that you will find a range of different expiry times are available which can be as short as just 60 seconds or as long as one month.
If you are new to the world of Binary Options trading then below is our 10 step guide (infographic) which will enlighten you on all there is to know about placing Binary Options trades at any of our featured Brokers.
What Trades to Place The first decision you need to make when you are thinking of placing any type of Binary Options trade is just what asset, commodity or stock exchange you wish to place your trades on.
Once you have made an educated decision on just which type of asset, commodity or stock exchange you are interested in placing your trade or trades on you will need to decide just which way you think the value of that trade will move.
If you think for example the value of let’s say oil will fall in value then you will need to place a Put option, however if you think that the value of oil will increase in value then you will need to place a Call option.
Choosing a Broker You will of course need to select a Binary Options Broker to place your trades at, and with that in mind we would advise you to take some time taking a look through each of our reviewed Binary Options Brokers.
List of Top 10 US Binary Option Sites for 2020
|Broker||Offer||Devices||Trade Now / Review|
|Nadex Exchange||$250||100%||» Visit|
|RaceOption||$250||90%||100% Deposit match bonus||» Visit|
|BinaryCent||$100||85%||100% Bonus on ANY 1st Deposit||» Visit|
What is a Binary Option and How Do You Make Money?
A binary option is a fast and extremely simple financial instrument which allows investors to speculate on whether the price of an asset will go up or down in the future, for example the stock price of Google, the price of Bitcoin, the USD/GBP exchange rate, or the price of gold. The time span can be as little as 60 seconds, making it possible to trade hundreds of times per day across any global market.
Before you place a trade you know exactly how much you stand to gain if your prediction is correct, usually 70-95% – if you invest $100 you will receive a credit of $170 – $195 on a successful trade. This makes risk management and trading decisions much more simple. The outcome is always a Yes or No answer – you either win it all or you lose it all – hence it being a “binary” option. The risk and reward is known in advance and this structured payoff is one of the attractions.
Exchange traded binaries are also now available, meaning traders are not trading against the broker.
To get started trading you first need a regulated broker account (or licensed). Pick one from the recommended brokers list, where only brokers that have shown themselves to be trustworthy are included. The top broker has been selected as the best choice for most traders.
If you are completely new to binary options you can open a demo account with most brokers, to try out their platform and see what it’s like to trade before you deposit real money.
Introduction Video – How to Trade Binary Options
These videos will introduce you to the concept of binary options and how trading works. If you want to know even more details, please read this whole page and follow the links to all the more in-depth articles. Binary trading does not have to be complicated, but as with any topic you can educate yourself to be an expert and perfect your skills.
The most common type of binary option is the simple “Up/Down” trade. There are however, different types of option. The one common factor, is that the outcome will have a “binary” result (Yes or No). Here are some of the types available:
- Up/Down or High/Low – The basic and most common binary option. Will a price finish higher or lower than the current price a the time of expiry.
- In/Out, Range or Boundary – This option sets a “high” figure and “low” figure. Traders predict whether the price will finish within, or outside, of these levels (or ‘boundaries’).
- Touch/No Touch – These have set levels, higher or lower than the current price. The trader has to predict whether the actual price will ‘touch’ those levels at any point between the time of the trade an expiry.
Note with a touch option, that the trade can close before the expiry time – if the price level is touched before the option expires, then the “Touch” option will payout immediately, regardless of whether the price moves away from the touch level afterwards.
- Ladder – These options behave like a normal Up/Down trade, but rather than using the current strike price, the ladder will have preset price levels (‘laddered’ progressively up or down).These can often be some way from the current strike price.As these options generally need a significant price move, payouts will often go beyond 100% – but both sides of the trade may not be available.
How to Trade – Step by Step Guide
Below is a step by step guide to placing a binary trade:
- Choose a broker – Use our broker reviews and comparison tools to find the best binary trading site for you.
- Select the asset or market to trade – Assets lists are huge, and cover Commodities, Stocks, Cryptocurrency, Forex or Indices. The price of oil, or the Apple stock price, for example.
- Select the expiry time – Options can expire anywhere between 30 seconds up to a year.
- Set the size of the trade – Remember 100% of the investment is at risk so consider the trade amount carefully.
- Click Call / Put or Buy / Sell – Will the asset value rise or fall? Some broker label buttons differently.
- Check and confirm the trade – Many brokers give traders a chance to ensure the details are correct before confirming the trade.
Choose a Broker
Options fraud has been a significant problem in the past. Fraudulent and unlicensed operators exploited binary options as a new exotic derivative. These firms are thankfully disappearing as regulators have finally begun to act, but traders still need to look for regulated brokers.
Note! Don’t EVER trade with a broker or use a service that’s on our blacklist and scams page, stick with the ones we recommend here on the site. Here are some shortcuts to pages that can help you determine which broker is right for you:
- Compare all brokers – if you want to compare the features and offers of all recommended brokers.
- Bonuses and Offers – if you want to make sure you get extra money to trade with, or other promotions and offers.
- Low minimum deposit brokers – if you want to trade for real without having to deposit large sums of money.
- Demo Accounts – if you want to try a trading platform “for real” without depositing money at all.
- Halal Brokers – if you are one of the growing number of Muslim traders.
The number and diversity of assets you can trade varies from broker to broker. Most brokers provide options on popular assets such as major forex pairs including the EUR/USD, USD/JPY and GBP/USD, as well as major stock indices such as the FTSE, S&P 500 or Dow Jones Industrial. Commodities including gold, silver, oil are also generally offered.
Individual stocks and equities are also tradable through many binary brokers. Not every stock will be available though, but generally you can choose from about 25 to 100 popular stocks, such as Google and Apple. These lists are growing all the time as demand dictates.
The asset lists are always listed clearly on every trading platform, and most brokers make their full asset lists available on their website. This information is also available within our reviews, including currency pairs.
The expiry time is the point at which a trade is closed and settled. The only exception is where a ‘Touch’ option has hit a preset level prior to expiry. The expiry for any given trade can range from 30 seconds, up to a year. While binaries initially started with very short expiries, demand has ensured there is now a broad range of expiry times available. Some brokers even give traders the flexibility to set their own specific expiry time.
Expiries are generally grouped into three categories:
- Short Term / Turbo – These are normally classed as any expiry under 5 minutes
- Normal – These would range from 5 minutes, up to ‘end of day’ expiries which expire when the local market for that asset closes.
- Long term – Any expiry beyond the end of the day would be considered long term. The longest expiry might be 12 months.
While slow to react to binary options initially, regulators around the world are now starting to regulate the industry and make their presence felt. The major regulators currently include:
- Financial Conduct Authority (FCA) – UK regulator
- Cyprus Securities and Exchange Commission (CySec) – Cyprus Regulator, often ‘passported’ throughout the EU, under MiFID
- Commodity Futures Trading Commission (CFTC) – US regulator
- Australian Securities and Investments Commission (ASIC)
There are also regulators operating in Malta and the Isle of Man. Many other authorities are now taking a keen a interest in binaries specifically, notably in Europe where domestic regulators are keen to bolster the CySec regulation.
Unregulated brokers still operate, and while some are trustworthy, a lack of regulation is a clear warning sign for potential new customers.
Recently, ESMA (European Securities and Markets Authority) moved to ban the sale and marketing of binary options in the EU. The ban however, only applies to brokers regulated in the EU. This leaves traders two choices to keep trading: Firstly, they can trade with an unregulated firm – this is extremely high risk and not advisable. Some unregulated firms are responsible and honest, but many are not.
The second choice is to use a firm regulated by bodies outside of the EU. ASIC in Australia are a strong regulator – but they will not be implementing a ban. This means ASIC regulated firms can still accept EU traders. See our broker lists for regulated or trusted brokers in your region.
There is also a third option. Traders who register as ‘professional’ are exempt from the new ban. The ban is only designed to protect ‘retail’ investors. A professional trader can continue trading at EU regulated brokers such as IQ Option. To be classed as professional, an account holder must meet two of these three criteria:
- Open 10 or more trades per quarter, of €150 or more.
- Have assets of €500,000 or more
- Have worked for two years in a financial firm and have experience of financial products.
Is binary options trading legal in the USA?
Yes, trading binary options is legal in the US. The US binary options market is strictly regulated. These safeguards are in place to protect US residents, but trading is absolutely legal.
What is illegal, is for non-US based brokers (‘off shore’ brokers) to solicit US residents. It is this which has resulted in some binary options brokers receiving heavy fines, and the majority not accepting traders based in the USA. There are however, a number of options for US traders, where they can trade legally, at reputable brokers, fully regulated by the CFTC.
The US Binary options brokers list above, is tailored to display only brokers that accept US clients. Nadex and CBOE remain the only regulated exchanges however. The Nadex offering delivers binary options that mimic futures contracts more familiar to US pattern day traders.
Binary options trading in the USA
Most binary options brokers operate accounts in USD. This is seen as the ‘global currency’ within the binary options industry and therefore US clients are free to trade with funds in their local currency.
Binary options brokers will generally have their trading platform open when the market of the underlying asset is open. So if trading the NYSE, Nasdaq, DOW or S&P, the assets will be open to trade during the same hours as those markets are open. Any moves by the Federal reserve for example, will feed into binary markets immediately, just as you would expect.
Forex trading has no central market, and as such USD pairs can generally be traded around the clock for 5 days a week. Markets in Hong Kong, Europe and the US, mean that foreign currency can be traded 24 hours a day.
US Traders also have the option of using exchange traded binary options, or an over the counter (OTC) broker. So binary options trading in the US, generally delivers the same level of choice trading in Europe, but in a more closely regulated market.
Some of the links to third party websites included on our website are affiliate links. This means that we may receive commission or a fee if you click on a link that takes you through to a third party website or if you purchase a product from a third party website.
Strategies and Guides
We have a lot of detailed guides and strategy articles for both general education and specialized trading techniques. Below are a few to get you started if you want to learn the basic before you start trading. From Martingale to Rainbow, you can find plenty more on the strategy page.
Signals and Other Services
For further reading on signals and reviews of different services go to the signals page.
If you are totally new to the trading scene then watch this great video by Professor Shiller of Yale University who introduces the main ideas of options:
Education for beginners:
Types of Trades
How to Set Up a Trade
The ability to trade the different types of binary options can be achieved by understanding certain concepts such as strike price or price barrier, settlement, and expiration date. All trades have dates at which they expire.
When the trade expires, the behaviour of the price action according to the type selected will determine if it’s in profit (in the money) or in a loss position (out-of-the-money). In addition, the price targets are key levels that the trader sets as benchmarks to determine outcomes. We will see the application of price targets when we explain the different types.
There are three types of trades. Each of these has different variations. These are:
Let us take them one after the other.
Also called the Up/Down binary trade, the essence is to predict if the market price of the asset will end up higher or lower than the strike price (the selected target price) before the expiration. If the trader expects the price to go up (the “Up” or “High” trade), he purchases a call option. If he expects the price to head downwards (“Low” or “Down”), he purchases a put option. Expiry times can be as low as 5 minutes.
Please note: some brokers classify Up/Down as a different types, where a trader purchases a call option if he expects the price to rise beyond the current price, or purchases a put option if he expects the price to fall below current prices. You may see this as a Rise/Fall type on some trading platforms.
The In/Out type, also called the “tunnel trade” or the “boundary trade”, is used to trade price consolidations (“in”) and breakouts (“out”). How does it work? First, the trader sets two price targets to form a price range. He then purchases an option to predict if the price will stay within the price range/tunnel until expiration (In) or if the price will breakout of the price range in either direction (Out).
The best way to use the tunnel binaries is to use the pivot points of the asset. If you are familiar with pivot points in forex, then you should be able to trade this type.
This type is predicated on the price action touching a price barrier or not. A “Touch” option is a type where the trader purchases a contract that will deliver profit if the market price of the asset purchased touches the set target price at least once before expiry. If the price action does not touch the price target (the strike price) before expiry, the trade will end up as a loss.
A “No Touch” is the exact opposite of the Touch. Here you are betting on the price action of the underlying asset not touching the strike price before the expiration.
There are variations of this type where we have the Double Touch and Double No Touch. Here the trader can set two price targets and purchase a contract that bets on the price touching both targets before expiration (Double Touch) or not touching both targets before expiration (Double No Touch). Normally you would only employ the Double Touch trade when there is intense market volatility and prices are expected to take out several price levels.
Some brokers offer all three types, while others offer two, and there are those that offer only one variety. In addition, some brokers also put restrictions on how expiration dates are set. In order to get the best of the different types, traders are advised to shop around for brokers who will give them maximum flexibility in terms of types and expiration times that can be set.
Trading via your mobile has been made very easy as all major brokers provide fully developed mobile trading apps. Most trading platforms have been designed with mobile device users in mind. So the mobile version will be very similar, if not the same, as the full web version on the traditional websites.
Brokers will cater for both iOS and Android devices, and produce versions for each. Downloads are quick, and traders can sign up via the mobile site as well. Our reviews contain more detail about each brokers mobile app, but most are fully aware that this is a growing area of trading. Traders want to react immediately to news events and market updates, so brokers provide the tools for clients to trade wherever they are.
What Does Binary Options Mean?
“Binary options” means, put very simply, a trade where the outcome is a ‘binary’ Yes/No answer. These options pay a fixed amount if they win (known as “in the money”), but the entire investment is lost, if the binary trade loses. So, in short, they are a form of fixed return financial options.
How Does a Stock Trade Work?
Steps to trade a stock via a binary option;
- Select the stock or equity.
- Identify the desired expiry time (The time the option will end).
- Enter the size of the trade or investment
- Decide if the value will rise or fall and place a put or call
The steps above will be the same at every single broker. More layers of complexity can be added, but when trading equities the simple Up/Down trade type remains the most popular.
Put and Call Options
Call and Put are simply the terms given to buying or selling an option. If a trader thinks the underlying price will go up in value, they can open a call. But where they expect the price to go down, they can place a put trade.
Different trading platforms label their trading buttons different, some even switch between Buy/Sell and Call/Put. Others drop the phrases put and call altogether. Almost every trading platform will make it absolutely clear which direction a trader is opening an option in.
Are Binary Options a Scam?
As a financial investment tool they in themselves not a scam, but there are brokers, trading robots and signal providers that are untrustworthy and dishonest.
The point is not to write off the concept of binary options, based solely on a handful of dishonest brokers. The image of these financial instruments has suffered as a result of these operators, but regulators are slowly starting to prosecute and fine the offenders and the industry is being cleaned up. Our forum is a great place to raise awareness of any wrongdoing.
These simple checks can help anyone avoid the scams:
- Marketing promising huge returns. This is clear warning sign. Binaries are a high risk / high reward tool – they are not a “make money online” scheme and should not be sold as such. Operators making such claims are very likely to be untrustworthy.
- Know the broker. Some operators will ‘funnel’ new customer to a broker they partner with, so the person has no idea who their account is with. A trader should know the broker they are going to trade with! These funnels often fall into the “get rich quick” marketing discussed earlier.
- Cold Calls. Professional brokers will not make cold calls – they do not market themselves in that way. Cold calls will often be from unregulated brokers interested only in getting an initial deposit. Proceed extremely carefully if joining a company that got in contact this way. This would include email contact as well – any form of contact out of the blue.
- Terms and Conditions. When taking a bonus or offer, read the full terms and conditions. Some will include locking in an initial deposit (in addition to the bonus funds) until a high volume of trades have been made. The first deposit is the trader’s cash – legitimate brokers would not claim it as theirs before any trading. Some brokers also offer the option of cancelling a bonus if it does not fit the needs of the trader.
- Do not let anyone trade for you. Avoid allowing any “account manager” to trade for you. There is a clear conflict of interest, but these employees of the broker will encourage traders to make large deposits, and take greater risks . Traders should not let anyone trade on their behalf.
Which Are The Best Trading Strategies?
Binary trading strategies are unique to each trade. We have a strategy section, and there are ideas that traders can experiment with. Technical analysis is of use to some traders, combined with charts, indicators and price action research. Money management is essential to ensure risk management is applied to all trading. Different styles will suit different traders and strategies will also evolve and change.
There is no single “best” strategy. Traders need to ask questions of their investing aims and risk appetite and then learn what works for them.
Are Binary Options Gambling?
This will depend entirely on the habits of the trader. With no strategy or research, then any short term investment is going to win or lose based only on luck. Conversely, a trader making a well researched trade will ensure they have done all they can to avoid relying on good fortune.
Binary options can be used to gamble, but they can also be used to make trades based on value and expected profits. So the answer to the question will come down to the trader.
Advantages of Binary Trading
The main benefit of binaries is the clarity of risk and reward and the structure of the trade.
Minimal Financial Risk
If you have traded forex or its more volatile cousins, crude oil or spot metals such as gold or silver, you will have probably learnt one thing: these markets carry a lot of risk and it is very easy to be blown off the market. Things like leverage and margin, news events, slippages and price re-quotes, etc can all affect a trade negatively. The situation is different in binary options trading. There is no leverage to contend with, and phenomena such as slippage and price re-quotes have no effect on binary option trade outcomes. This reduces the risk in binary option trading to the barest minimum.
The binary options market allows traders to trade financial instruments spread across the currency and commodity markets as well as indices and bonds. This flexibility is unparalleled, and gives traders with the knowledge of how to trade these markets, a one-stop shop to trade all these instruments.
A binary trade outcome is based on just one parameter: direction. The trader is essentially betting on whether a financial asset will end up in a particular direction. In addition, the trader is at liberty to determine when the trade ends, by setting an expiry date. This gives a trade that initially started badly the opportunity to end well. This is not the case with other markets. For example, control of losses can only be achieved using a stop loss. Otherwise, a trader has to endure a drawdown if a trade takes an adverse turn in order to give it room to turn profitable. The simple point being made here is that in binary options, the trader has less to worry about than if he were to trade other markets.
Greater Control of Trades
Traders have better control of trades in binaries. For example, if a trader wants to buy a contract, he knows in advance, what he stands to gain and what he will lose if the trade is out-of-the-money. This is not the case with other markets. For example, when a trader sets a pending order in the forex market to trade a high-impact news event, there is no assurance that his trade will be filled at the entry price or that a losing trade will be closed out at the exit stop loss.
The payouts per trade are usually higher in binaries than with other forms of trading. Some brokers offer payouts of up to 80% on a trade. This is achievable without jeopardising the account. In other markets, such payouts can only occur if a trader disregards all rules of money management and exposes a large amount of trading capital to the market, hoping for one big payout (which never occurs in most cases).
In order to trade the highly volatile forex or commodities markets, a trader has to have a reasonable amount of money as trading capital. For instance, trading gold, a commodity with an intra-day volatility of up to 10,000 pips in times of high volatility, requires trading capital in tens of thousands of dollars. However, binary options has much lower entry requirements, as some brokers allow people to start trading with as low as $10.
Disadvantages of Binary Trading
Reduced Trading Odds for Sure-Banker Trades
The payouts for binary options trades are drastically reduced when the odds for that trade succeeding are very high. While it is true that some trades offer as much as 85% payouts per trade, such high payouts are possible only when a trade is made with the expiry date set at some distance away from the date of the trade. Of course in such situations, the trades are more unpredictable.
Lack of Good Trading Tools
Some brokers do not offer truly helpful trading tools such as charts and features for technical analysis to their clients. Experienced traders can get around this by sourcing for these tools elsewhere; inexperienced traders who are new to the market are not as fortunate. This is changing for the better though, as operators mature and become aware of the need for these tools to attract traders.
Limitations on Risk Management
Unlike in forex where traders can get accounts that allow them to trade mini- and micro-lots on small account sizes, many binary option brokers set a trading floor; minimum amounts which a trader can trade in the market. This makes it easier to lose too much capital when trading binaries. As an illustration, a forex broker may allow you to open an account with $200 and trade micro-lots, which allows a trader to expose only acceptable amounts of his capital to the market. However, you will be hard put finding many binary brokers that will allow you to trade below $50, even with a $200 account. In this situation, four losing trades will blow the account.
Cost of Losing Trades
Unlike in other markets where the risk/reward ratio can be controlled and set to give an edge to winning trades, the odds of binary options tilt the risk-reward ratio in favour of losing trades.
When trading a market like the forex or commodities market, it is possible to close a trade with minimal losses and open another profitable one, if a repeat analysis of the trade reveals the first trade to have been a mistake. Where binaries are traded on an exchange, this is mitigated however.
Spot Forex vs Binary Trading
These are two different alternatives, traded with two different psychologies, but both can make sense as investment tools. One is more TIME centric and the other is more PRICE centric. They both work in time/price but the focus you will find from one to the other is an interesting split. Spot forex traders might overlook time as a factor in their trading which is a very very big mistake. The successful binary trader has a more balanced view of time/price, which simply makes him a more well rounded trader. Binaries by their nature force one to exit a position within a given time frame win or lose which instills a greater focus on discipline and risk management. In forex trading this lack of discipline is the #1 cause for failure to most traders as they will simply hold losing positions for longer periods of time and cut winning positions in shorter periods of time. In binary options that is not possible as time expires your trade ends win or lose. Below are some examples of how this works.
Above is a trade made on the EUR/USD buying in an under 10 minute window of price and time. As a binary trader this focus will naturally make you better than the below example, where a spot forex trader who focuses on price while ignoring the time element ends up in trouble. This psychology of being able to focus on limits and the dual axis will aid you in becoming a better trader overall.
The very advantage of spot trading is its very same failure – the expansion of profits exponentially from 1 point in price. This is to say that if you enter a position that you believe will increase in value and the price does not increase yet accelerates to the downside, the normal tendency for most spot traders is to wait it out or worse add to the losing positions as they figure it will come back. The acceleration in time to the opposite desired direction causes most spot traders to be trapped in unfavourable positions, all because they do not plan time into their reasoning, and this leads to a complete lack of trading discipline.
The nature of binary options force one to have a more complete mindset of trading off both Y = Price Range and X = Time Range as limits are applied. They will simply make you a better overall trader from the start. Conversely on the flip side, they by their nature require a greater win rate as each bet means a 70-90% gain vs a 100% loss. So your win rate needs to be on average 54%-58% to break even. This imbalance causes many traders to overtrade or revenge trade which is just as bad as holding/adding to losing positions as a spot forex trader. To successfully trade you need to practice money management and emotional control.
In conclusion, when starting out as a trader, binaries might offer a better foundation to learn trading. The simple reasoning is that the focus on TIME/PRICE combined is like looking both ways when crossing the street. The average spot forex trader only looks at price, which means he is only looking in one direction before crossing the street. Learning to trade taking both time and price into consideration should aid in making one a much overall trader.
How To Make Money On Binary Options- 10 Life-Changing Word Of Advice
How to make money on binary options? I was searching for the same thing when I first decided to make money with binary trading.
Come on, who does not want to be a millionaire?
Everyone wants to know the process to fill the box with money. Even in the trading business, there is no difference. But, somewhat, there is a thin line between earning and making money.
Binary options trading is about the decision, between yes or no. However, the process is less complicated than other trading types. Traders around the world can perform binary on different assets such as forex, commodities, stocks, etc.
Besides, you won’t feel the necessity of being a professional. In the flip side, we recommend you to be the master in trading to generate a steady income.
For example, to place a trade on gold, no need to buy gold bullion. All you need to do is decide whether the price of gold expects to shoot up or go down, within a certain period.
Before deciding, go through our article how to successfully trade binary options . Especially, it will help you to take an implacable decision.
Additionally, the following 10 words of advice will make your trading life as simple as pie.
10 Effortless Steps To Make Money With Binary Options
Proper Trading Knowledge With Profitable Trading Assets:
As we mentioned before, trading knowledge is necessary for every trader before executing a trade. It will help you to make the right decision in a very crucial moment.
95% of traders lose money because they have a limited idea of trading. However, for binary traders, you can have basic knowledge of trading before executing.
Additionally, you can develop your knowledge by applying it in the real trading field. Hence, you can make good use of a demo account here.
The minute you set your mind to start getting into trading, choose the type of trade you are willing to get involved in.
In general, it means to decide the asset class – stocks, forex, commodities, and so on .
Each trade holds different methods. For example, if you think the value of oil prices is going to crash soon, then your choice of the asset should be commodities.
Choose The Right Trading Broker:
Before starting this phase, take some time to review the trading broker list and choose the top 5 that have a good rating.
Once you have the filtered list, go through the features, services, and cost associated with each of these brokers. Make a short list with names and unique trading features.
On the other hand, you can open a practice account to test the trading platform and its function. The approach will help you to take the decision of choosing a right and reliable broker for all your trading activities.
At the same time, the broker regulation is a key factor for each trader. Check the regulation as well as the regulatory body. It is wise to open an account with more than one broker’s platform.
Choose The Right Expiry Time:
Expiration time indicates when the binary options trade expires. Traders have to predict the right asset price within an expiry time.
Depending on the asset, different brokers may offer different expiry time. The terminology of binary options trades can be as less as 60 seconds to over a month.
It’s important to choose the right expiry time considering the extreme conditions of uncertainty. As a result, the expiry period will decide after considering the level of risk you are ready to take.
Moreover, you all know that trading binary options is much easier than other trading classes. Traders need to research the marketplace depends on the trading expiry time.
After all, the financial market is volatile. So, things can change upside down overnight. Make well research on your investment strategy until you are expecting to keep the option live.
Understand The Potential Gains:
The potential gain varies people to people. Just like how you will compare each product with another, and buy the one at the best price while shopping. Similarly, you have to do it in trading.
In trading, investors need to invest after calculating the proper potential gain. Each broker is different. So, their offerings also different from each other.
Compare each broker to check what would be the potential gains and what you will be missing if you do not make the right choice.
Not only that but also the comparison will help you to understand the potential gains that are expected to get and from which broker.
Try to gather knowledge on the latest and most used information. At the previous time, traders need to collect trading related news from different media.
At this moment, most of the platforms are offering the latest updates or news. Some platform offers real-time data to make your task easy.
Daily trading information is crucial to understand the reason for any movement in the market.
Getting a specific strategy of trading and sticking to the same will not help you to reach anywhere. You trading life will be boring.
Place Trades Instantly:
As you already know that the market is very volatile and things will flip instantly. If you decide to execute a trade , don’t do it right away.
Research the market properly by using different trading tools and indicators.
However, make use of the mobile app offered by most of the binary options trading brokers to book your trades.
The market will not have for anyone convenience. If you miss the opportunity, you cannot be taken back. If you are sure that the market will move on your favor, then there is no reason to delay in executing the deal.
Increase The Trading Budget:
There is a lot of competition among binary options brokers. Unique and attractive features are offered by brokers to gain customers.
These benefits should be used to increase your trading budget. For example, some binary options trading brokers offer Welcome bonus during registration. (Example: Binomo ).
Moreover, you will find a lot of brokers who are giving bonus after inviting friends. That means, if you are introducing someone new to the platform, a certain percentage of their profit is shared with you for a certain period.
Ob the other hand, the deposits bonus is also available for traders depending on the amount.
Trading tournaments are also a great source of increasing profits. You can trade and compete with various traders around the globe. You can polish your trading skills and win a large amount of money.
Hedge Your Trades:
Do not try to make money by exposing your risk to the market movement. Being greedy will not get you anywhere.
Thus hedge your trades through off-setting positions and nullify your risk in the trade.
Though the profits you make through this are very marginal, it will help you to play a safe game especially when the market is very unstable .
Roll Forward Features:
This option is offered by a few brokers. It also offer when you have a live trade in the market.
By extending the expiry time of existing trade, roll forward feature will help traders. Moreover, traders will get the facility, if the market moves to them.
You can apply this feature by extending the trade’s expiration date.
The feature will help you to make money through binary options on an existing trade that is moving in your favor.
However, for this, a proper understanding of the financial market is very essential.
Some of the brokers who are offering this feature are:
Look For Early Exit Option:
Getting into a trade with a broker who offers this early exit option is very good and beneficial.
Suppose you fear about some uncertain event in the market that can take a loss on your investment.
Early Exit option will give you a chance to get out from the risky transaction with some minimal charges.
This charge will be acceptable by the trader, if he thinks he will face loss on his investment from the uncertain event(s).
Some of the brokers who are offering this feature are:
Make good use of all these tips and guidance to safeguard your investment and to make money with binary options which will increase your profit earning power!
Can You Really Make Money with Binary Options
Is making money with binary options possible?
If you want a quick answer, then Yes! You can definitely make money from binary options. There’s a catch though.
If it were that simple, then we wouldn’t have so many traders questioning the legitimacy and effectiveness of binary options.
Binary options are quite popular all over the globe.
They are known for their simplistic nature of trading where you predict the price movement of various assets such as commodities, forex, indices, crypto, and much more.
This trading is called binary because the outcome is either a winning payout or nothing. If you lose a trade, you gain nothing and your investment goes down the drain.
This is why most beginner traders are scared to trade options. That being said, there are traders who consistently make money from binary options trading.
This brings me to the main point, that is the difference between making and losing money in binary options is trading practices and mindset.
Newbie and inexperienced traders see binary options as a one-time opportunity to score a big payout.
They invest a large sum of money (usually a large percentage of their investment size) on a single trade without properly analyzing the market and researching on the asset.
When they lose the trade, they gain nothing and instead lose all their initial investment.
These traders, end up blaming the system instead of owning up to their faults.
I know while reading this, some of you have realized that I just described you and now you realize where the inherent fault lies in.
Let’s summarize the common mistakes discussed in the above example that why traders lose money when trading binary options:
- Lack of trading knowledge
- Not researching on the assets to be traded
- Lack of technical, fundamental, or market analysis
- Investing a large portion of their investment in one trade.
- Not using risk management.
The traders that make money from binary options don’t gamble all in on a single trade.
They carry out small trades and aim for small gains. They work their way up the ladder. This method of trading has 2 benefits.
Firstly, it’s easier to recover from losses in case you lose a trade. And the other reason it the more you trade, the more experience you gain.
And the more experienced you are, the more familiar you are with how the market behaves and the probability of you losing trades decreases.
So, now that you know what mistakes to avoid, how do you make money from trading options?
Firstly, educate yourself on trading. Learn how to read charts, understand the consequences market news can have on an asset’s price movement.
No trader has a 100% win ratio. So don’t be disheartened by losses and your emotions ruin it for you.
Now you’ve learned how to avoid common mistakes, and know how to trade successfully. But there is one more factor that determines whether you make money when trading binary options.
That is the broker that you trade with or the trading robot service that you use for automated trading.
Let’s talk about broker first. A binary broker facilitates binary trading for you. They act as middleman allowing you to trade binary assets through their platform.
So all aspects of your trading depend on how well the broker and their trading platform is. The range of assets they offer, their regulation, minimum deposit all shapes your trading experience.
Choosing the perfect binary options broker is like finding treasure from the depths of the ocean. Luckily for you, we have done all the research and sorted out the best brokers for you.
For binary options trading, the best brokers out there in the market are IQ Option, Binomo, and OlympTrade.
These three brokers excel in every feature and provide a complete trading experience for their traders.
The same applies in the case of trading robots. Trading robots trade automatically for you by analyzing the market and predicting the market for you.
Your best bet would be to trade using a combination of manual and auto-trading.
The best auto-trading robots currently in the market are BinBot Pro and Crypto Robot. They offer multiple indicators and robots that adapt really well with the market.
10 Step Guide to Binary Options Trading
Binary Options trading is one of the financial trading instruments covering a range of Assets, Commodities, Shares, Stocks or Forex Pairs.
One of the reasons why Binary Options trading has recently become more and more popular is that similar to Forex trading, Binary trading hours are not only limited to the working hours.
If you wish to trade on the value of gold, you need not purchase actual gold but will only need to predict if the amount of gold is going to increase or decrease in a given time frame.
One of the most significant benefits of binary options trading is that there are several expiry times available for you to choose from, and can range from as little as 60 seconds to 1 month.
However, Binary Options trading has only recently become popular, and many people are still new to the term, which is why this article provides a 10 step guide (infographic) that is going to teach you everything about Binary Options trading. You can choose any of our featured brokers to get started.
How to Trade Binary Options Guide by BinaryManual.com
We believe that once you read through this guide, you will be able to place individual trades of your own and efficiently start your career either on a demo account or directly on a real money account.
What Trades Should You Place – This is the first thing you are going to have to decide when you start binary options trading. You need to choose an asset, stock exchange or commodity you will be placing your trade on.
Once you decide, the next decision will be to predict whether the value of the chosen asset, commodity or stock exchange is going to increase or decrease in a specific time frame.
For instance, if oil is what you have chosen and you believe the value of oil is going to fall, you will have to go for the Put option, while if you think otherwise, you will have to go for the call option instead.
Choosing a Broker – You cannot expect to trade binary options without a broker, which is why you will need to spend a good amount of time and choose the right broker out of the numerous brokers featured on our website.
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