Maybe you feel you are now ready to start trading in binary options, and you are excited. Everyone who is getting involved in binary options trading wants to profit from it. You want to know how to master binary options trading. Many will get involved because they have been told they can double their money quick. Unfortunately, that’s not always the case. In fact, many of the best getting involved in binary options trade end up losing and quitting the trade altogether. Many binary options brokers will not tell you this, because they profit when the traders lose. Regardless of how many trading tools, strategies, or round-the-clock financial markets are available, many traders do not achieve the success they wish for.
The fact that most people do not profit from the trade has not kept people away from it though. More people continue signing up on binary options brokers’ platforms hoping to make some money there. It is estimated that only 5 percent of the people who get involved in binary options trading profit from it. Five percent might sound like a small figure, but bear in mind we are talking about millions of people around the world. There is, therefore, a good number of people profiting from trading in binary options. So, what does it take to profit from trading binary options? What do you have to do to know how to trade binary options profitably? Our hope is that this article can help you successfully trade binary options. Let’s dive in and explore.
We are going to divide the plan on how to trade binary options successfully into two.
1. Basic Steps – this step with show you how to start binary options trading.
These are basic steps that you should take to ensure that you are set to trade binary options successfully. These are steps that should be employed by everyone seeking to trade in binary. Please note that these steps do not guarantee winning results, but they will certainly go a long way in ensuring you get the results that you desire. We are going to look at six common steps (assuming you already know what binary options are and how binary options brokers work). Let’s get to it right away.
6 Basic Steps to Successful Binary Trading
1. Choosing the Appropriate Broker
Why do you need a broker to trade binary options? You can only trade in binary options through a binary options broker since the capital threshold for the main market is very high. It is estimated that there are over 400 binary options brokers around the world currently. These brokers have different services and, therefore, the broker you choose plays a huge role in your success as a trader. Some of these brokers are actually scammers. Always go for a reputable, licensed and regulated broker. Your success as a trader depends a lot on the resources and features offered by your broker. Some brokers will offer educational materials and resources while others won’t. You need to get a reliable and trustworthy broker. Keep in mind that the brokers make a profit when you lose.
See Also: Best Binary Options Brokers
2. Start Small
Many people and the brokers themselves will tell you that starting with a demo account is the best way to get started. I beg to differ! However, Why? I mean you don’t have to stake your money with the demo account, so you get to learn slowly.
You see, most of these binary options broker accounts give you a virtual financial market on the demo account. They will not give you access to the real market because in the actual sense there no capital in your account. It’s more like learning to ride a bike by pedaling on a stationary bike. You could still start with a demo account if you are a complete novice, but don’t dwell on it a lot thinking you are learning a lot. It would be unfortunate for you to get involved in the real financial market thinking you know a lot only to end up losing a lot of money because you actually know nothing. My advice is to start with a real account, but start small. Start will small amounts.
3. Managing Risks
This is one of the most important, if not the most important, aspects of trading binary options. If you have no risk management skills, you might as well consider yourself to be gambling rather than trading. Risk management starts with the minimum deposit. Do not deposit money you don’t have. By that I mean;
- Do not deposit money into a binary trading account when you have pending bills
- Do not borrow money to trade binary
- Do not deposit money that is not yours
You need to understand that you cannot solely depend on luck while trading binary. Traders who depend on luck do not last. Once you have your deposit on the trading platform, do not stake all you deposit at once. A general rule is not to use more than 10% of your deposit in a single trade. Chances are that you will lose a couple of times. Give yourself a chance to redeem yourself once you make a wrong prediction. Statistics show that a majority of the binary options traders join a platform, make the first deposit, fail to manage risks and loses all the deposit, then quits and never trades again. That brings me to the next step.
4. Keep the Emotions at Bay
People get carried away by emotions and take too many risks, or quit before they have really explored binary trading exhaustively. The same way you are advised to keep the emotions and attitude away from a workplace is the same way you keep them away from binary options trading because things are not always going to go your way. There are two emotions that are quite detrimental to your trading endeavors;
- Fear- many people, will make people fail to make a lucrative trade because of fear. You counter fear by having a strategy and sticking to it. We are going to look at strategy next.
- Greed – greed does to you the opposite of what fear does, but you still end up losing. Greed leads you to take too many risks. Again, it is tackled using strategy.
Keeps these two emotions, and generally all other emotions at bay while trading. Get a strategy and constantly focus on how to improve it. Once you have established a solid strategy, stick to it so long as its working.
5. Personal Discipline
If you do not have personal discipline, you might as well not think of getting involved in binary trading as well. Indiscipline and laziness will kill your dreams of successful binary options trading on arrival. You need to be able to handle high-pressure situations. They need to reason fast and reason logically. Also, learn to stay put even when things do not go your way. Things will fail to go your way a lot of times in your trading endeavors, especially when you are beginning. That’s why many people never make it out of the beginner phase.
6. You Never Know Enough
You can never know everything there is to know about binary trading. You will be shooting yourself in the foot the moment you start thinking you got the perfect strategy and you know it all. The learning never stops. Concentrate on constantly improving your strategy. That improvement will reflect on your winning strategy. Many binary options broker platforms require you to have over 60% winning rate to make a profit.
The strategy is the magic word in any binary options trading space. Having a binary options trading strategy is your best bet if you wish to make anything trading in binary options. If you have no strategy for trading in binary options, you are basically gambling. Gambling with binary options has been proven not to be sustainable time and time again. Gambling with binary options is even worse than gambling on pure betting sites and casinos. At least you have the chance to win a jackpot and get life-changing money on the betting sited and casinos (they are rarely won though).
Strategies are based on the financial market behavior. To have a strategy, you need to have some analytical skills or employ a third party that can help you with the analysis. You as the trader relies on statistical and analytical data to analyze the financial market. This approach is usually a bit difficult for beginners to understand, and most of them end up quitting. The strategies developed through the analyses are the most reliable though. There are a lot of resources developed to help you understand the analysis process and the charts. There are no best days to trade binary options. Most of the trading platform run for 24/7.
Below are three of the most common approaches to coming up with a trading strategy.
1. Overall Performance Analysis Strategy
The asset you may choose to trade with is attached to a certain company. The operation of that company is going to have an effect on your trades with the selected asset. Therefore, you would want to concern yourself with the performance and attributes of the company. You need information such as; how the balance sheet of the company looks, cash flow status, income statements and more before you purchase an option.
Also, concern yourself with technical aspects such as employee and partners satisfaction. Generally, this strategy is based on observing the company of the asset you be trading with and the whole industry at large. They will help you make judgments about how their stocks are going to perform.
2. Technical Analysis Strategy
This is a popular and less complex strategy. It is employed by many successful binary options traders. This strategy involves studying and analyzing the past performance of a certain asset and using the findings to predict the future. Analyzing the past gives you a picture of the behavior of an asset in certain conditions. The findings will give you a certain level of certainty of what is going to happen if you anticipate the asset is going to experience similar conditions ahead.
Time is also a crucial factor in binary options trading. For instance, the best time of day to trade 60 second binary options, is during the day when there is a lot happening that effects the trend of the financial markets. During the day is the best time to trade binary options currencies. The is no best time frame to trade binary options though. It depends on how well analyze the previous trends at any given time.
This strategy does not concern itself with the intrinsic value of the asset. As a trader, you do not have to go through the financial statements of a company. There are trading tools used for the technical analysis such as moving average and Bollinger bands and many others. It is one of the strategies to trade binary options.
3. Basic Options Strategy
This is yet another popular strategy that every serious binary options trader should consider. It is fairly easy to understand. The strategy is based on risk minimizing the risks as much as possible. The strategy protects the trader from incurring complete losses, in case they make wrong predictions. Once you pick an underlying asset or currency pair; let’s say the GBP/USD if you notice the market is moving in a good direction you will place a call option, but you also place a put option on the other end on the same asset. The GBP/USD is the best currency to trade binary options.
This is how it works;
Say the currency options GBP/USD is currently at 1:4000 and you are anticipating that it is going to go up so put place a call option of $100 that expires in 10 minutes. You are offered a payout of 80% if you get it and a 10% cash back if you miss it. After the first five minutes, the pair is at 1:4015 which is okay but not convincing. Therefore, you put a put option of the same amount with an expiry of 5 minutes. The payout and cashback percentages remain similar.
So, what are the possible outcomes after the last 5 minutes?
You call option wins and the put option losses, or vice versa. You will have a total payout of $190. That is; the 80% profit from the win, and the 10% cashback loss on the other end. You end up losing $10 since you had staked $200.
You could win on both the call and the put options and get $360. Two wins of $180 each. It is nearly impossible to lose on both ends due to the dynamics of the market. Losing on both ends is only considered hypothetically.
In the scenario depicted above you the amount of loss risked if far less than the possible total possible win. It means if you were to put up three consecutive such trade pairs, then lose two and win one, you would still end up with a profit.
There are many more strategies that are employed. Successful traders use these combine the basic strategies to come up with their best strategy to trade binary options. You trade when you feel you have a leverage in knowing what will happen next to the asset you are trading with. There is no best time to trade binary options. Having a strategy is the way to go if you hope to make anything in binary options trading. It is the safest way to trade binary options.