Over the last couple of years, trading binary options has tremendously increased in popularity. One of the main reasons is because of the relatively low entrance capital required. Another factor that has contributed to the growth of binary options trading is because most merchants can easily access these markets via their computers or smartphones.
So, what are binary options? In simple terms, a binary option is a kind of a “yes” or “no” proposition. You simply have to predict whether a specific underlying asset will trade above or below a given price at a specific time. If your answer is “yes” at a correctly predicted time, you win. If it’s a “no”, you lose your invested money. So with this kind of a risk involved, it’s very possible for a novice trader to lose lots of money and even end up quitting altogether. To help you out avoid this unwanted scenario, here are some pro-tips on how to trade binary options successfully. Keep reading!
“no”, you lose your invested money. So with this kind of a risk involved, it’s very possible for a novice trader to lose lots of money and even end up quitting altogether. To help you out avoid this unwanted scenario, here are some pro-tips on how to trade binary options successfully. Keep reading!
1) Be Realistic
Being realistic with your goals is arguably the most important characteristic you need to become an expert binary options trader. To begin with, carefully plan what you hope to achieve and then figure out whether your goals are attainable within the timeframe you’ve set.
We recommend you draft up a list of periodic goals, which can be daily, weekly, monthly, or even yearly. Your goals should include important things like your annual salary, the amount you wish to spend on each trade, and so on. In short, make sure these goals are realistically achievable, because your overall success could depend on it.
2) Choose Your Broker Wisely
When trading binary options was introduced almost a decade ago, the number of brokers offering these items was limited. In fact, most of them were located far off in some country. To make it even worse, you could have to deal with untested and unknown brokers. Today however, there’re lots of brokers to choose from, with some traditional brokers setting up subsidiaries to easily cater for your trading needs. This means that the risks involved in trading binary options are reduced, but it doesn’t mean that there’s zero risk.
The best option is to start with small amounts as you test the withdrawal process of your chosen broker. In addition, make sure your broker is fully regulated and they should also provide you with a demo account. In addition, be wary of those promotional internet ads and bonus commitments to avoid getting scammed.
3) Take Advantage of Demo Accounts
Demo accounts are totally underrated, but are very crucial if you’d like to become a successful binary options trader. Most traders view it as a means of testing out the waters before depositing money. Instead, you should consider them as practice tools to help you try out different strategies, and find out which one works best for you. After all, you’ll have nothing to lose.
4) Master One Strategy
Be careful not to become a jack of all trades, but a master of none. That aside, there’re lots of simple trading strategies to download. Each strategy has its own unique character and is designed for a specific purpose. Therefore, you are likely to gain more profits if you become a complete master of one strategy. However, if you can master different strategies, it means that you can handle several circumstances, which is a definite plus for you. Just remember to try it out first in a demo account before going live.
5) Stick to Longer Timeframes
Most binary traders generally go for short-term and fast-paced trades that can last between 60 seconds to 1 hour. However, there’s a reason why you should slowly move to longer trades. Let me explain why. Although a shorter timeframes are tempting due to the ability to make quick money, a longer expiry period will leave your positions open for long. This’s important because certain assets like crypto and Forex are very volatile, hence there can be rapid price changes that are hard to anticipate.
Another thing, most indicators will give you inconclusive results in shorter timeframes, which lessens your accuracy chances. All in all, greed should not be a factor to hinder your binary options trading success.
6) Invest In a Reputable Signal Provider
If you’d like to trade like a pro, investing in a signal provider who can point to you potential opportunities is a must. Be careful however not to be scammed by the multiple software robot providers claiming to be legitimate. You can check out the multiple user reviews on the internet as well as validate the winning percentages before making a decision.
7) Monitor Your Trades
The road to success is full of mistakes and you should always learn from them. Having said that, monitor your success and failures as this will point out to you what you need to improve on as far as strategies and the assets you’re choosing are concerned. To begin with, don’t change assets and strategies that are proving to be working for you. Also, monitor all the news surrounding your assets as this will help you stay ahead of any incoming climate change in the market.
8) Follow Money Management Rules
Although you don’t have a lot to risk trading binary options, strictly adhering to money management rules is still very important. In this case, it’s advisable not to exceed a five percent wager of the original deposit balance for any given trade. This’s to help you quickly recover in case those dreaded losing streaks occur. Also, avoid doubling or tripling down in order to recover your losses. Remember, this’s not gambling, so always lock your ego and emotions somewhere safe.
9) Don’t Overtrade
This’s arguably the in’ number one committed by most traders. At some point, you’ll find yourself getting promising opportunities every second, and if you’re tempted to grab most of them, this’s what we call “overtrading”. In this game however, patience is everything, so focus your strategy on a few asset choices. Nonetheless, if the market movements are favoring you, then you can load up and take full advantage of the momentum. That being said, this should only be after you’ve met all your plan requirements.
10) Avoid “Interacting” Assets
Don’t be surprised to find some assets affecting the performance of other assets in the market. For instance, the EUR and USD affect each other inversely – meaning that when the EUR rises, the USD goes down and vice-versa. Therefore, avoid investing on the EUR going up, while at the same time investing on the USD going up. In such a scenario, you’ll probably win only one bet, giving you an overall loss. I’m sure you don’t want this, do you?
Let’s be honest, getting started with Forex trading or binary options can seem like a daunting task, which is true. In fact, there’s a lot to learn, especially for novice traders. However, it’s very possible to become a professional trader and start making substantial profits, but this won’t happen overnight. Just follow the aforementioned tips together with some patience, and be rest assured of making a lucrative career out of trading binary options.