Welcome to Binary Options University! We are happy to have you join us for learning, studying and profiting in one of the fastest growing trading markets. Keep in mind, this trading site is on the Internet to help you achieve your trading goals, but please make sure you understand the Risks.This type of action is fairly new and has been growing as one of the fastest markets since 2008. Binary options trading is one of the most lucrative marketplaces nowadays because of the potential for huge gains in a short period of time. In the past, the stock market has been seen as a haven for people looking for big gains, but a stock trader is generally deemed as fairly successful when they have achieved a rate of return of 10 percent per year for their portfolio. With this new instrument, you can see a profit of 75 or even 85 percent per trade.
About Trading Binary Options
Don’t be fooled, though. Trading these successfully over the long term is not an easy thing to do. They are high risk, in part because of their all-or-nothing nature. When you are on the profitable side of things, you can gain up to 85 percent of the amount you risked. If you are wrong and have no rebate features with your broker, you will lose 100 percent of what you had risked. This means that for it to be profitable to you, you need to be right in your predictions more often than you are wrong.
When you want to start trading, the platform will differ a little bit from broker to broker, but your basic interface will be the same. First, you select an asset. Then you select which direction you think it will go (up/call, or down/put). Next you figure out your timeframes. Do you want to have a quick 60 second trade? or do you want to choose an expiration time 30 minutes from now? Your brokerage should help you to easily pick an expiry from a list near the asset you have selected. Finally, you want to decide how much to risk. Some brokers have a minimum of $5 or $10 per trade. If you’re new, you will want to start out as small as possible until you have refined your technique. Next, when you’re sure that everything is the way you want it, you hit the button that executes the trade for you. Then, you just sit back and wait to see if you were right or wrong.
Types of Options
At their most basic, there are two main types. The call option is what you will use when you think that the price of the asset in question will go up. You utilize the put option when you think the price will be going down.
This is extremely simple to learn—only one of two things can happen. You are either right and you see a profit returned to you, or you are wrong and you lose your risked money. This creates an illusion of simplicity. Binaries might be simple in how profits and losses are set up, but this is where they stop being easy. If you want to be successful trading, you need to have a mastery over chart interpretation, sentimental and technical analysis tools, and even have a good eye for spotting significant fundamental trades.
The best way to start a career in binary trading is to get some practice in with a demo trading account. With a demo account, you can practice trading in real time with certain brokers. There is no way to duplicate the experience that comes with real trading.
The way it works is pretty easy. With demo trading, you are given a certain amount of fake money to start out with. You can use that money anyway you see fit. The platform you will be using for demo trading is the same platform that you will use when you’re actually trading with real money, so demo trading helps eliminate the learning curve and any mistakes that you might make while figuring out how to use the software.
Demo accounts will differ from broker to broker, and some places do not even offer demo trading. Still, this is an important part of your trading tutelage. 24option and Traderush offer ongoing practice accounts.
There is a downfall to using a virtual account, however. Most brokers that have it will only allow you to keep it open for a very short period of time. Some will only allow you to demo trade for 72 hours. This is more than enough time to figure out how to use pretty much all aspects of how the software functions, but if you are brand new to trading, this is hardly enough time to work out an effective trading strategy. If you are new to trading, you will want to give yourself as much time as possible before starting out. Experience is something that you need to accumulate over time.
Preparing For Your First Trade
The thing about binary options trading is that you cannot enter a trade unprepared—ever. In order to meet long term success here, you need to have a viable method of identifying profitable trades and a good money management system to make sure you are never risking too much at any one time or risking too little for the trade to be worthwhile. Trading strategies can take months (or longer) to develop, and if you skimp out on this area of your trading, you will likely not be successful. Do your research on the asset you are looking at and make sure that you have a good entry point picked. This will make sure that you are being efficient at picking winning trades.
The trade you pick doesn’t need to be a monumental one. Small movement of only a 1/10th of a pip will get you a profitable outcome. Still, if you are trying to select only the very best trades, you will not be trading as many trades throughout the day as the person who looks for tiny movement.
Which method you ultimately apply is up to you, but think about it this way: would you rather have a few trades with a really high probability of success, or many trades that look like they will go only slightly in your favor. If you make only a few trades per day, but the quality of their outcome is superior, you might be able to make more money off of fewer trades. Quality is more important than quantity.
However, the immense risk that is associated with binaries is also something that you can easily use to your advantage. The knowledge that you gain because you know what you are risking is a tool that can make money management a whole lot easier. For example, when you are trying to determine your weekly goals for profits, you can easily determine how many trades and of what amount those trades need to be in order for you to hit your goal.
Selecting a Broker
There are many different brokers out there to choose from. However, there is no one right broker out there for every need. Different traders will have different areas that are important to them so there is no broker that will satisfy every need. Still, there are a few main things that you should be keeping your eyes open for when figuring out which broker or brokers to use for your trading.
- Ease of use. You want a company that will allow you to use their software without fear of difficulty or delay. With fast paced trades you can’t afford it if the software slows down or wastes precious seconds.
- Enough assets. There’s no point in trading at a broker that doesn’t have the assets that you want to trade. If you have a background in Forex trading, you want to make sure that they have a rich assortment of the currencies that you would be interested in trading. If they don’t have the assets you need, don’t waste your time.
- Good rates of return. This is imperative. If one site is offering you an 83 percent rate of return while another is offering you 84 percent, as long as all other factors are the same, you need to go with the one offering more—even if it is only a 1 percent difference. Factors like ease of use are important, but you don’t want to sacrifice profits just because one broker takes a little bit longer to get used to than another.
- Enough option choices. There are more choices than just the standard call/put options. As you become more advanced in your trading, you will find that the more customizable your trading is, the more profitable it will become. Start with the basics and work your way up until your trading strategy is exactly where you want it to be. There are enough different choices out there now that binary options have been around for a while that will allow you to realize this.
- Rebates. Some trading sites offer up to 15 percent back on your money when your trade is not successful. This obviously isn’t something that all traders will want to take advantage of, but many will, so if this is something that works in with your overall trading strategy, you need to be on the lookout for it.
More Than One Site
You will find that sometimes, even after taking these five points into account, that one broker doesn’t have everything you need. If this is the case, having your money in more than one broker is perfectly acceptable. For example, if they offer 85 percent returns on the EUR/USD pair, but only 70 percent on the price of crude oil, you can trade the Euro/U.S. dollar on your original site and oil on another that has a more favorable rate for you. This is okay to do, and because most binary options brokers have web based platforms, it won’t slow down your computer a lot to be running more than one broker at any given time.
The other benefit that pops up here are the bonuses that you might earn. Some places offer incentives to first time clients in order to attract business. These take the shape of bonuses added to your trading account. Usually, you need to be a big customer to warrant one of these, but if you place $10,000 in two different locations, odds are, you will be getting an additional amount of money added to your account. For this reason, having more than one broker can become even more profitable to you. A standard bonus amount is about 100 percent of what you initially deposit.
Remember though, you cannot withdraw this money right away. With most places, you have to trade 30 times the bonus amount before you can withdraw the funds. This might seem like a lot, but it makes sure that they don’t lose a lot of money by having this client-attracting feature.
Conclusion: What Works Best For You
Above everything, you always will want to make sure that you are comfortable with the trade and confident in your decision making ability. When you start having doubts about whether or not your system works, or if you are nervous because you risked too much money, your emotions start to come into play. Poker players call this tilt because it skews their judgment making ability. When your emotions become a factor in your trading, logic and research take a back seat, thus making it harder to be successful. Emotions have no place in trading of any sort; you want to be as rational as possible. If you are starting to have deep feelings come up while you are trading, it’s time to take a break. You can always come back when you are ready.
Get started with Your Binary Options Education
Get the experience you need and do not trade outside of your parameters. If you are studious and astute in this, you can be very profitable, but you need to remain disciplined. You can become a successful binary options trader if you want.