If you are wondering how to trade binary options, it’s not as difficult as it may seem. You can learn how to trade binary options in a few simple steps. Step one, learn what a binary option is. Step two, choose a place to trade binary options. Step three, learn some trading basics. Step four, pick an asset to trade. Step five, start trading!
Learn what a binary option is
So step one, learn what a binary option is. An option is a contract that gives you the right to purchase an asset for a given price at a specified time in the future, no matter what the price of that asset actually is when that date comes around. A binary option is an option that typically has an all or nothing payout, meaning you either get a fixed amount of money, or nothing at all. You invest a set amount of money, and you know before hand the amount of money you can make and the risk before hand as well. With a traditional option, the amount of money you make depends on how much the asset rises past the strike price. With a binary option, the asset just has to be past the strike price in order for you to be considered in the money. People like binary options because they are easy to understand, and there are not many fees associated with trading them.
Find a place to trade
Step two, choose a place to trade a binary option. The biggest issue with binary options is that the are unregulated in most of the world. But, there are still a lot of regulated exchanges, and you need to do your best to find a broker that is regulated and has good custom service. Regulations matter because a regulated exchange and broker has to keep all of your money in a trust, and there is a third party that verifies your trades for accuracy and fairness. It’s pretty easy to find a regulated exchange, just look for the information at the bottom of their webpage or check their about me page. If you still can’t find out, call their customer support. Customer support for a binary options broker is especially important if you are a new trader. If you have any questions with your broker, you’re probably going to need to call or email somebody. If you can find a binary options broker that has a physical location you can visit, that’s also a good thing to look for. Many brokers are just faceless, nameless websites on the Internet.
Learn some trading basics
Step three, learn some trading basics. If you are trying to trade binary options and don’t know the basics of both fundamental analysis and technical analysis, then you need to go do some studying. In order to improve your changes at making money, you need to be able to make trades that are logical and technically sound. Most binary options brokers will give you a little tutorial on the basics, but the depth of the training materials tend to vary between broker to broker. If what your broker has isn’t enough, try contacting their support for more information or look at other brokerages training materials.
Pick an asset to trade
Step four, pick an asset to trade. This is extremely important. If you didn’t learn this when trying to learn some general trading binary options, you need to pick a single asset or asset class to trade. This will help you in many different ways, but mostly because most strategies are only designed to work with certain types of markets. Different assets have different markets and pricing volatility. Some assets are extremely volatile in the short term and prices can fall or rise drastically in a just a few minutes. Other assets tend to trend up or down over longer periods of time and aren’t really that volatile in the short term. If you want to make less trades, you may want to pick assets that are easier to judge in the timeframe you want to trade them in. Learning how to trade binary options isn’t’ that difficult, it just takes a little bit of time and energy.
Step five, start trading. If you’ve gotten this far, you may have already made a few practice trades using the demo account your broker gave you. If you didn’t get a demo account with fake money to practice with, you need to find a new broker, because you are probably getting shafted. The key to trading and not losing your shirt is to trade with small percentages of your total capital. If you’re just starting out, don’t trade more than 2-3% of your total capital. So for instance, lets say you start out with $5,000. A single trade shouldn’t be more than $150. This will give you a lot of room to make mistakes, as well as successful trades.
Learning how to trade binary options is a great way to give yourself a secondary or even primary income. While it can be risky if you don’t pay attention to what you are doing, most people can achieve monetary success do a degree with binary options if they take their time to become a disciplined trader.