Binary options present traders with a user-friendly platform to dabble in the financial markets. The beauty of binary options trading lies in the fact that you can profit off rising or falling markets by placing call or put options accordingly. The simplicity of binary options trading is its saving grace; prior to the advent of this evolution in financial trading all activity was limited to brokerage houses, investors in ivory towers, and professional fund managers. Binary options have levelled the playing fields, making it possible for everyday traders to dabble in the markets with their choice of financial assets.
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You can trade indices, commodities, currencies and stocks, without taking ownership of these financial assets. Binary options trading is a speculative endeavour which allows for substantial profit generation by correctly forecasting the direction of price movement of the underlying asset. As such, large profits can be generated regardless of the direction of market movement. Among others, binary options offer traders known outcomes at all times. You will know precisely how much profit you stand to generate at the time of expiry, and your loss is limited to your initial investment – no leverage or margin is required. Since fixed payouts are made on all trades that end in the money, it is possible to budget accordingly and plan strategically.
5 Steps to Earn a Higher Payout
- Use an economic calendar to carefully plan your trading activity
- Only trade financial assets that you understand and enjoy trading
- Educate yourself about all aspects of your preferred financial assets
- Use binary options trading strategies to limit losses and maximize gains
- Use binary options signals to automatically manage large-scale trading activity
Novice traders tend to trade haphazardly; but sage strategic advice is to limit your trading activity to financial assets that you understand. In other words if you have a penchant for tech stocks like Microsoft, Facebook, Google, Intel and Yahoo! – that is precisely where you should focus your trading activity. Once you feel comfortable venturing out into currency pairs, perhaps even commodities like gold, silver, copper and iron ore, you can do that.
The golden rule is to stick with what you know, because you’re more likely to understand the market mechanisms that work to generate favourable or unfavourable price outcomes. Never ever chase your losses when you’re trading binary options. If you consistently sustain losses, use the educational facilities available to improve your understanding of the trading mechanisms before you plough further resources into it. As a recap here are some useful strategies to help you get started:
- Use the educational facilities available at your preferred binary options broker
- Stick to a budget and divide your available funds up amongst multiple trades
- Limit your trading activity to those financial assets that you understand before venturing out into new asset
- Always use a demo trading platform before you trade for real money
- Evaluate the strengths and weaknesses of competing brokers before you deposit with one of them
- Trade with regulated brokers such as Banc De Binary or 24Option
- Contact customer support at your chosen broker before you make a deposit to ensure that they are responsive
As a new binary options trader, it is not uncommon to get overly excited at the prospect of being able to engage in the financial markets. However, caution is the order of the day. Since you’re dealing with real market conditions and real investments, the profits and losses are also real. One of the most common mistakes is therefore over-eagerness. What you want to do is register with a regulated and accredited binary options broker, and use a demo trading platform to get started. Demo platforms offer zero risk and maximum benefit in the sense that you will trade under real market conditions. Be advised however that many regulated binary options brokers provide the demo trading platform for a limited time period only.
Another common mistake made by novices is too much invested into a few trades. It is best to spread your available cash around multiple options, such as currency pairs, commodities, indices or stocks. When you invest small amounts on individual trades, you limit your exposure to losses and you maximise your potential gains by having more possibilities of favourable outcomes. As soon as your understanding of market conditions improves, you can gradually start to increase the size of your trades and start to explore other options.
As a novice, you are advised to avoid one touch binary options and range bound binary options trades since these are difficult to gauge. The best options for novice traders are simple put and call options at preset expiry times. Recall that there is greater volatility in 60 second trades than there is in trades expiring within a week or a few days.
You may notice that binary options brokers typically offer generous bonuses and promotions. Should big bonuses entice you to register at a binary options broker? The answer to this question is yes and no. First of all, it is imperative that you only trade at regulated brokers.
You will easily see which brokers are regulated by looking for things like CySEC regulation (Cyprus Securities and Exchange Commission). Any broker that is not regulated does not offer you recourse to any claims you may have against it. Therefore your point of departure is to only trade at regulated brokerages. In terms of bonuses and promotional offers, you want to be sure that the terms and conditions attached to the bonus offers are easily attainable. For the most part, the wagering requirements/trading requirements are difficult to satisfy. Always read the fine print to ensure that you will qualify for the bonus before you are roped in.