Binary trading is the ideal starting point for new traders with little or no experience in the world of finance. Thanks to the structure of binary options, traders can start trading with a small capital and still make a lot of money. Unlike the stock market for example, where traders are usually rewarded with a fairly low return rate over a long period of time, binary options offers a much more fast paced environment, where investments can be rewarded with up to 80% return, meaning that investors can make profit quickly. This, of course, also means that the risk involved is higher than it is in other financial trading systems, but for someone with the right knowledge, binary trading is definitely one of the most effective ad quick ways to earn money.
So for a new trader, it can be hard to know how to get started in binary trading, and that is why we have written this guide, meant to giving you some basic tips and strategies to use.
Before creating your account
First of all, there’s no real need to start binary trading if you are not interested in learning about the financial market. After all, your success in the long rung will be based on your knowledge, not your luck. In order to predict the direction of a market price correctly, you need to know what events are taking place at the moment that may affect the market trend. This means that you will have to read financial news, especially regarding the types of commodities you are looking to trade with. If you don’t know what your doing, your results will be based on chance, and only have a 50% chance of generating a win for you in each trade, and given the fact that the return rate is under 100% you’re more likely to lose money in the long run.
What sort of options to buy
When you’re first starting out, don’t go crazy and start buying binary options that you don’t know anything of. It’s better to start with commodities or currencies that you actually know something about, as this gives you a bit of an edge. Many people start off with the most popular types of options, such as the USD/EUR for currencies or GOLD for commodities. Since these are the more popular trading options, there will inevitably be more information available about them. These are also the most mentioned trading options on online forums, where traders will share tips with each other.
Know the tools
These days, binary trading companies are offering their clients with all the tools neccessary to analyze the market. These tools are there for your convenience so make sure to take advantage of them. Learn how to interpret the different graphs and chart tools available. Different brokers have different tools to use, so when you are picking your broker, make sure to sign up to one that you find to have good usability.
Given the relatively high risk that is involved in binary trading, it’s extremely important to succesfully manage that risk. Unlike forex trading for example, where you can easily cut your losses early if you see an unexpected market change, binary options offers only all-or-nothing deals. That means that you cannot afford to put too much money into the market at at the same time. The general advice in the binary trading world is to never have more than 5% of your account size exposed to the market at any one given time. This means that just because you have a great feeling about a trade, you can’t just shove all your money in and hope for the best. Doing so would put your whole capital on the line, and those kind of risks cannot be taken in order to succeed in the financial world.
So as an example, if you have $2000 on your trading account, you should never have more than $100 exposed to the market at the same time. as your account size grows bigger, so will your maximum trading amount do. The same thing goes if you should start losing money: When your account size is $1000 you should have a maximum level of $50 on the market.