Binary options success is not a coincidence. It is the result of solid planning, knowledge, and the right resources. Whether you are a newcomer or a veteran trade who wants to rethink his strategy, this article has all the information you need.
You will learn the three steps to binary options success. These are:
Step 1: Understanding the basics
Step 2: Finding the right broker
Step 3: Finding the right strategy
Take these three steps, and you are on your way to binary options success.
Trading Success, Step 1: Understanding The Basics
Your first step to becoming a successful binary options trader is learning the basics. For a quick start, here is what you need to know.
Why are binary options called binary? With binary options, you make a prediction about what will happen to an asset’s price. This prediction either comes true or it does not. If it does, you win your option; if it does not, you lose your option. Because there are only two possible outcomes, the result is binary. This is where the name comes from. This trading style is very different than conventional trading styles where all outcomes are possible, depending on what happens to the asset’s price.
Why are binary options a great investment? Because binary options are binary, you can make a lot of money with small movements. In regular trading, making a 50 percent gain requires the price of an asset to rise by 50 percent, which takes years. With binary options, you get a payout of around 70 percent if your prediction comes true. If you predict a price increase of one percent, you can make a 70 percent gain with this 1 percent increase – a much more profitable offer.
What types of binary options are there? There are different binary options types. The most prominent are:
High/low options. You predict whether the price of an asset will be trading higher or lower than now at a specific time.
One touch options. You predict whether an asset can reach a target price within a specific time frame.
Ladder options. You predict whether an asset will trade above or below a specific price at a specific time.
Boundary option. You predict whether the market can leave a price channel within a specific time.
What is an expiry? Because binary options are predictions about market movement, they must expire at some point. For example, saying that an asset will trade higher than now at some point in the future is hardly a worthy prediction. There must be a deadline involved or a specific time at which the prediction is tested. This is what the expiry is for. Most binary option uses expiries from 30 seconds to a few hours, some also use expiries of a few months or years.
How can I trade binary options? To trade binary options, you need a binary options broker. In contrast to conventional assets such as stocks, your broker does not charge you fees to access a stock exchange, which is something you could do for free on your own if only someone allowed you. You trade binary options directly with your broker. There are no middlemen and no fees.
The last point of this list leads us to our next step: finding the right broker.
Trading Success, Step 2: Finding The Right Broker
The second step to a successful binary options career is finding the right broker for you.
Because binary options are not traded on a central exchange but directly with your broker, different brokers offer different binary options. At the same time, all brokers will offer different payouts, expiries, and options types for the same asset. In addition to the many natural difference between two financial institutes – security, trading platform, location, etc. – these variations are the reason why you have to compare brokers and find the one that is the right fit for you.
There are many brokers out there, and each of them offers a different service. The same trader might make a fortune with one broker but lose money with another.
There are two things you have to consider when you search a broker:
Can I trust this broker? As with any online transaction, you should make sure that you are dealing with a trustworthy business before you transfer your money to anyone. This is the easy part. You can find a selection of trustworthy brokers in our top list of the best brokers. All of them offer you a decent service, which greatly simplifies the selection process for you.
Is this broker right for me? This is the difficult question because there is no general answer. You have to decide for yourself whether a broker offers the right assets, binary options types, and so on for you. To help you, our broker top list also list the most important information about each broker in a simple-to-analyse table. In a glance, you see how much money you have to deposit with a broker, whether the broker offers a demo account, and so on. We also list links that take you to the websites of each broker.
Take a look at our top list, and you have taken the first step to finding the right broker for you. Follow our links, get an account, and try the broker with a demo account or a small investment per trade first. You will soon know if this broker is right for you.
Trading Success Step 3: Finding The Right Strategy
Once you have found a place to trade binary options, you need a strategy for your trading. A strategy defines when you invest, how you invest, and in what you invest.
There are so many different strategies that it makes no sense to explain every aspect of them in great detail in this article. To learn more, take a look at our other articles on strategies. Nonetheless, to help you understand what you need, here are the basics:
Why do I need a strategy? You need a strategy to stop random investments. Random investments are the number one reason why traders lose money. Without a clear strategy, you win some money here and lose some money there, but because you need a 100 percent gain to come back from a 50 percent loss, your losses will always outweigh your gains. In the long run, you will lose money. A strategy solves this problem and continually grows your money by guaranteeing that you always do the same things in the same situation.
What strategies do I need? A complete strategy consists of three sub strategies: a trading strategy that analyses the market and defines when and how you invest, a money management strategy that defines how much you invest, and an analysis and improvement strategy that helps you become a better trader and avoid mistakes. With these strategies, you are in good shape to become a successful trader.
What do I have to know to create a successful strategy? Successful binary options strategies use technical analysis. To make the short-term predictions that you need to trade a binary option, fundamental influences such a company’s earnings are meaningless. Technical analysis focuses solely on what has happened to an asset’s price and concludes what will happen next.
Our site provides you with hundreds of strategy articles. Read at least a few of them, and you will soon be able to create your own successful strategy.
Conclusion
Success in trading digital options is not a coincidence. It is the combination of learning the basics, finding the right broker, and attacking the market with a good strategy. Take a look at our list of the best brokers and read our articles, and you are on a good way.