It is quite possible to make a lot of money trading binary options. But it is not easy, it takes a lot of effort. Beginners need to invest a lot of time on education – read as much as you can about trading binary options, especially regarding trading strategies. It is also very important to choose a good broker.
But first things first, investing in binary options is easy and you don’t need to be financial expert, but it still pays to know. Important skills are money management, reading of charts and usage of indicators.
Simplicity of trading binary options comes from the fact that you only need to predict will price go up or down. You don’t need to know by how much. So for example if you know European central bank is printing Euros, you can be sure in longer term Euros will go down compared to other currencies. So it pays to buy a put option on euro.
You can start investing very low, usually brokers ask for only couple of hundred dollars o Euros to open an account. From then on you can trade. Usually lowest possible trade is ten dollars upper limit is usually 10.000 dollars. After account is open, you can start buying options.
It is recommended that your trades are not bigger than 1/15 of your total account value. So if you start with 200 dollars make sure you never invest more than 10-15 dollars. This way you don’t risk too much. You have greater chances of winning long term if you invest on multiple trades smaller amounts of money.
Also, every trade you make must be a learning point. Be it loss or win, you can learn from it. Every time before you make a trade try to keep a cool head and name a reason why are you making that trade. It must be based on some hypothesis. E.g. “I’m buying call binary option for Apple stock because I know they are presenting new iPhone this week. Their stocks always go up after such presentations.” This is valid way of reasoning that yields best results when trading binary options.
During longer period of investing, bad string may come when you keep losing money. It is very important not to lose heart, event best professional traders can have bad strings. But they come to an end. Unfortunately many people give up trading just before they become good at it.
There are two main ways of trading binary options: long-term trades and short-term trades
Long-term trades are simpler and thus recommended for beginners, while short-term trades ask for more experienced traders. Long-term trade entails longer waiting for outcome, usually few days or weeks, while short-term trading can be done in matter of minutes.
Best example for long-term trading is using news events. You need to be well informed when big companies achieve certain success or when like in text above, ECB decides to “print” Euros. When such news are published, you only need to buy put option for Euro with any other world currency and wait for ECB measure to take effect.
Short-term trading is best reserved for only investors with a lot of experience, since it calls for extensive knowledge of strategies as well as reading charts. It is important to know patterns. It pays to specialize for some good or stocks. You are not able to rely on news, because trades are done and decided within minutes or even seconds. Main goal here is to recognize pattern, if you catch pattern in its early development, you can predict what happens next, so making investing decision is relatively easy.
The best is always to use a combination of both strategies if you want to make money consistently using binary options. If you are a beginner, you should first start with the long-term strategy described above because it’s very easy and there you will have realistic winning chances even as a complete newcomer. Then later diversify to short-term.
If you wish to learn more about how to make money on binary options visit our page Binary options.