In this article, I explain binary options trading for beginners and how to become a successful online trader. You’ve probably heard sentences like “Don’t waste time and money on it, you can’t beat the market” many times by now. “Binary options are a scam.” Also, investing in binary options trading is often compared to gambling.
At first glance, this comparison seems justified, because investors invest money in their predictions of how the value of an instrument traded on binary options will move. However, all this is not true at all, and what binary options trading is and how to make money online through binary options trading, read in the text that follows.
What are binary options?
Binary options are often referred to as “yes or no investing.” In binary options trading, the trader’s task is to predict whether the value of a trade asset will rise or fall after the chosen time frame.
For example, if you think that the value of a trading asset after one hour will be higher than the current value, you predict “yes” and buy a binary option. Otherwise, if you think that the value of a trading instrument will fall after the allotted time, you predict “no” and sell that binary option.
So, you simply invest a certain amount of money to predict the movement of the value of the trading instrument.
The outcome can be twofold. If you hit, you get your money back and you get a bonus, and if you make a mistake in the forecast, you lose the amount invested. Bonuses vary depending on which brokerage platform you choose to trade binary options. Some brokers give bonuses of up to 90%, and even higher.
In simple mathematics, it looks like this: If you have a bonus of 90%, and you invest $ 100 and your prediction about the movement of the value of the trading asset comes true, you get $ 190 – 100 invested and 90 earned.
In case your prediction was incorrect, you lose the money you invested, which in this example is $ 100.
So, the risk of binary options trading is always there, but it is limited, which makes binary options a better choice if you want to trade online compared to all other types of online trading, where the risk of loss is not limited.
Be careful when choosing a binary platform as many brokers are prone to fraud.
This is a very important note. The binary options industry is flooded with scams, so if you decide to make money online through binary options trading, it is important to choose a reliable binary broker.
Choose exclusively the platforms of legal and legitimate brokerage houses. Search the internet and find out which brokers are on the blacklist.
You can do this by simply entering the following phrase into a search engine: blacklist binary options. All brokers who are on every blacklist you come across on the Internet should be avoided at all costs.
Binary options trading instruments
As with other online investment platforms, with binary options, the available trading funds depend on the broker you choose. However, in binary options trading, there are four basic groups of trading assets, and they are:
- Currencies and currency pairs;
- Shares (shares) of companies;
- Goods (various types of goods such as crude oil, natural gas, precious metals, soybeans, corn, etc.;
- Indices (various world stock exchanges).
Depending on the broker, more or less types of each of these fixed assets will be available to the binary options trader.
How to make a successful prediction on binary options
It is not an easy job at all. It is difficult to predict movements on the world market. If it were easy, anyone could make a profit through binary options trading.
The key to good market value forecasting is research. If you want to make money on binary options, turn off blind and unfounded predictions. That way you can’t expect success. And to better explore the market and how binary options work, you need to do the following:
First open a demo account and practice on it. Almost every quality binary options trading platform offers its potential clients the opening of a demo account. Through a demo account, you can try and practice all the options without losing real money.
You try to better understand the market in which you want to trade. If you want to trade in goods primarily, research that market segment. If, on the other hand, you want to trade the shares of large companies, try to find as much information (including the latest news) related to large companies on the Internet.
Perform market analysis. For better and more detailed analysis, use technical tools, primarily charts. Through the chart, you will have a historical overview of the movement of the value of the desired trading instrument, how the value of that instrument moved in the past and what are the indications for the future.
Track your transactions and analyze them. Keep track of every successful and unsuccessful trade, try to better understand why you made a mistake in some predictions, so the mistake will not happen again.