Before we even get to understanding how to trade and money in binary options trading, it becomes imperative that you get a good idea of what exactly constitute binary options…essentially what they are.
Well, binary options are relatively simplistic investment options where your focus as an investor is on the direction which an asset will take. Let’s say you have an Apple stock which is hypothetically trading at a price of $100 a share currently. Now, as a binary options trader, you would speculate on the direction that the stock would take within a predefined time period, say in the next 1 hour, will the stock be trading at $110? Maybe go up to $120? Or will it tank to $90? Or maybe just whether or not the stock will touch a certain high or low point, viz. below or above its current trading price of $100? These are typically the kind of speculations which you will be making as a member of the binary options traders fraternity.
The same holds true for other asset classes for which binary options are available. As an example, besides stocks you have got the option of major stock indices around the world, you’ve got commodities like oil and gold, and you also have currency pairs such as the Australian Dollar vs. the US Dollar. In all of these instances, there is speculation involved in terms of whether or not these assets will take a particular direction in their movement and if so how much?
This is largely all that binary options are all about.
How to Trade and Make Money with Binary Options
With an understanding of binary options clearly behind us, the next step is to understand how to trade and make money with this investment option.
In that regard you need to understand that trading in binary options is nowhere as easy as many of the online websites may like you to believe. Remember that it takes skill and years of experience to really trade as an expert binary options trader. Also, most traders, especially the novices LOSE money with this investment option.
Yet, our candid, sincere and honest advice to you would be that binary options are still a VERY GOOD investment option for one and all, provided you are willing to invest your time and effort towards understanding binary options and looking at the kind of movement assets within this investment option take over time. This is very important. You must scan the newspapers, magazines or websites where you can get a very good idea of the kind of movement which asset classes within this option are likely to take. This will in turn allow you to establish a clear pattern, a trend of movement which will over time give you the much needed grounding in predicting with accuracy.
An important observation on this front has been that news or developments with regard to these assets typically have a big impact in the direction which they take. For instance, if there is a shortage in supplies of gold which is expected (for whatever reason), there is every chance that prices of existing gold supplies will shoot up – basic Demand & Supply Economics which should not be too tough for you to understand.
So the important learning lesson for you as a budding binary options trader would be to ensure that you keep track of the asset classes that you are invested in; that way you can predict more accurately.
With all of these thoughts in mind, following are some golden tips when it comes to understanding how to trade and make money with the investment option of binary options trading:
One of the fundamental aspects behind making money with binary options is adequate knowledge. And as they say, knowledge is power – in this case, the power to make money and lead a high quality life. So before you even commence your binary options journey, make sure you thoroughly educate yourself on them.
A very important tip that we can provide you would be to start small and then grow big in your binary options investments. Otherwise a lot of greedy investors trade a major chunk of the money that they have – in some cases all of it, then end up on the losing side, only to blame binary options themselves. Don’t do that! Remember that besides theoretical knowledge, it is practical lessons learnt while investing which will prove useful to you. So learn while trading your account and make the most of the entire experience.
Again, this is an absolutely invaluable tip. Essentially what we imply over here is that binary options have numerous asset classes such as stocks, indices, commodities and currency pairs. Herein your aim has to be to ensure that you gain mastery over a particular asset class, perhaps even a specific account item within these asset classes, say gold or oil within commodities. Try not to be a jack-of-all-trades and master of none – you will quite likely end up on the losing side!
Choose Brokers Wisely
Today the binary options market is dominated by numerous brokers looking to share the bounty between themselves, given the frenzy among investors for trading in this market space. As a savvy investor, it is imperative that you understand this market well and look to trade with those brokers with maximum value overall. Factors to consider would include best payout rates, superior customer support, excellent feedback on neutral third party platforms, a wide range of asset classes, generous bonuses and so on. Together this will give you a good idea in terms of the broker option to zero in on.
Overall, these tips should offer you sufficient guidance in trading your way with ease and eventually making significant amount of money through your binary options account, over time.