How To Start Trading Binary Options

Best Binary Options Brokers 2020:
  • BINARIUM
    BINARIUM

    The Best Binary Options Broker 2020!
    Perfect For Beginners and Middle-Leveled Traders!
    Free Education.
    Free Demo Account.
    Get Your Sign-Up Bonus Now!

  • BINOMO
    BINOMO

    Recommended Only For Experienced Traders!

Contents

How to Start Investing in Binary Options

Damyan Diamandiev
Contributor, Benzinga

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If you’re looking for a simple way to trade and invest in financial assets, why not consider binary options? They’re easy to understand and preferred among newbies, so you’ve pretty much already got a head start in the right direction. Benzinga will help launch you the rest of the way.

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What is Binary Options Trading?

Binary traders profit from price fluctuation just like other traders, but binary options have a preliminary stated risk and profit potential. That’s why this type of contract is called a “binary” option. You get one of the two possible outcomes: suffer the risk or profit from the reward.

In binary trading, you bet if the price will be higher or lower after a certain time passes: the expiration. If you’re right, you win. If you’re wrong, you lose. When you lose, you lose the amount you’ve bet in the trade. When you win, you win around 80% of the amount you’ve bet (this depends on the broker as well).

Let’s say you believe the price of the EUR/USD will be higher in one minute and you bet $10. If you’re correct, you’ll profit around $8, depending on the broker. If you’re wrong, you lose your $10.

There’s some specific terminology wrapped with binary options. Can you sell an option? No, but you can buy a “put” option.

This is how it works:

Call Option

You buy a call option when you expect the price to increase. This means you enter a deal where you bet that the market will increase in price.

Put Option

You buy a put option when you expect the price to drop. This means you enter a deal where you bet that the price will go down.

Calls and Puts

It’s easy to understand the difference between “buy” and “sell,” and which corresponds to bullish and bearish markets. However, it might be tricky to remember the difference between calls and puts. Here’s an easy way to remember:

Imagine a phone is on a table. When you want to “call” you need to lift the phone “up,” an increase. When you want to “put” it down, it needs to go downward, or “drop.”

How To Start Trading Binary Options

Step 1: Build your strategy

Test different approaches and check which one is profitable for you. You can also combine different indicators to build your strategy. Some indicators could be:

  • Price levels
  • Trend
  • Candle patterns
  • Chart patterns
  • Moving average indicators
  • Fibonacci levels
  • On-chart indicators
  • Area indicators

These are not the only indicators available; there are many more and each of them works in a different way. Match signals from different indicators to reduce the chance of getting a bad signal and incline the scales in your favor.

Step 2: Calculate the returns

Say that your broker will give you 80% return if you guess the right price direction. You risk 100% of the invested amount, a return of 8:10. How successful should your strategy be and where is your break-even point?

Say that you do 100 trades by investing $10 in each. This means that you’ve invested a total amount of $1,000. Your strategy has a 55% success rate, meaning that you will get an approximation of 55 successful trades out of 100.

If you guess correctly, you’ll win $8. If you guess incorrectly, you’ll lose $10. Since you’ll get around 55 winners, this means you will make 55 x $8 = $440. Since you’ll get around 45 losers, then you will lose 45 x $10 = $450.

A profit of $440 – $450 (loss) = -$10 per 100 trades with this strategy, which isn’t ideal.

Here’s another test with the same brokerage conditions: 80% return on a successful guess. Let’s say our strategy has a proven record of 70% success rate. This means we’ll have 70 winners and 30 losers after 100 trades:

70 x $8 = $560 (profit)

30 x $10 = $300 (loss)

Net profit = $260

Step 3: Money management strategy

Don’t forget to factor in luck. If you deposit $100 in your account and you invest $20 in each trade, you’ll likely fail. The reason for this is that you will be able to handle only five losing trades in a row, which is very likely to happen.

It’s safe to have money for at least 100 trades. What is the chance to get 100 losing trades in a row? It’s just like flipping a coin and getting 100 heads in a row: pretty unlikely.

Step 4: Choose your binary options trading broker

Pay attention to some important rules when you choose a broker. There are scam brokers who will not let you withdraw your money, so research in advance. Good brokers:

  • Are regulated and conform to the laws of a country.
  • Have existed for a while. Scam brokers get caught and typically close after a year or two.
  • Have good reviews online. What are people saying about the broker? Can you withdraw your winnings?
  • Offer a variety of trading assets. You don’t want to have only five currency pairs available for trading.
  • Have a friendly interface.
  • Include a rich set of trading indicators. These indicators will assist in your analysis and help you build a successful strategy.

Step 5: Create and fund your trading account

This is the easiest step as long as you have the money! Follow your broker rules for creating an account. You’ll need to identify yourself and to confirm your account, then deposit the amount you are willing to start with.

Make sure you conform to the money management rules we already discussed. If you’re willing to invest $10 in a single trade, this means you’ll need to deposit at least $1,000. This way, you’ll have enough money to conduct 100 trades and you’ll be able to handle an eventual downswing.

Step 6: Execute your first trade

Now you’re ready to go! If you’ve deposited $1,000 in your account, then it is safer to invest only 1% per trade, or $10.

  • Change the investment per trade to $10.
  • Choose the expiration time of the binary option.
  • Do your analysis and apply your strategy.
  • Click “call” if your analysis shows that the price will go up or “put” if you believe that the price will go down.
  • Wait until the binary option expires.
  • Track results.
  • Repeat.

Final Thoughts

Binary options are an innovative and easy way to invest in the financial markets. Rules are simple (that’s why many traders prefer this type of trading) and there is a limited risk per trade, based on the amount you invest.

You’ll still need to conform to the well-known trading rules if you want to be successful. Build a strong strategy, calculate the amounts, manage your bank well and be smart, and you’ll increase your chances of success. A demo account is always a helpful test before jumping in with real money.

Learn How To Trade Binary Options Successfully And Profitably

How to trade binary options, is a question frequently asked by beginners including our readers. So, we aim to give you a proper solution through this article.

Binary options are popular because of its simple trading nature, with a fixed return percentage. Despite its simplistic nature, many traders use on their binary trades far more often than you think.

It boils down to reasons such as lack of trading knowledge, experience, or choosing the wrong broker. Whatever the reason may be there must be a clear plan ahead of trading, so you don’t face ill-consequences in your trading result.

Before enlightening you with the step by step guideline on how to trade binary options profitably, we will give a short brief on what binary options are.

What Are Binary Options?

We are going to explain a basic concept on binary options here, but for detailed information, read what is binary options trading article.

Binary Option is an investment type where you have two outcomes, all or nothing. It has also a fixed expiration.

You have to accurately predict the outcome with an expiry time to make a profit. Either you will win a trade or lose all the money that you have invested for a particular trade. Moreover, you can perform binary trade in two ways.

  • Manual Trading
  • Automated Trading

In manual trading, you do all the hard-work and place the trades yourself using trading strategies . But in auto-trading, automated trading software does the trading for you, using a build-in trading strategy.

Which method you use for trading depends entirely on your preference. If you are a new trader, you might take help from a trading robot in exchange for a price. Or you can learn the basics of trading, and do it yourself.

Binary Trading Example

You already know through our citation that binary options give you a fixed payout and loss amount. To power-up your trading journey, you must have to follow some rules.

Before jumping to those specific points, we will try to connect your existing knowledge with a small example.

James Chen from Investopedia explains binary options trade with the help of an example.

Assume stock XYZ is currently trading at $64.75. A binary option has a strike price of $65 and expires tomorrow at noon. The trader can buy the option for $40. If the price of XYZ finishes above $65, the option expires in the money and is worth $100. The trader makes $60 ($100 – $40).

If the option expires and the price of the stock is below $65, the trader loses the $40 they put into the option. The potential profit and loss, combined, always equals $100.

5 NoteWorthy Steps To Trade Binary Options

What you are expecting from this phase?

Hang on! Let me guess. Maybe, you might think that we will share with you a spell so that you can earn a lot of money. But, the section will focus on the 5 noteworthy steps on how to trade binary options.

  • Choose a regulated broker
  • Analyze the market and asset
  • Practice on a demo account
  • Make an initial deposit
  • Start Live trading

As each step is very powerful, so our recommendation is to read each step without skipping.

# Choose A Broker

Choosing a broker without evaluating some factors can bring disaster. On the other hand, the retail investment market is large and have a lot of scopes. According to a report of SEC,

approximately 7,600 investment advisers registered with the SEC that serve retail investors, with over $12 trillion in retail client assets under management, and approximately 34 million clients.

Isn’t it crazy!

The actual craziest thing is that one has to choose one or more than one broker from thousands. Here, we will mention some factors that you should keep on mind before selecting any broker.

  • Regulation
  • Demo account
  • Minimum initial deposit
  • Ease of use
  • Variety of assets
  • High Payout percentage
  • Fast withdrawals
  • Multiple modes of payment

In addition to that, you refer to our list of binary options broker . It’s not necessary that you have to stick to one broker. No broker is perfect, and one broker may not suit all your needs. Don’t hesitate to trade with multiple brokers.

Taking all the above factors into consideration, we have prepared our list of recommended brokers that you can trade with.

These brokers meet all the requirements such as regulation, offering a demo account, huge asset index, high payouts, fast withdrawals, easy-to-use trading platform, and much more. Here is the list of brokers Binary.com , IQ Option, and BinaryCent that we think will offer you the best binary options trading experience.

Binary.com

IQ Option

BinaryCent

# Analyze The Market & Asset

The trading market is unpredictable and changes every sec. Three main types of analysis bring an optimal trading result.

  • Fundamental Analysis
  • Technical Analysis
  • Sentimental Analysis

Here, an economic calendar works as a ground from where traders use data to forecast the market movement. As there is “no” best method of analysis, so you have to pick the most viable option depending on time-frame and asset information.

Best Binary Options Brokers 2020:
  • BINARIUM
    BINARIUM

    The Best Binary Options Broker 2020!
    Perfect For Beginners and Middle-Leveled Traders!
    Free Education.
    Free Demo Account.
    Get Your Sign-Up Bonus Now!

  • BINOMO
    BINOMO

    Recommended Only For Experienced Traders!

# Practice On A Demo Account

Registering an account is free of charge with most brokers. All it takes is your vital information such as an email address, your first, and last name. Once you have created an account, you need to practice trading through a demo account.

Train yourself with the help of a demo account until you create an unbeaten situation. Educate yourself on the basic concepts of binary trading. Understand what strike price, expiry time, call, and put option, etc. Familiarize yourself with the different ways you can trade binary options.

Just because the funds and the outcome in demo accounts don’t hold any real meaning, it doesn’t mean you should trade recklessly.

Trade on the demo account exactly how you would live trade. This practice will develop your trading skills and build valuable experience.

There is no fixed duration on how long you have to practice on a demo account. Take as long as you need. Finally, when you feel confident enough, you can step up to real trading.

# Make An Initial Deposit

The initial deposit amount varies from broker to broker. You need to deposit on the trading account to carry out live trading. On the other hand, there is a big difference between an investment and deposit.

An investment is a price what you pay to get the future value. Meanwhile, the deposit is a certain amount of money that one needs to open an account.

It is wise to start with a small deposit amount like $10 to $20.

# Start Live Trading

You can start trading on a real account once you are familiar with the ins and out of binary trading. Select your preferred asset and choose your investment amount. Depending on your prediction, buy a call or put option.

Place your trade, and wait until your trade expires. In the next section, we have listed some tips and techniques on binary trading to make your trading successful and profitable.

How To Trade Binary Options Successfully And Profitably – Best Way To Trade

We already discussed a few steps above. Those steps are the principle that one trader should follow whether he is professional or not. After that, you need to turn your binary options trading into a successful profit machine.

Don’t miss out the chance by skipping points that we covered below. Follow these tips to ensure you don’t lose money while trading binary options.

  • Choice of assets
  • Start trading with small
  • Eliminate emotions from trading
  • Choose the right expiry time
  • Follow the market news
  • Risk management
  • Knowledge is power

Choice Of Assets

As you can trade with a large number of assets, so trade those assets that you are most familiar with. Do not take unnecessary risks by trading in markets that you cannot predict.

Successful binary trading depends on how well you can predict the market. Follow the market news before executing trades. Diversification of your portfolio is one way of reducing your overall trading risk. But it doesn’t mean you should diversify to assets that may not be profitable to you.

Stat Trading With Small

You may have heard about the risk management where you have stick on either 1% or 2% rule. It is a general rule of thumb for traders.

90% of traders failed in trading because they have lack of knowledge on money management. Investing a huge amount of money will not help you to increase profits.

So, at first, start with a small amount like $10. After gaining valuable experience, you can start increasing your trade size. No matter how much you practice on a demo account, trading on a live account is a different scenario. As there is real emotion involved, which brings us to our next point.

Eliminate Emotions From Trading

Professional traders are not super-human. They also fight to control their trading emotions. Eventually, all traders must go through a cycle of market emotions.

Controlling emotions is not sky-rocket. However, you will find a difference in gratitude of a winning trader and a losing trader. No wonder, a low expectation level can save you from a massive failure.

Stop dreaming about to get rich quick and follow the 7 secrets that will help you to improve your trading emotions or psychology.

Choose The Right Expiry Time

It is may seem like a matter of preference or a trivial issue, but even expiry time is a crucial factor when it comes to binary options trading.

For example, a trend was supposed to reverse within an hour. But if you placed a trade with 2-hours expiry, the trend would have reversed by then. And, you had lost the trade.

Follow The Market News

Whatever underlying asset you may trade, you need to be informed on the latest global events, and news associated with that asset. Many traders build strategy depending on the market news. So don’t skip on that, and act accordingly.

For example, if there is negative news regarding the gold and a price drop is imminent, log in to your binary options trading platform, and open a put position on gold.

Reacting appropriately to market news can bring in more trading success than you think.

Risk Management (Hedging)

Unless you are a pure gambler looking for absolute results, you should make use of hedging. Hedging is a money management strategy used to protect your profits. In this way, if you are wrong on your prediction, you lose money from your call option, but you regain that back from the put option.

Protecting your investment by buying a binary option contract opposite to your initial contract is hedging. Hedging may reduce your overall profit potential, but it also protects your capital.

If you quite confident about your prediction but still want to hedge, invest the lesser amount in the hedge position compared to your main position.

Knowledge Is Power

Trading education is one of the big factors that play a vital role in success. You need to constantly educate yourself with trading knowledge. Even though binary options look easy and simple, there is a lot that goes into constantly turning your trades into a profitable one.

Moreover, you are less likely to commit mistakes and perform better trading analysis when you are equipped with trading knowledge.

Learn To Trade Binary Option (Manual Vs. Automated Trading)

You can either manually trade binary options or can use binary options software which will do the trading for you.

When you trade manually, you choose the asset, the expiry time, and most importantly, the decision to call or put. Everything depends on you alone. Moreover, you have to set a strategy using indicators and trend lines to make a decision.

In the case of automated binary options trading, a binary robot does all the work for you. It is a programmed software that makes decisions based on certain algorithms.

On the other hand, most binary options robots allow you to customize settings such as investment per trade, risk level, indicators, and choice of assets.

However, if you want to completely leave your fate at the hands of the trading robot, you may do so. Or you can put manual effort also by building strategy.

We would recommend a mix of both auto and manual trading for the best results. We have compiled and reviewed the best binary option trading robots for you.

How to Start Trading Binary Options

This simple step-by-step guide will help you start trading binary options if you’re still a beginner. Follow the instructions on this page and read our tips carefully, so that you can save your time, money, and nerves.

What This Guide Has to Offer

By following a few simple steps, you will be able to safely start trading binary options. In just 30 or 40 minutes, we’ll guide you through the following:

    Calculating a deposit and investment amount in line with your budget Finding the best binary options broker that suits your needs Singing up with a broker and funding your account Learning to trade through a simple and effective strategy Providing you with the basics of risk management Supplying you with useful tools for future trading

Ready to start? We’ll need only 30 or 40 minutes.

Calculate Your Deposit and Investment Amount

How much are you going to invest? Enter your initial deposit amount, and we will calculate your investment based on the risk management rules.

Expert’s Tip

    Start trading with an amount you are not afraid to lose. This will be your initial investment amount. Follow the risk management rules from the start. This will ensure you won’t blow up your account in terms of hours. Do not trust scam brokers promising any ‘magical systems’ and guaranteeing profits at no risk. This is just scam that will result in a total loss of your account balance.

These details are necessary to calculate your deposit and investment amount based on your risk appetite.

Calculation Methods
  • Calculate your investment amount based on your deposit and your risk appetite
  • Calculate your deposit amount based on your investment and your risk appetite

At the next stage, our system will select reliable brokers based on your deposit and minimum investment amount.

Then, you will be able to safely make your first deposit, once you’ve calculated the amount based on the money management rules.

Finally, you will learn to trade with a simple and effective binary options strategy.

Fill out the form and make the most of this page!

Your deposit and investment amount details exist only while you remain on this page. They will be removed once you close the page. Your information remains private at all times. The owners of this website do not have access to such information.

Calculate Your Deposit and Investment Amount

Select the currency of your deposit, specify the deposit amount, set your risk percentage, and you will get your investment amount.

Calculate your investment amount based on your deposit

If you’ve figured out how much you want to deposit, but do not know what will be your investment amount per trade, follow these steps:

  • Specify your deposit currency
  • Enter your deposit amount
  • Select your risk appetite
  • Click the Calculate button

Calculate your deposit amount based on your investment

In case you know how much you will invest per trade, but cannot figure out the deposit amount you’re comfortable with, follows these steps:

  • Specify your deposit currency
  • Select your risk appetite
  • Modify the deposit amount until you find your desirable investment amount
  • Click the Calculate button

What Is Risk Appetite

Your risk appetite percentage means how much you risk per trade in relation to your deposit. As per the golden money management rule, you should not risk more than 2% of your account balance per trade. We recommend you sticking to this rule at all times.

You are going to start trading binary options with . Your investment amount is . Your risk appetite is %.

Let’s move on and find you a broker!

Open an Account with a Reliable Broker

Sign up and open a trading account with one of our recommended brokers. We’ve selected these brokers based on your initial deposit amount and your investment per trade.

Expert’s Tip

    Open an account only with a regulated broker operating in the market for a long time. Always supply your up to date personal details and primary email address. This will allow you to avoid any future issues related to verifying your account. Explore the broker’s trading platform and sign up for any related webinars.

We recommend only reliable and trusted binary options brokers.

How we select our recommended brokers:
  • Regulated by financial authorities
  • Financial security
  • Positive reputation and feedback among traders
  • Deposit and investment amounts fit your needs
  • Demo account for learning how to trade
  • Top tier customer support
You can feel confident about opening an account with any of these brokers.

Be ready to verify your account by confirming your personal details. All regulated brokers ask you to verify your account, as this is required by law.

Choose a Broker to Open an Account with

These brokers have minimum deposit and investment amount that are in line with your financial needs.

Your Deposit

Your Investment Amount

Risk Percentage

Risk Appetite

Why is regulation so important?

Why do I need to provide my true and up to date personal details?

Can I open a demo account without making a deposit?

Make Your Initial Deposit and Open a Demo Account

Fund your trading account and contact your broker to request a demo account. This will help you learn how the platform works.

Expert’s Tip

    Use your credit card as your deposit method, if that’s an option. You will be withdrawing your earnings to this card later. Once you’ve made a deposit, request a demo account. This is vital! Verify your account by providing the required documents once you’ve made your initial deposit.

Please Note:

    Use your credit card as your deposit method. This will allow you to avoid any future issues related to withdrawals. Request a demo account once you’ve made your deposit. This will help you to explore the platform and test your trading strategy. Make sure to verify your account in the first few days after making your deposit. You will not be able to withdraw your profits before you verify your account. The broker may offer you a welcome bonus of 25% to 100% after you make your initial deposit. See the FAQs section to learn more about bonuses. Ask your account manager to enroll you for all upcoming webinars. You must learn how to trade before you can invest with confidence. Do not start trading until you’ve tested your strategy. Do not invest at random without confirming signals.

Why do you recommend depositing via credit card?

The broker offers me a 100%, should I accept it?

Most brokers will offer you welcome bonuses on your first deposit, ranging from 25% to 100%. This is actually free money, but you won’t be able to withdraw it before you complete the bonus terms and conditions you should check out carefully. Some bonus terms involve trading amounts 40 times bigger than the bonus amount.

Thus, if you deposit $1,000 and get a 100% bonus, you’ve got $2,000 to trade, and the bonus terms are 40x. To withdraw your bonus money and your profits, you’ll then need to make trades with the total amount of $1,000*40=$40,000. Seems to much? Let’s see. Suppose you stick to the 2% rule. With a $2,000 account balance, your investment per trade is $40. So, to reach the required volume, you’ll need to make $40,000/$40=1,000 trades. Even if you’re a very active trader, you’ll be hardly making more than 5 or 6 traders a day. Thus, you will need at least 165 trading days to work off your bonus.

Now you see what it means to accept a bonus. It is up to you whether or not you are okay with trading for a few months without being able to withdraw your earnings. If you are serious about learning how to trade, do take the bonus, as it will significantly boost your initial trading capital.

What you need to know before you start trading

Binary Options are all about making the right choice. That includes predicting correctly in which direction the market will move. There is a number of strategies for Binary Options trading which can significantly increase your profit. A strategy you choose depends on your experience and knowledge, but let’s look at some basics that every trader should know:

Money Management Strategy

This is not the strategy which will help you predict assets’ movements, yet it is the most important strategy you should follow when trading Binary Options. AYREX cares about your financial well being and although we are here to help you profit and make your life better, we acknowledge, that any trading carries financial risks. We recommend you develop your financial strategy and follow it at all times when trading. Do not put all the money your have at stake – trading is an emotionless procedure and your every choice should be well thought out. Remember that you are here to do business and make money.

Analyzing markets

Financial news is a great aid to use when building your trading strategy. If you follow and analyze news on the assets you trade, you are more likely to make consistent profits. Markets are very sensitive to any global event and you don’t have to major in economics to notice the connection.

Best Binary Options Brokers 2020:
  • BINARIUM
    BINARIUM

    The Best Binary Options Broker 2020!
    Perfect For Beginners and Middle-Leveled Traders!
    Free Education.
    Free Demo Account.
    Get Your Sign-Up Bonus Now!

  • BINOMO
    BINOMO

    Recommended Only For Experienced Traders!

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