Realities of Binary trading – What every trader must know about Binary Options trading
It is not very easy to trade in Binary Trading. And it is further difficult to trade successfully over a long time to make a sustainable profit. Its because if you are on a profitable side of trading, you can gain up to 85% the amount you risked, but if you are on the wrong side, you lose 100 % of what you have risked.
In other words, if you predict the market direction correctly, you earn 85% of your investment, else you lose 100% you invested in that particular trade.
So, to be successful in binary trading, you have to be right in your prediction more often than you are wrong. Nobody in this world can indeed predict 100 % correctly. Keeping in view the above facts, we conclude that “Disciplined trading and smart strategy can only help you make a profit from binary options trading.
Two types of options:
CALL OPTION: The call option is what you will use when you think that the price of the asset in question will go up.
PUT OPTION: You utilize the put option when you think the price will be going down.
How to start:
The best way to start binary options trading is by practicing on a demo account. Trade on the demo account seriously to get some real knowledge which will be undoubtedly helpful during real account trading. The more seriously you trade in a demo account, the more it will help you in a real account.
All brokers don’t provide you with a demo account. Open a demo trading account with IQ OPTION UAE.
After you practice in a Demo Account:
Prepare for your first Trade: Binary options trading requires a lot of preparation in terms of analysis, strategy, and discipline. You have to have a viable method to identify a profitable trade opportunity, a money management policy to ensure you are not risking too much at any time.
It may take months for you to develop a trading strategy within you and trade successfully.
Open a real account:
Now its time for opening a real binary options trading account. What should someone look for with a binary options Broker?
1. Bonus on first deposit.
2. Regulated? Additional requirements for trading from the United States.
3. Payout Percentages.
4. Deposit and withdrawal method.
5. Withdrawal charges.
Some of the brokers provide from 45% to 150% of bonus deposits on initial deposits for a new account. It is crucial for a new trader as more bonus amount you have in your account, more time you will survive in the market (only if you trade responsibly). Consider the bonus amount as your own hard earned money and trade carefully with this amount too. Never be casual while trading with a bonus amount.
Regulated brokers: Check for the reputation of the broker. Certain brokers don’t accept traders from the US as a policy because additional regulatory requirements are to be complied with for accepting US traders for binary trading.
Payout percentage and minimum deposit: Some brokers pay a higher percentage of return than others on the same currency pair and the same type of trading. It will certainly help you earn more.
Check for the minimum deposit requirements with the broker of your choice.
Deposit and withdrawal method: Check for the deposit and withdrawal methods that are suitable for you. Few brokers charge a fee on deposit and withdrawal both. Check for these charges before you finalize the broker.
If you are from the United States, ensure you choose a broker authorized for the same.
Let us assume you have USD 500 in your account for trading.
We will first consider a short term Binary Options Trading.
1. Select a currency pair. (example EUR/USD)
2. Select a time frame (60 seconds or 90 seconds)
3. Select the amount you want to risk. (1-2 percent of your capital)
3. Check the technical chart for the currency and SEE THE TREND.
If it is in the uptrend, we will Buy a CALL OPTION.
If it is in a downtrend, we will buy the PUT OPTION.
Before you buy any Option, please refer the pivot point, support, and resistance for the pair.
If the currency pair is at Support level 1(S1) or (S2), and the currency has an uptrend as per the chart (or technical analysis)
Then BUY the CALL OPTION and wait for the trade to expire. If the trade expires in your favor, repeat the process and trade again(with USD 5)
If you lose the above trade: (You lost 5USD)
Double the amount risked (make it 10 USD )and trade again after you refer the pivot points, support, and resistance. If you win, you will recover the previous loss.
If you lose again, relax. Refer the chart again to see the trend, refer pivot points again to find trading opportunities and trade with (20 USD). If you win this time, you will recover your previous loss, and you can resume your trade with 5 USD again.
By following the above strategy, you can preserve your profits, assuming that you don’t lose three times consecutively. (You have lost 35 USD by this time)
But in case you lose this trade too, stop trading for some time, take a break and come back to trade with the minimum amount set for your account. (5 USD in case of 500 USD capital, 10 USD in case of 1000 USD capital)
Again trade with the minimum amount (5 USD) and proceed with the same strategy.
Most of the investors make a mistake when they lose from a trade – they try to get their money back immediately and thus lose a lot more because their emotions start clouding their judgment. It is the worst thing to happen to a binary trader because it makes you see what’s not there (in the chart) and lose a lot more, which further increases your anxiety and the need to make a quick profit, which finally leads you to even more bad trades. The only way to avoid this situation is to stick with your strategy, as described above.