Trading binary options is the perfect starting point for new traders with little or no experience in finance world. Thanks to the structure of binary options, investors can start trading with small capital and still earn important amounts of money. Unlike traditional share trading, where investors get a small reward on a very long period of time, binary options offer a much more dynamic environment, where investments can be rewarded with up to 85% return in few minutes. Of course, this is also riskier, but for someone with the right skills, binary options are certainly one of the fastest and most effective methods to get benefits in financial markets.
However, we are aware that for a person who is starting in the business world, the first step can be a little bit tricky. Therefore, that‘s why we have written this guide, because we want to provide ysome basic tips and strategies; they will be very useful in your first steps as a trader.
Before creating your account
First, you don‘t need to start trading binary options if you're not really interested in financial world and you are not willing to learn. Your long-term success in trading binary options depends entirely on your knowledge and skills, not in your luck. To predict in a correct way the evolution of the price of certain asset, you need to know what is happening in the markets and how it affects the price of the asset on which you want to operate. That means that you should read and keep up the date financial news, especially those that may affect asset prices on which you normally operate.
On the other hand, if you are not interested in learning and start trading binary options without knowing what you're doing, your results will depend largely on chance and you only have a 50% chance of hitting your price prediction, which means that, as the profitability whenever you hit will be less than 100%, you will lose money in the long run.
What kind of asset should you choose to operate
When you start doing trading with binary options, don‘t get crazy and don‘t start trading on assets you know nothing about. You must better start investing in binary options on assets or currencies you have some knowledge, then you will have better success possibilities. Most new traders start trading binary options on the price of gold or currency pairs like USD / EUR. Given these are the most popular options, you will have lots of available information to help you to make your decision about the price development. Moreover, you could find even experienced traders who make public their predictions in specialized forums.
Find the tools
Currently, brokers offer their customers all the necessary tools to analyze the market and the evolution of asset prices. These tools are there for you to be used, so learn to use them and extract the most, mainly learning to interpret the various available graphs. Each broker has a different analysis tools, so this should also be a factor you should consider when you choose a broker.
Given binary options trading carries a relatively high risk, it‘s extremely important to manage properly the risk of your operations. And, for example, unlike the currency trading (FOREX), where you can limit your losses in each operation if you see that price developments is not what you expected, binary options are operations "all or nothing": if your prediction about the price is the right one, you'll earn up to 85% of your investment; but if your prediction is wrong, you‘ll lose everything you have invested in this operation (however, many brokers allow undo the operation before expiry and recover some of the investment). That means you can not afford to invest much money in a single operation.
The advice from HabTraders is to never invest in a single binary option more than 5% of your investing money. That means that, for sure you are of particular operation, never invest all your money in one binary option. A good trader never do that.
For example, if you have in your account €1,000 for trading binary options, you should never invest more than €50 for each operation. Of course, as you get a profit and your account grows, you can put more money in a single operation. If your account is reduced for example to €800, you should only invest a maximum of €40 for each binary option.