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10 Reasons why Binary Options Traders Fail
In the recent times, the binary options trading has become very popular amongst professional as well as naïve traders. Unlike, other trading platforms, the binary options trading platform offers ease of trading, simple rules, very high payouts, and eye candy features to attract traders from all strata of the trading fraternity. The binary options trading also has some very advanced features like automated trading through which one just has to deposit funds and set preferences, and then the software does the rest by placing orders to keeping a tab on the transactions. The brokerage firms which provides the binary options trading platform also allows traders to use signal services to help traders in their decision-making process. Even with so much on the platter, the traders fail to make big and continue to bleed on the street.
In this article, I have identified 10 reasons of failure for the binary options trader to help readers to succeed. This article will help seasoned as well as aspirants of the binary options trading, to better understand that there is more than just “options” in the binary options trading.
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10 Reasons why Binary Options Traders Fail • Avoid These Simple Mistakes and Make More Money Instantly! • Including Secret Strategies! •
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1. Your Binary Option Robot will analyse the market and decide, which asset (currencies, indices, commodities and stocks), is right to trade at that point in time.
2. The Binary Option Robot Will Predict the Price Movement
Your robot will assess a wide-range of factors, and then make a prediction on how the assets price will move, saying: Call (up) if it believes the price will rise and Put (down), if it believes the price will fall.
3. Decide on how much you want to Invest
Then you need to decide how much you want to invest in the commodity and when that investment will expire.
4. Collect your Earnings
Finally, you collect your earnings (the good part!)
The following article provides detailed description about reasons for failure.
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1. Ignorance to “Knowledge is the King”
The easiness of the binary options trading platform and simple trading format makes traders avoid the knowledge part of the trading. It is not necessary that you should go through the formal education process for learning the binary options trading as the successful traders aren’t always with some formal educational degree. Generally, Individuals think that the trial and error is the best practice to gain experience about any trading. This is the first blunder committed by the newbie. Though, the trial and error can give you a knowledge in a bitter way of losing money and time, the learnings from various educational articles, e-books, strategies, technical chart reading, usage of technical indicators and news article regarding the binary options trading can help you gain better understanding, planning and execution of the binary options trade.
The knowledge is the supreme in each and every facet of life and the binary options trading is no different. As a binary options trader, you should always be open to learning new things, even if it reduces your trading in order to achieve the larger goal. You should also invest time in learning technical indicators, reading charts and their implication to take the sound trading call. In the case of the binary options trading, technical parameters make much sense due to its short expiry duration and hence one should be able to learn and apply the knowledge gained in taking call for each and every trade.
In today’s Glocal (Global + Local) world, the internet presents a plenty of information regarding the binary options trading and I recommend you to use the internet to search and digest as much information as possible to learn the binary options trading. Always remember that the knowledge is supreme and it never makes you poor.
2. No research to find broker
As it happens with all new things, the exponential rise of the binary options trading also attracts scammers to the field and hence one should do a serious research to find the legitimate broker for the binary options trading. Any aspirant traders should look for qualities like; where it is registered, what kind of regulations it follows, deposit and withdrawal policies, customer service policies, and security policy, besides payouts and other financial policies. Search for existing customer experiences with that brokers and reviews left by consumers to better understand the broker.
Some brokers offer minimum deposit amount as low as $10 while others offer varying minimum deposit amount ranging from $200 to $250. While some brokerage firms offer minimum investment as low as $1, others allow minimum investment amount ranging from $10 to $50. The payout also varies from 60 percent to 200 percent and hence one should choose broker according to his/her requirements and which fulfills all his/her needs.
A wrong selection of broker can set you up for a bigger trap to lose all your hard earned money, and hence, I urge you to devote sufficient time to find the right binary options broker.
Failures occur every once in a while
3. Avoiding Demo/Free Account
All of us must have heard this phrase “Practice makes a man perfect”, and it makes a lot of sense when undertaking any kind of trading, specifically the binary options trading. To give you the feel and hands-on experience, almost every binary options brokerage firm provide a practice account (Demo Account or Free Account), wherein you are given a virtual currency to trade in the actual trading environment. The newbies generally avoid this demo/free account and jump on to real money to try and learn through trial and error, in the process, losing a significant amount of money and desire to continue trading. The demo accounts allow you to deploy various learnings and strategies and find the outcome, which can be very useful when you trade with a real account. You can also help you assess your trading style and show you the outcome, to further improve your winnings.
Demo account helps the trader to apply the learned strategies on the real environment and allow a trader to identify which strategy work well for him and which does not work well. By practicing on a free account, the trader can optimize the workable strategies and possibility to start its real money account on a positive note.
As a thumb rule, one should at least spend 2
3 weeks on a demo account or a free account to gain confidence and improve winning percentage, before starting with the real money account.
4. Get Swayed by emotions
Normally, we consider that any financial transaction is emotionless, but a simple glance on an average trader shows otherwise behavior. As normal human beings, we are prone to get influenced by our emotions. Continuous loss-making trades makes us angry and frustrated resulting into more loss-making trades, in turn, a mounting losses. On the other side, the winning roll makes us overconfident and in turn, makes us lose our objective and ignore some basic trade influencing aspects to make a wrong future trade. So it is imperative to understand that every trade should be a well thought out decision, in whatever streak you are. Don’t get your emotions take over your trade, as it may hamper your profitable trades and may sway you to make an irrational decision which generally results into loss-making propositions.
One should be calm and composed for each and every trade, and the trade should be a well thought out decision than an emotional one. If you are showing an irrational behavior then you should stay away from any kind of trading, as emotional decisions are always irrational and lead to considerable amount of loss to the account holder.
5. Putting everything in a one shot
The naïve traders generally put up the maximum possible amount in a single trade and loose everything in a one trade leading to frustration and giving up on trading. These further sways traders emotionally and compound losses. One must consider starting a real money account trade with minimum investment amount and build up once you gain confidence. Though, with the smaller amount it takes longer to make considerable profits, it helps to minimize your initial losses.
The binary options are a truly retail trade industry as it allows minimum deposit as low as $10, and minimum investment amount of $1. So, my recommendation for retail the trader is to start with small investment amount and then increase the investment amount as confidence grows. This way you will not lose your hard earned money in one go and you will be able to manage your money well.
One can never avoid all failures
6. No planning or strategy
Though the binary options trading is a simple form of trading, it is still a form of trading. Many newbies think that to trade in a binary option, you just need to signup, deposit funds, and trade. Though they are correct, they forget that a good plan can take their trading business to flourish. Planning ensures that each and every trade undertaken is with thoughtfulness and knowledge resulting in better-winning chances. You should always make a plan before trading for how much to invest, where to invest, and when to invest. Your plan should also incorporate sound money and risk management techniques giving due consideration to the possibility of making a loss. In addition, one must be flexible enough to make required changes in the plan, in case your plan doesn’t work as intended.
Well, planned trade execution can minimize your chances of losing money, and increases the chance of winning trades. You should consider each and every trade as a business transaction and plan for each trade and never jump on to trade without planning for the trade.
7. Too much too soon
In the binary options industry, as in any other industry, there are brokers who make false claims that you can make too many profits in a shorter time period. Such claims make traders believe that the binary options trading is quick-rich-get-scheme. Actually, the binary options trading is a profitable business only if one is organized, rational, knowledgeable, flexible and enduring. You have to remember that nothing comes cheap in the world, and everything has a price attached to it. The binary options trading is not a quick-rich-scheme and you should never get influenced by the false claims of the broker.
The trader must control their own greed to overcome such false claim, and understand that it is also a business which can have both ups and downs. Also, traders must realize that the binary options trading is still an another type of financial trading and where no one becomes rich overnight. Hence, one should have rational and realistic goals before entering the market.
8. Everything is constant
Another biggest misconception in the minds of the trader is that the market is constant and nothing changes overnight, in reality, nothing is constant except the change. Traders who do not understand that the binary options trading industry is affected by various micro and macro factors, tend to fail. So it is important as a trader to understand what affects the changes in the market and should be flexible enough to adapt to the trading environment changes. We have a natural resistant to change, but as a trader, you must overcome and treat the change as an opportunity. Skilled individuals are more consistent with their adaptation of changes and comprehend changes better.
Always remember, the only thing constant in the world is the change and no one can stop the change to happen. You should develop skills and your thought process in such a way that you are always ready for the changes, and be able to bend your plans accordingly.
9. Lack of risk management
To become a successful binary options trader one should learn strategies, but strategies only cannot make you a successful binary options trader. One must have adequate money management and risk management techniques in place to become an effective binary options trader. The zero risk management is sure to fail the trader as it won’t allow them to look at the bigger picture and manage their risk. No risk management makes trader take high-risk trades and lose big, and risk management technique can help traders to evaluate the market condition and put appropriate measures to minimize losses. One must understand that it is equally important to minimize losses and making profits in order to attain a long-term goal of becoming successful binary options trader.
By putting risk management practices in place, the binary options trader protects their money from evaporating via big losses and always have standby conservative plan to continue with trading.
10. You Think It’s Gambling, Instead of a Business
One of the biggest reason for the failure of the binary options trader is that they consider it as gambling and not as a trading business. Trader considers it as a gambling because of its structure of nothing or payout. The mistake of considering the binary options trading as gambling makes traders take undue risk and not considering as a sound business makes trader not to put sufficient efforts to learn it, resulting into higher chances of losing money.
Business owners know that short run losses and profits don’t matter in order to achieve the larger longer run gains. As a trader, you should also consider it as a business, and evaluate every profit/loss on the trade in order to perform better in the future. As a business owner, you should plan, set a rational goal, stay disciplined and organized to take your trading business on next level. The binary options trading is not a gambling but can become a potential money earning business if considered as a long term profession and not as a short-term gambling entertainer.
All traders fail sometimes.
The binary options trading is a lucrative business opportunity if an individual put efforts to learn the nitty gritty of the binary options, and show disciplined approach to it. The binary options trading is very attractive due to various reasons like 24 x 7 access, high payouts, and low account requirements. It can be a rewarding if you consider following highlights:
- Devote sufficient time to learn the theories behind the binary options trading.
- Put efforts to research right, legitimate and suitable broker.
- Make full utilization of demo/free account and use to at least for 2 to 3 weeks before starting real money trading.
- Emotions act as a deterrent and should be put aside before starting a business and consider each trade with rational and sound logic.
- Never put all your money in one go, always do staggered trading.
- Prepare and plan well, and then stick to plan to execute your trades.
- It’s not an overnight get rich scheme, it requires proper planning, organized and attentive behavior, sound knowledge and dedication to learning in order to become successful binary options trader.
- The market dynamics are there to chance very often than one would like them to, and hence you should be well prepared for changes.
- Learning strategies is not the only thing which can make you successful trader, you also need to put sound risk management and money management techniques to minimize losses.
- Consider it as a business venture and apply organized business approach to be successful binary options trader.
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Binary Options Guide: The Truth About Binary Options
Trading binary options can seem deceptively simple, but leaning too far into that notion can blind people to some of the risks that often accompany this type of trading.
Before I go any further, I want to make it clear I’m not a binary options trader. I trade penny stocks and teach day trading. I’d love to see you join the Trading Challenge — it’s the result of over two decades of trading and a decade of teaching. It’s awesome.
If you’re interested in taking the binary options path, it’s critically important to understand exactly what you’re getting into and set appropriate expectations. And you should get a mentor who trades binary options. Seriously. Preparation is key.
Again, I don’t trade binaries. For the most part I think they’re scams. Can you trade them successfully? There are successful traders in every niche. But most traders lose. That’s the reality of the industry.
It doesn’t matter if you’re trading forex, penny stocks, options, big caps, or … binary options. Most traders lose and most trading teachers don’t want you to know about it. So I’m going to tell you about binary options in this post. But I don’t trade them and I don’t recommend it.
Will trading binary options enable you to buy a villa in the South of France next year? Probably not. Will they allow you to quit your full-time job and finally start on that novel you’ve always wanted to write? Don’t count on it.
Here, we’ll take a look at what binary options trading is all about and you can decide whether it’s right for you. As you read, keep in mind that binary options are getting outlawed in more and more countries. Companies are getting shut down. Or they’re based overseas in places where you can’t sue them. More on that later.
Table of Contents
What Are Binary Options?
Before we dive into specific binary options trading strategies, let’s review exactly what binary options are. According to Investopedia’s definition:
A binary option, or asset-or-nothing option, is a type of option in which the payoff is structured to be either a fixed amount of compensation if the option expires in the money, or nothing at all if the option expires out of the money. The success of a binary option is thus based on a yes or no proposition, hence “binary”. A binary option automatically exercises, meaning the option holder does not have the choice to buy or sell the underlying asset.
At the core, binary options are based on a yes or no proposition. You must decide whether you believe an underlying asset will be above or below a specific price at a specific time.
Binary trades are ruled by expiry times. These time constraints indicate how long you have to make your predictions regarding whether you believe an underlying asset will be above or below a specific price at a specific time. Once the expiration limit occurs, your predictions determine whether you gained or lost money.
Expiration times vary from binary option to binary option. Some of these minimums are known as short expires, which means the expiration date is actually within mere minutes of the buy-in.
There are medium and long expiries, as well. For medium expiries, the deadline could be anywhere from two to five hours. Long expiries typically last between two and 24 hours. Many experts believe that longer expiration times can help make predictions easier.
What Are the Underlying Assets of Binary Options?
In order to participate in binary options trading, you must first have ownership of an asset that can be optioned for a fixed amount. The types of assets common in binary options include stocks, indices, commodities, and currencies. Many binary traders chooses to trade with stocks, as this option can allow them to get high returns within a short span of time.
Along with indices and commodities, currencies are another popular binary option vehicle. Since currencies are liquid and often subject to dynamic price fluctuation, many traders choose to analyze their binary options across the complex — and often shifting — global currency market.
A quick aside since we’re talking about forex. Be aware that the forex market is among the most difficult to trade. Why?
Because it’s the biggest and most liquid market in the world. You’re up against the smartest, richest, and often most experienced traders in the world. Personally, I don’t want to compete against that. Plus, the forex markets move so fast on news you don’t have access to, that there’s no edge whatsoever.
And now, a new asset has emerged: cryptocurrency. I don’t trade crypto, either. I’ve traded the random crypto-based stock. But this is a whole niche unto itself and I’m happy with penny stocks. Crypto has its own version of binary options — which is why I’ve included it here.
Led by Bitcoin, this new, digital currency class is intriguing investors around the world who see the digitization of finances as the way of the future.
According to Options Advice, there are two prominent ways you can capitalize on Bitcoin binary options. The first strategy is by trading on what you think the imminent fluctuation of Bitcoin might be, and the second is trading regular options with Bitcoins as your currency.
If you’re interested in taking the cryptocurrency binary options route, I strongly suggest familiarizing yourself as much as possible with the trends dictating the ebbs and flows of the altcoin market.
An entire niche financial industry has been built up around educating consumers and future investors of digital coins and tokens. From resources like Cryptoslate to ICO listing sites like Coinschedule, there are many resources available to help you make the most strategic crypto trading moves possible.
There are also a lot of scams. And strange happenings. Like when a crypto exchange CEO died with the ONLY key to $137 million in crypto. Ouch. More than 100,000 cryptocurrency holders learned a very hard lesson. Back to binary options …
What is a Call and What is a Put?
Two of the most common terms you’ll hear throughout the binary options world are call and put. These two labels represent the market positions of binary options.
You typically choose to call if it looks like the value will rise within the confines of the expiry time.
Options also have a strike price, which is the price at which the security would be bought or sold.
If you choose to call, you’re signifying your confidence that a stock will rise within the time limitations. If the stock valuation moves upward at all, you’ll receive both your initial investment as well as the return.
On the opposite end of the spectrum, a put signifies your confidence that the valuation of a stock will drop within a certain time limitation. So if you predict that a stock valuation will decline before the expiration date, and the stock does dwindle, you will have succeeded at that trade and will receive your initial investment — as well as the trade — back.
What Are Other Types of Binary Options?
Beyond call and put options, there are other distinguishing factors that separate binary options from one another.
This guide from Binary Tribune delves more specifically into binary options types based on the number of interactions a trader must initiate with the trade. The levels include one-touch, no-touch, double one-touch, double no-touch, and paired options.
Let’s take a look one-touch and no-touch options …
Essentially, a one-touch binary option indicates that in order for you to receive a payout, a trigger (or predefined barrier) must be reached. Traders often choose one-touch if they feel confident that a stock will move in a certain direction at a minimum amount.
The option only has to meet the predefined trigger level once (hence the “one-touch” term). However, as indicated by Binary Tribune, this strategy is often accompanied by some risk.
Beyond simply calling or putting, you also must feel confident that a certain valuation threshold will be crossed. However, with greater risk often comes greater reward.
In contrast, a no-touch binary option essentially depends on a trigger level not being reached.
Rather than hedging your bets that the valuation of a stock will rise above or dip below a specified amount, you’re betting that the trade will not dip above or below an amount.
Because you’re making the trade with the intention that a threshold will not be crossed in either direction, it’s referred to as “no-touch.” Like their one-touch counterparts, these trades come with greater reward — and risk — potential.
I liken one-touch and no-touch calls and puts to something like an electronic stop-loss. The problem is, you don’t have control. You’d better be damned sure you’re right. Which is impossible.
What Are the Pros and Cons of Binary Options?
Now that you understand binary options basics and the different factors between them, you might be wondering whether this type of trading aligns with your goals. Let’s weigh the pros and cons.
We’ll start with the benefits …
Low Barrier to Entry. You don’t need a masters in economics to engage in this kind of trading. For this reason, many first-timers enter the trading arena through buying and selling binary options. Comparatively, binary trading is relatively simple. When compared directly to other types of trading, including quantitative or arbitrage, trading binary options is straightforward.
Fast Returns. Many traders are eager to see fast results and liquidate within a specific time frame. Those who play the long game (investors) are typically most concerned with growing their money steadily over long periods of time. Many opt to invest in index funds, IRAs, or bonds. Trading binary options is fast paced.
Thing is … you can get all the speed you need trading penny stocks. So, while binary options might be a fast game, the reward might not be worth the risk.
High Rewards. Binary options trading is touted by those who promote it as high reward. It’s possible to receive up to a 70% return on their investments if your binary trades reach your expiration dates in the money. This high average return is what makes this type of trading vehicle attractive to many novice and expert traders.
As explained by Investopedia, the risk on binary options is capped off, so while the rewards could yield high returns, you can’t lose more than the cost of a trade.
Low Cost. If you’re just getting started with trading, there’s a good chance you don’t have excess capital lying around to snatch up shares of the fastest-rising stocks on the market. Binary trades offer an alternative to other types of investments that require high-capital buy-ins.
In theory, you can experiment with a binary trade for any amount you’d like, whether it’s $5 or $50. Starting small and working your way up to bigger trade amounts incrementally is a great way to learn the lay of the land.
As you familiarize yourself with expirations, strike prices and — if you’re interested in one- and no-touch options — triggers, it’s best to gamble with an expendable amount that won’t derail your entire financial status. Notice I used the word gamble — just sayin’.
Accessibility. Binary trading platforms make it easy to trade on any day and at any time. When it comes to binary options, traders aren’t necessarily beholden to standard market times and broker availability.
Now, let’s explore some of the disadvantages of binary trading …
Scams. Conduct any Google search on binary trades and one of the first things you’ll likely notice are the abundance of hits warning against binary scams and shady binary brokers.
Remember when I said I’d get back to the part about shady companies? Here goes …
… and I say this to protect and warn you.
Like I said, these companies are often based overseas. Places like Cyprus. (I have nothing against Cyprus. It’s a beautiful country with amazing people.) Anyway, these companies are based in places where you can’t sue them if they screw you.
Then you sign away pretty much your entire life in the forms they make you fill out. Your odds of winning are so low the brokers who do it are pretty much laughing at you. They’re laughing that so many people fall for this crap. It’s like going to the casino.
So, if you come across a binary broker that sounds too good to be true, it’s because he or she most likely is. And if you come across a binary broker who doesn’t let you liquidate your investment, run in the other direction.
Short term. Binary trades have expiration dates that are often fairly short windows of time. Given this, it’s impossible to use binary options as mechanisms for long-term investments. Which, of course, I don’t mind because I day-trade and teach day-trading. But if you’re looking for buy-and-hold investing, binary options aren’t the right solution.
Can You Really Make Money with Binary Options?
Short answer: It’s possible, but you MUST know what you’re doing. Like I keep saying. Most traders lose. Doesn’t matter the niche. I would never trade binary options. Ever. Your choice, I’m just tryin’ to keep it real.
If you’re serious about binary trading, start small. By making small trades and working your way up, you give yourself breathing room to assess market trends and develop the necessary skills.
As is the case with many types of trading, history is sometimes the best predictor of the future. Many successful binary options traders experience trading wins and financial growth because they’ve spent time studying and familiarizing themselves with market movements.
Wait. Does this sound familiar? Yep. You guessed it: you can’t cheat your way to success. Doesn’t matter the niche. I don’t trade binary options. I don’t recommend you trade them. But if you decide it’s for you then prepare yourself. Study your ass off.
Learning common candlestick patterns can make it easy to spot recurring trading patterns. If you want to understand candlestick patterns — and you do if you are serious about trading — I recommend you get a copy of the classic “Japanese Candlestick Charting Techniques” by Steve Nison. Doesn’t matter which niche you trade, this book should be on your bookshelf.
Of course, trading patterns are never 100 percent accurate, so don’t fool yourself into thinking of them as absolute stock predictions. However, the more you can learn about patterns and begin to recognize them yourself, the more likely you’ll be comfortable making your own options decisions.
Is it Safe and/or Legal to Trade Binary Options?
Naturally, binary options contain risk. And by now you know my take. I pretty much think they’re scams. But there are differing opinions and some even consider them safe trading routes. I’m not gonna tell you not to trade them. I recommend you don’t. I’ll be interested to hear back from you. When you’re ready to trade the way I teach … apply for the Trading Challenge.
While it’s legal to trade binary options within the United States, they’re only available to trade on Commodity Futures Trading Commission (CFTC) regulated exchanges within the country.
Binary options traded outside the U.S. are structured differently to those traded here. You can learn more in this article on Investopedia: What You Need To Know About Binary Options Outside the U.S.
The Bottom Line
The good: Some traders like binary options because they are traded at fixed costs. You know where you stand.
The bad: Binary investments are too much like flipping a coin, there are too many scams, and your odds of winning are so low you might as well go to the casino.
The bottom line: Educate yourself like crazy. Avoid sketchy brokers. Start small and work your way up. Remain vigilant. Stick with these rules, and someday you might reach your trading goals. Will you do it with binary options? I doubt it. But you might prove me wrong.
Want to Try Binary Options Trading?
At this point, I hope I’ve shed enough light on binary options trading that you don’t do it. But … you might be thinking about giving binary options trading a shot. If you do, study your butt off. Get a mentor. Don’t screw around. The best of the best in every niche work with a mentor.
Trading — any type of trading — can quickly become complicated. Like any other sector of trading, it’s important to seek out an education before you attempt to invest in this way. I can’t help you trade binary options. But I can help you learn to trade penny stocks …
Is the Trading Challenge for You?
As a teacher I want to help my students forge long-term, sustainable careers as traders. The Trading Challenge can help you reach your goals through risk-averse, conservative trading.
Plus, my best students — those who have become millionaires themselves — join me in coaching you.
What do you get?
- Wednesday morning live trading webinar. I show you live trades so you can see how it’s done. And it’s not only wins. These are true live trades. Sometimes I lose. But you’ll see how fast I cut losses and why I get out so fast when things turn against me.
- Wednesday evening live lesson and Q&A. No matter where I am in the world. This is killer stuff.
- Thursday live trading & review with Mark Croock. @thehonestcroock is at it every Thursday. You don’t want to miss this. Mark is one of my best students/teachers. He’s constantly in the challenge chat room alerting students.
- Annual Penny Stocking Silver Membership. You need this. Thousands of hours of video lessons and archived webinars. Immerse yourself. This is how to get good fast.
- PLUS: Two monthly bonus webinars by my top student Tim Grittani. It won’t take long to understand how Tim went from $1,500 to where he is now when you see how meticulous he is about his trades. Learn from a master.
WAIT! There’s more …
I always wanted to write that. Anyway, there is more, but you have to apply for the Trading Challenge to get it. Simple.
Will you be my next success story?
As you’ve now learned, if you study hard, start small, keep your scam radar on high alert, and stay educated, then becoming a successful trader is possible. But it’s not easy. So don’t even think about doing it if you’re not willing to work hard.
As for binary options …
Look, whatever you decide, it’s about how much time and effort you put into learning. I don’t think binary options are a good way to go. Plain and simple. But there are success stories.
If you’d rather learn what I teach, then apply for the Trading Challenge. But no lazy losers allowed. Seriously. Only join the Trading Challenge if you’re willing to work hard.
Are you a trader? Do you trade binary options? Comment below and let your fellow traders know how it works for you. Even if you are brand new, I love to hear from readers. Comment below!
Binary Options Platform – Addressing Your Questions
If you want to immediately derive profit from your investment in the stock market as opposed to waiting for quite some time (as in the case of traditional stocks), then binary stock options are a great option.
A binary options platform is an important venue in a trader’s life as he will be able to utilize it to make more money for himself and for his clients. This tool presupposes the use of technological advances but is not so vague that it cannot be learned. A bit of dedicated hard work and patient perseverance to master the basic learning required is the perfect jump off to what is needed in the practical world of trading. Add into the mix a hunger for more knowledge and the results will pave the way for greater profit — a trader’s dream realized.
Let’s start by getting to know the technology one will encounter daily – a binary options platform.
Binary Options, addressing the what
Culled from the term itself, binary options enable you two choices. The options are, first, a call investment and second, a put. When we speak of call investments, it simply means that you think a stock will be gaining or going up. When we speak of the latter, it means you are choosing the opposite. That is, you pre-determine that its value will decrease or fall.
The choice has to be made on the basis of its expiry date – the date upon which said option will expire. This is the basic foundation upon which this form of trade stands on.
The most beautiful trait of this transaction is that binary options do give a semblance of security to traders to somehow turn a profit even in the most dire economic climate. Option traders have a bit of a leeway that even when stock values plummet, they can still make money.
A Binary Options Platform, addressing the why
A binary options platform is a great avenue for one to have a sweeping view of the market.
Quality platforms will enable you to have a foresight which will make you strategically envision the placement of assets in the coming days. When maximized well, this will allow one to rightly make intelligent trades and do away with mere trivial guesses.
One cannot afford to gamble away assets in the guise of trading them as this will only lead to losses.
Binary Options Platform, addressing the how
Everything is indeed on the Internet – binary options platforms included. It is not difficult to find them. The delicate choice is in finding one that suits you most, becoming worthy of your time and your money. The most effective way of finding a platform is upon the recommendation of a broker. If you have a standing relationship with a good broker already, chances are, he will know which platforms work best. He will also be able to give you due notice on platforms not to waste effort on.
On the other hand, if you have time on your hands and you wish to personally determine which platform to use, then consuming free trial periods may ideally be the path for you. The key is in eliminating those that are mediocre and finding high-quality platforms.
Binary Options Platform, qualities to look for
There are a couple of basic things to watch for when sifting through the many choices of finding a binary options platform.
It must first be solid. That is, it must at least give you a predetermined return of 65%. This will keep losses to a bare minimum and said payout may be addressed on the date wherein the buyer enters into a contract. It must also give you a guaranteed return on losses. Some platforms who need you will do their best to get your confidence to the extent that it promises to return at least 10% of your money in case of losses.
You may also choose a platform that allows you to invest in not just one but multiple currencies. Whenever you encounter a platform that allows such, it is a telling sign of its stability and presence in the international scene. The major currencies must be present. In other words, do not deal with any binary options platform that does not cover any or all of the following currencies: the Euro, the US dollar, or the British Pound Sterling.
The platform must also have a wide range of assets to choose from because it is what promises its greatness. Said assets include stocks, currencies, commodities, and indices. These assets ensure that you make the most out of your investment and gives you a higher amount of profit. It gives you a choice in the present to trade the assets you wish to prefer. It gives you a choice in the future in case your preference of trades change.
A secure platform is also mandatory. Security may be gauged in the platform’s strong encryption. Only authorized entry to these accounts may be allowed.
Wide choices in expiry periods are also given in really strong binary options platforms. Latitude in such periods via minutes, and hours, up to weeks is provided. The go signal to your preferred period determines the extent of your control to your investment as well.
A platform that does not require downloading is also a wise choice. This protects your computer from viruses and other problems. Also, avoid platforms that ask for extra or additional charges. It will highly diminish the payouts you are likely to receive.
And finally, pick a binary options platform that offers multi-lingual services and more than enough customer support. A good platform communicates well to its investors. It gives the idea that needs are being met and that someone is always there to address each valid concern.
That being said, investing in binary options is exciting. Hopefully, you will be able to pick the best platform in the form of software that will be able to address your needs and give you the best outcome.
A Guide to Trading Binary Options in the U.S.
Binary options are financial options that come with one of two payoff options: a fixed amount or nothing at all. That’s why they’re called binary options—because there is no other settlement possible. The premise behind a binary option is a simple yes or no proposition: Will an underlying asset be above a certain price at a certain time?
Traders place trades based on whether they believe the answer is yes or no, making it one of the simplest financial assets to trade. This simplicity has resulted in broad appeal among traders and newcomers to the financial markets. As simple as it may seem, traders should fully understand how binary options work, what markets and time frames they can trade with binary options, advantages, and disadvantages of these products, and which companies are legally authorized to provide binary options to U.S. residents.
Binary options traded outside the U.S. are typically structured differently than binaries available on U.S. exchanges. When considering speculating or hedging, binary options are an alternative—but only if the trader fully understands the two potential outcomes of these exotic options.
Now that you know some of the basics, read on to find out more about binary options, how they operate, and how you can trade them in the United States.
U.S. Binary Options Explained
Binary options provide a way to trade markets with capped risk and capped profit potential, based on a yes or no proposition.
Let’s take the following question as an example: Will the price of gold be above $1,250 at 1:30 p.m. today?
If you believe it will be, you buy the binary option. If you think gold will be below $1,250 at 1:30 p.m., then you sell this binary option. The price of a binary option is always between $0 and $100, and just like other financial markets, there is a bid and ask price.
The above binary may be trading at $42.50 (bid) and $44.50 (offer) at 1 p.m. If you buy the binary option right then, you will pay $44.50. If you decide to sell right then, you’ll sell at $42.50.
Let’s assume you decide to buy at $44.50. If at 1:30 p.m. the price of gold is above $1,250, your option expires and it becomes worth $100. You make a profit of $100—$44.50 = $55.50 (minus fees). This is called being in the money. But if the price of gold is below $1,250 at 1:30 p.m., the option expires at $0. Therefore you lose the $44.50 invested. This called out of the money.
The bid and offer fluctuate until the option expires. You can close your position at any time before expiry to lock in a profit or a reduce a loss, compared to letting it expire out of the money.
A Zero-Sum Game
Eventually, every option settles at $100 or $0—$100 if the binary option proposition is true and $0 if it turns out to be false. Thus, each binary option has a total value potential of $100, and it is a zero-sum game—what you make, someone else loses, and what you lose, someone else makes.
Each trader must put up the capital for their side of the trade. In the examples above, you purchased an option at $44.50, and someone sold you that option. Your maximum risk is $44.50 if the option settles at $0, and so the trade costs you $44.50. The person who sold to you has a maximum risk of $55.50 if the option settles at $100—$100 – $44.50 = $55.50.
A trader may purchase multiple contracts if desired. Here’s another example:
- NASDAQ US Tech 100 index > $3,784 (11 a.m.).
The current bid and offer are $74.00 and $80.00, respectively. If you think the index will be above $3,784 at 11 a.m., you buy the binary option at $80, or place a bid at a lower price and hope someone sells to you at that price. If you think the index will be below $3,784 at that time, you sell at $74.00, or place an offer above that price and hope someone buys it from you.
You decide to sell at $74.00, believing the index is going to fall below $3,784 (called the strike price) by 11 a.m. And if you really like the trade, you can sell (or buy) multiple contracts.
Figure 1 shows a trade to sell five contracts (size) at $74.00. The Nadex platform automatically calculates your maximum loss and gain when you create an order, called a ticket.
Nadex Trade Ticket with Max Profit and Max Loss (Figure 1)Best Binary Options Brokers 2020:
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