How to start BInary Options Trading

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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:

Best Binary Options Brokers 2020:
  • Binarium
    Binarium

    The Best Binary Options Broker 2020!
    Perfect For Beginners!
    Free Demo Account!
    Free Trading Education!
    Sign-up Bonus!

  • Binomo
    Binomo

    Trustful Broker!

  • 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.

How To Start Trading Binary Options?

If you’d like to start trading binary options, I highly recommend trying the demo account for the first couple of months. The main reason is: you need to fully understand how everything works, especially the market.

Once you have gone through this process, you’ll be able to reward yourself and will be able to trade with real money (finally, huh?) This is the real business! Starting to trade binary options is really easy. In couple of easy steps, I’ll explain what you need to do. There is no time to waste time, so let’s get to it. ��

Choosing the broker

The first thing we need to do is to choose a broker you’ll be trading with. If you are not completely satisfied with the services of that particular broker, you can always withdraw your money and try another one. A list of trustworthy brokers that I’ve put together can be found here on our website. As an example, I’ve chosen the broker StockPair which is, in my opinion, suitable for beginners and also belongs to our favourite brokers.

Creating an account

Second thing you need to do is to create an account. After clicking “Open Account”, you’ll see a form with a couple of details that are necessary to create an account. Fill it in and click “Save and continue”. On the next page, you’ll fill in other details about yourself. It will only take a couple of minutes and you’ll be doing this only once.

Depositing money into your account

When you’ve completed the registration, the system will automatically log you into your newly created account and will transfer you to the page where you can deposit you money. Choose your payment method, fill in the form and click “deposit” Wait until they load into your account. If you’re using a credit/debit card, the money will be transferred within seconds.

You are all set!

After a successful deposit, you can check your account balance in the top right corner of the website.

In the menu choose the option “Trading”. Here you’ll find a lot of things that may look really complicated at first, but in fact, it’s all really simple. So let’s have a look at what all these things mean and what do they do.

  • 1) Type of a trade. KIKO or UP/DOWN (More on this topic later)
  • 2) Sentiment. This column shows what traders and investors do. CALL means, that other traders on Stockpair think, that the price will increase and thus buy CALL options, PUT means the exact opposite.
  • 3) Selecting an asset. Here, you’ll choose an asset you are going to trade, ranging from commodities, stocks, indices to currencies.
  • 4) Panel of investment. After making a decision and clicking CALL or PUT, here you can select the chosen amount of investment and you’ll directly see how much money can be won or lost.
  • 5) All open options. If you’ve made a bet, here you can see how it is turning out.

Everything has been demonstrated with Stockpair‘s interface, but don’t be afraid. All the brokers work very similarly. As you can see, everything is very easy and brokers’ platforms are very intuitive and user-friendly. If you have any questions, do not hesitate to leave a comment below.

Author

More about the author Step

I’ve wanted to build a business of some kind and earn money since I was in middle school. I wasn’t very successful though until my senior year in highschool, when I finally started to think about doing online business. Nowadays I profitably trade binary options full-time and thus gladly share my experiences with you. More posts by this author

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.

Binary options: where to start the trader’s path? How to do it?

Most people perceive the financial market and its trading processes as something very complex and inaccessible. This prevents ordinary investors from becoming successful and financially independent. But despite such difficulties, online trading today is gaining popularity and becomes an excellent way to earn money. In our material, we offer recommendations on how to become a successful participant in the market and how to achieve high financial results. We hope that with their help you will start a successful trader’s way on such an instrument of stock exchange trading as binary options.

So, the successful career of any trader of binary options should begin with the realization that this type of contract is a real opportunity for earning, as well as the fact that for this you need to make some efforts and spend time. On the binary market, nothing happens just like that!

The first thing a beginner trader should do is get training! Without knowledge, experience and a clear understanding of the technical processes of the market, it is impossible to consistently receive a high income. Only profound knowledge in the matter of technical analysis, proper market valuation and capital management issues can lead a trader to success and the expected financial result. Do not worry, you do not have to spend money on training and time to graduate from a specialized educational institution. In binary trading, training is offered completely free of charge and in an effective mode. You just need to turn to the services of a professional broker to get the necessary knowledge and skills on his free services.

The trading platform should be built on specialized information services that allow you to quickly learn technical analysis, understand the general principle of the market and gain skills in practical trading in the market of binary options. The broker system works on such types of technical services:

– knowledge base – a collection of terms and concepts that are used in the work on the market;

– an interactive textbook – a guide for novice traders, which reveal the secrets of successful trading;

– video lessons – materials that provide specific market situations and examples of trading operations;

– webinars – lectures from professional traders and financial market specialists, where recommendations are given on working with binary options;

– demo account – technical service for training and obtaining practical trading skills.

Having passed all steps of obtaining knowledge, you can professionally and effectively work in the market and get a stable trading result.

The second step on the path to success in the binary market is the choice of a reliable trading partner in the form of a broker of binary options. The problem here is the large choice of a variety of platforms, among which there are often frank scammers. Therefore, in order to work successfully, in a safe mode for investment funds and with comfort, we recommend carefully choosing a trading partner. To do this, there is a simple approach – choose a broker who has:

– the license of the regulatory body – this indicator will create the conditions of work that are as safe as possible for the capital;

– a professional level terminal where all the necessary technical services and analysis tools will be available;

– Fast, the most simple mode of trading profit withdrawal;

– minimum conditions for launch on the binary market;

– high level of financial stability of the broker;

– Positive feedback on the network from the company’s customers.

A trading platform with such services and working conditions will allow you to professionally handle trading operations and will provide a full range of opportunities for success. Note that it is for such parameters that a really reliable broker should be available. Such a binary market provides a full list of technical and commercial services that are necessary for effective trading, and also creates maximum safety conditions for investors.

Having completed the training and choosing a reliable partner for themselves, any trader will increase his chances in trading binary options and will have at his disposal a simple, interesting and profitable earnings tool.

“General Risk Warning: Binary options trading carry a high level of risk and can result in the loss of all your funds.”

Best Binary Options Brokers 2020:
  • Binarium
    Binarium

    The Best Binary Options Broker 2020!
    Perfect For Beginners!
    Free Demo Account!
    Free Trading Education!
    Sign-up Bonus!

  • Binomo
    Binomo

    Trustful Broker!

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