Consistent Income from Binary Option is no longer a difficult job! The last five years have been the golden years for binary options. The market has grown phenomenally and traders are joining in the trade in multiples. The binary options have expanded and the systems have become more sophisticated and accurate, especially with the advent of automated systems. Profits have risen and a good number of traders have made impressive profits over this time. Within the same period, there have been traders who did not do very well in the binary options trading. This will happen if you do not develop a plan to profit from binary options consistently.
Binary options trades, like any other trading transactions in the assets and commodities markets can go either way; make a profit or lose your investment. The trick is to keep the winnings considerably higher than losses over an extended period of time. Here you will learn what to do and what not to do to create a framework within which you can make winning trades consistently.
Start with a full swing
- With a maximum payout of 91% for winning trades, which the best binary options brokers such as ZoomTrader provide, you only need to be right approximately 50% of the time in order to be a profitable trader.
- This means you don’t need to swing for the fences. Rather, you only need to get on base majority of the time.
- This means it is crucial to maintain the same exact risk on every trade.
- Since it is impossible to know ahead of time which of your trades trades will be winners and which will be losers, don’t risk a greater amount on one trade than another.
- Let’s say you make three trades and to them end up being winners. If your capital risk on each trade is the same, you will have made money on the some of those three trades, regardless of which one of those three trades was the losing one.
- However, what happens if your losing trade was taken with $1,000 risk, but you only risked $300 in your two winning trades?
- The answer is that you would still end up losing money on the sum of those three trades, even though two of the three trades were winners.
- Therefore, keep your risk consistent, which will allow you to get on base majority of the time.
Practice Trading Binary Options
- By the way, I almost forgot to warn you about paper trading, which is making practice (imaginary) trades without real money.
- A lot of beginning binary options traders think this is a great thing to do because it allows you to “test the water” without risking any real money.
- However, I’m here to tell you that paper trading is useless and creates false expectations.
- So, rather than paper trading, my advice is to immediately start by trading real money, but just keep your capital risk per trade small until your profits start to grow.
- Be sure to tune in for my next blog post, in which I will share with you one of the most common mistakes that beginning binary options traders make, as well as a very easy way to avoid falling into the same trap.
Beginners Can get Consistent Income from Binary Option Trading
Even with so many ways to mess up, beginners to binary option trading can make money if they work hard and follow a system. The key to binary options trading is to control risk. A trader can never lose too much money on any particular trade. Hypothetically, a trader has a 50% chance of being correct on any trade whether they buy a call or a put option. To make money, a trader only needs to be correct on about 60% of trades of the trades that they take.
- Use a signalling service. While most are not are not going to give a trader a significantly better than random chance of making money, they still should tilt the odds into the trader’s favor. This is all any trader can ask for. There are paid services out there such as elite trader, but even a free service from a site like barchart can give you the edge you need.
- Learn to use technical indicators. Technical trading involves using strictly price action (price charts) to predict future movements. There are a lot of indicators out there, but some of the most common ones involve using moving averages. Examples of popular indicators are MACD, relative strength index, and bollinger bands. If you can find an indicator that works well for the security you are trading you can gain the edge you need in order to turn some of your would be losing trades into winners.
- Trade stocks before trading binary options. Stock trading is less volatile for a trader’s account than binary option trading as long as the trader does not use leverage and sticks to securities priced over $5. If you can figure out how to be correct on more than 50% of your stock trades, you can take what you learn and apply it to binary options to multiply your earnings power.
- Track your performance in each binary option security. Most people will be better at trading some stocks or commodities or currency pair than they are at others. The simplified reason for this is that each particular symbol will move differently than the others because each one has its own characteristics and traders involved in moving the price. If you find a handful of option trades that you are consistently profitable in, stick with what works and increase your size. You don’t need to waste your time and money on unprofitable trading.
- Buy the right option length for your trading style. Some trading styles will work better over very short term trades, and some will work better over trades held for a long time. Know your style and the appropriate length option you should buy. A value investor for instance would not be sensitive to price changes over a 1 minute option, but may be correct on a super high percentage of trades over a 6 month period.
What experienced should do for Constant Income from Binary Option Trading
Control your expectations
Probably the right word to use here is ‘greed’. In binary options, it is very easy to be overwhelmed by your emotions. Such things tend to happen when you are winning, or losing money. The definite thing you need to do is to keep a clear head; keep all your emotions at bay. You must have come across trading platforms in this business claiming of extraordinary successes of making millionaires in a few months after making a small deposit. You probably want to be that person. While there is nothing wrong with that, the bad news is that you probably won’t be that person. With that out of the way, focus on making small consistent wins as a start, and then expand from there. The chances of becoming a millionaire within three months of trading with a deposit of $500 is a million to one; do not make rash decisions to invest all or most of your investment on a single trade just because you just made are on an 85% roll. Keep a clear head.
Usually around September and October each year Apple is known to release a new iPhone and several additional products. Your task will be to check out when this will happen (usually, these events are announced months ahead). Add the date to your calendar and around 1-2 days before the event buy a binary option that predicts that the stock value of Apple will go up during the next 2-3 days. You can be fairly sure that your prediction will be correct, as Apple’s stocks usually increase after a new product launch. And boom, this is it; you just made money with binary trading.
As you know, there are hundreds of large companies, such as Google, Samsung, Sony, and Microsoft, etc. Just check out when these companies are about to launch a new product and mark it in your calendar. You will usually find 1-2 such major events during every week of the year. With this strategy you can expect to win around 70% to 80% of the time but it requires a lot of preparations like following news events. It’s can potentially be easy money through, so it should be the first strategy you use to make money in binary options trading.
Choose the right broker or trading system
Your success or failure in the binary options business is considerably dependent on your broker, your trading system or both. Making the right choices here is paramount. Go through as much literature on your shortlisted brokers as you can to aid you in making an informed decision. A good thing is to stay away from brokers and systems promising over the top rewards and those with scanty information on how and what they trade. Give your selected broker’s system a test run with the demo account provided. For a beginner, you are well advised to try your strategies with a demo account other than a real money account. One thing about demo accounts is that you get a true feel of what you should expect. Try a few set strategies with the system and some of your own as well. By the time you come to deposit real money, you will have an idea of what to expect, what to do and what to refrain from doing.
Don’t Choose “Interacting” Assets
There are assets that affect how each other perform. For instance, the USD and EUR affect each other inversely–this means that when the USD rises, then the EUR goes down and vice-versa.
So, you should avoid investing on the USD going up and place a similar bet on the EUR going up too–you’re probably going to win one bet and lose another, which will cause you to get a loss overall.
Go for the automated systems
If you are the kind of person, who does not like keeping your eyes on the financial markets and currency values, or you simply do not have the time, and you wish to try your hand at binary options, the binary robots could be your preferred instrument. Unlike the manual trades where the most you get are signals, with automated systems, even the trading is done for you, even when you are off the computer. What happens is that you make the settings yourself, your daily limits, your maximum amounts per trade and things like that. The best thing about this is that you do not have to worry about the effect a Federal Reserve announcement will have on your next trade. The robots analysts and advanced algorithms will handle this for you. They will remove the headaches from binary options trading which is a good thing if you are not a professional trader.
Make Use of Practice Accounts
Most brokers provide their users with practice accounts, accounts that have “play money” and allow users to invest using that money in order for them to learn trading and to get better at it.
The practice accounts are there for a reason, and you should use them to their fullest–this can save you quite a lot of expenses.
Develop your own strategy and review it from time to time
The people who make a good income from binary options trading do so because of many factors. Among the most important is the strategy you use to make your trades. For experienced and professional traders, they can make use of the information they have to make winning trades. For novices AND experienced traders, one important strategy is to use the free trade signals provided by trading systems. While they may not be 100% accurate every time, they are way above uninformed decisions that many traders are likely to make. It will make your work easier to develop a strategy that comfortably gives you a consistent profitability. The strategy should not be written on stone all the same: you should give it an intensive review from time to time to see if you are trading at your best. Such a review of your strategy might result in a complete or partial overhaul, a few small changes or it can just remain the way it is. The trick is to keep reviewing it after some reasonable time.
Design a Binary Options Trading Plan and Research Assets
Traders can’t jump in and out of binary options’ orders by impulse or ruled by emotions–they should build and design a trading plan from the ground up and research every single asset they think about investing with in order to maximize profits and minimize losses.
Proper preparation is needed, and you shouldn’t be caught off guard–do your homework!
Make your expiry time selection wisely
The systems may be giving you a signal that your research confirms as one that will make a winning trade, but you lose your money anyway. Chances are that you made the right trade but you chose the wrong expiry time. This is where your own input is called for. If the signal is dependent more on an issue that is about to happen rather than from a trend, your expiry time will be crucial due to the timeline of the said event or issue. Make good use of the analysis charts available from your trading system to choose the right expiry time. This will ensure that the likelihood of losing your investment due to wrong timing is eliminated or minimized.
Choose the Right Binary Options Broker
In order to launch yourself on a successful journey that includes trading binary options, you have to get a trustworthy partner–a legitimate, reputable, professional and honest binary options broker. Summing up–the binary options broker that’s able to fulfill your needs.
We will recommend a certain binary options broker by the end of this article, but the rule of thumb is – if it looks too good to be true, then it probably is (and you should stay away from it).
Always read the binary brokers’ terms and services.
Stick to trades with high probability
When trading binary options, remember it is either you win a trade and make a profit or lose the trade and lose your investment in that trade as well. This means that you should stick to trades that offer the highest probability of coming out as a winner. If the movement of the value of an asset is dependent on a news item, make your trade before the rest of the market catches up by trading with options in the seconds, 1 minute options or even the 5 minute options. It will be your experience and knowledge that will enable you to make the right trade within the right expiry period. The lesson learned here is that you should be on top of things when it comes to live financial news and live reports. You can do this by subscribing to paid news sites that will keep you updated at all times. An alternative is to follow such accounts on social media to help you find out what is happening globally in the financial markets.
Trading Requires Practice
One of things you must know about binary options’ trading is that it requires practice and practice, when it comes to investments, requires money.
So, bear in mind that you should have a small fund that you can lose in order to learn and get better. Be sure to avoid investing with money you can’t lose, as on your first trades you’ll likely to kiss your money goodbye.
Trade only when the market is active
In a 24 hour period, the time when there is significant change in trends can be concentrated to less than an hour. This implies that for most of the day, nothing much is actually happening. What you should do is to learn when to anticipate changes in trends and this is where you are likely to make the most gains which will be much better than when the markets are in a lull.
Make frequent withdrawals
You are in binary options trading to make money for yourself and not to trade for the sake of it. What you should do is to minimize the risk of making some rash trades which can put you out of business in a flash. Make frequent withdrawals to pay yourself for your efforts. One good way to do this is to make withdrawals for all money that comes above your deposit and save it. This way, you will find out if binary options trading works for you or not.
These tips are not the definite bible on making winning trades at the binary options, but it will go a long way in getting you into the right picture of what you should and should not do. There are thousands of satisfied traders in binary options; there is no reason why you too cannot join them.