Binary Options Trading for Dummies

Binary option platforms are attractive for traders because of the possibility to earn quickly. There is no need to make huge investments when starting trading binary options. The size of the initial deposit of the majority of brokers starts from 100 dollars. There are binary options trading platforms that let traders start with $5 or $10. The profitability of this instrument is from 60% to 90%. This means that the rate of 10 dollars, with a contract profitability of 80%, corresponds to a profit of 8 dollars. Taking into account that the transaction time can take several seconds, it becomes obvious that binary options is an extremely profitable type of trading.

Binary Options – How to Start Trading

Binary options are a contract which underlying asset are currencies, stocks, commodities and stock indices. This type of contract is concluded for a certain period. The expiration date of the option is called the expiry date.

There are two types of simple options.

• Assuming that the price of the underlying asset will grow, the trader buys option “Up” – Call.
• If it is assumed that the price of the underlying asset will go down, the trader buys the option “Down” – Put.

Despite the apparent simplicity of this instrument, it is necessary to have a basic knowledge of using fundamental and technical analysis before starting earning on binary trading platforms.

Beginner traders are not recommended to use complex strategies, overloading their charts with all known indicators, rather they should first read some informative articles like https://www.stocktrades.ca/how-to-buy-stocks-in-canada/, through which beginners can learn about the best ways to buy stocks and carry out the trading. It is worth to take one simple strategy as a base and bring the trade to automatism. Signals for opening a deal should be clear and undisputed. In this case, a prerequisite for successful profitable trading on option trading platform is compliance with the rules and principles of capital management.

The next basic rule is not to open transactions based on the opinion of others. A lot of analytical materials, experts and analysts publish their forecasts in the Internet. However, there are as many people as there are opinions. At the same time, you can find on different sites fundamentally opposite forecasts for the same asset. Of course, it is necessary to analyze the market situation, but it is better to rely on facts and statistics published in leading economic publications. Analytical materials that help to understand the nature of the movement of a certain instrument, its correlation with other market instruments, the reaction to fundamental events, will be more useful than the study of hundreds of forecasts and predictions.

Beginner traders mistakenly believe that it is easier to trade on short time intervals, and the temptation to “accelerate” the deposit as quickly as possible, lead them to trade on options with minute and even second expiry dates. However, such short-term trading requires a lot of effort and experience. There are many false signals at short time intervals – “market noise” due to increased volatility. Beginners are better to choose trading at the time intervals H1 (hourly), H4 (four-hour), D1 (daily), respectively, the expiry dates H4, D1 and more. Of course, the number of trades will be several times less, but the quality of trading will be higher.

The most common strategies for those who start to trade binary options are strategies using moving averages, trend trading and buying/selling by levels. These quite informative analysis tools give a clear picture of the current market situation.