If you are new to Binary Options, and want some quick tips on how best to begin trading, have a look through our Binary Options tips below. These are by no means a "bible" for trading, but they ought to give you some useful pointers. Experienced binary options traders might also pick up a thing or two.
Use a Free Demo Account to Practice
Most decent binary options brokers offer this, so make use of it. Before you wade in and actually deposit money and trade for real, be methodical and set your self up a practice account. Try and trade as you intend to with real money - watch the markets, do your homework and plan out your trades. We recommend you do this for at least a week (preferably a month) so that you can get the hang of whatever platform you are using, and you can develop your trading style. When you feel comfortable with the amount of money you are making (or losing!), then you can trade for real, not before.
1. Trade With Your Head Not Your Heart
Good traders are clear thinking, methodical people who win and lose trades, just like everyone else. it's just that they win more than they lose. If you trade on your emotions, gut feel, intuition or whatever you want to call it, you are going to come unstuck pretty quickly. Do your homework and try and give your self an edge by following a trend, making a calculated gamble (after a financial announcement for example) or through sheer hard work on analysis. Don't trade if you are feeling angry, sad or greedy!
2. Spread Your Risk
There are plenty of instruments that you can trade on, and if you mix it up a bit, you are less likely to get caught out across your entire portfolio with sudden market movements. Trade commodoties, different currencies and stock market indices. You want to focus in a little bit, as you can't be an expert on everything, but you also want to spread the risk a bit. Try to find the right balance. If you are just trading options on EURUSD, you are going to be too exposed to market movements in one currency, and that can be dangerous. A minimum of 3 would be a good rule of thumb, and as you become more experienced, you can widen that- a more diverse portfolio is more likely to produce consistent returns.
3. 60 Second Trades- Avoid Just Going After the Quick Money
Again, we are not saying that you shouldn't test the short trading. But generally, building up a profitable binary options account is not going to happen in a series of 60 second trades- you may as well stick your money on the roulette table. Mix it up again- test out the different expiry times and see how you get on. If you are going to try out some of this short term trading, then make sure you balance it out with some longer term trades. Theoretically you can make a lot of money quickly if your 60 seconds trades come in but remember- the opposite is also true. You can also lose a lot of money.
4. Stick to One Platform
We know of traders who trade across multiple binary options brokers to spread their risk. In our view, the only time you should have multiple accounts is when you initially open demo accounts to research the brokers. Do your testing and then pick one broker and stick with that. You can always review your choice after a month or 2. If you open up multiple accounts, you are going to get confused and you'll take your eye off the ball, which should be your actual trades.
5. Start Slow Then Increase Slowly
Take it slowly when you first start- there is no need to rush! Just deposit the minimum amount and begin with small trades. When you first start trading binary options for real, it should be a small step from your demo account. Don't start loading in thousands of dollars. As your confidence (and hopefully your success) grows, so you can increase your investment steadily. It's all about minimising your risk and maximising your gain.
6. Read the Bonus Terms
There are a lot of brokers out there- and that's great for competition. They are all vying for your attention, and one of the favourite ways of doing this is through the deposit bonus. But you know what? It might not be a good idea to actually take it. It might- all we are saying is read the bonus terms and conditions. You might find that you need to trade the bonus (and possibly your deposit) and number of times before you can actually get your money out again. Binary Options Brokers aren't stupid. They aren't going to just give you money for free- they'll want a fair chance of making some back- so they'll want you to stick around and make a minimum number fo trades.
7. Don't be the Usain Bolt of Binary Options
Binary Options are more of a middle distance game, or even a marathon, rather than a sprint. If you go off too fast, you won't have enough experience to understand the intricacies of the system you are trading on (which may enable you to cut a winning trade short for example). You are unlikely to strike it rich in the first hour. Do the work and methodically hunt for the rich seams.
8 Dedicate Time to Reseatching Your First Broker
This goes hand in hand with our point 4 above. Because we recommend that you only use one binary options platform at a time, it is very important that you dedicate enough time researching the various brokers. Set out your criteria and try and tick all the boxes. What do you want from your broker? A specific payment method? Fast withdrawal? A certain type of option? We can't state the importance of doing this research enough, and it's easy to do as most will offer demo account (if they don't, we'd recommend you avoid them anyway).We should be able to help you with this here at bnoptions. There are alot of binary options players on the market- just be aware, that many of them are just "skinned" or white lable versions of others- the platform is the same, the only difference is the management and the marketing. We'll guide you too the core sites here.
9. You Will Always Lose Some Trades
You are not going to win every trade you make. Get in to the mindset that betting the wrong way isn't a bad thing- it's going to happen and it all helps to build your experience up. Successful traders learn form their mistake, trade methodically and then manage to execute more winning trades than losing ones. It's as simple as that.
10. Know Your Limits
By this we don't mean your personal limits (although that's important). We mean your financial limits. The good thing about trading binary options, over say online forex trading, is that you can limit your risk. You know, on a binary options trade, that you will not lose more than you invest in a particular trade. If you had opened up a long position on the "Swissy" (EURCHF) on the morning of Thursday 15th, 2015 just before the Swiss Central Bank dropped the peg to the Euro, your broker might have been chasing you for a lot more money than you had in your account by the end of the day, as the Swiss Franc appreciated by up to 30% in a day. If you were lucky, the forex broker would have taken the loss on the chin (or gone bust like Alpari in the UK). If you weren't so lucky, and you were trading with the likes of Saxo Bank, you might have found some debt collectors with Danish accents knocking on your door at 5pm.
That's not going to happen with Binary Options, but you still need to set yourself overall limits on how much you can afford to lose, and targets on how much you want to make on the account. You need targets at both ends of the spectrum.