In this article we will talk about investments, more precisely about very lucrative and interesting financial instrument - binary options.
You are about to learn the following from this article:
For all these, see below.
Today people have a great opportunity to earn in financial markets from the comfort of their homes.
Students and pensioners, businessmen and employees speculate on the stock market and draw a decent income from this activity.
Most people start from scratch, and only after some time achieve success here.
The development of the world's financial markets is going fast and the technologies, of course, do not stand still as well.
Many new trading tools appear. Along with the now classic options, binary derivatives* appeared, that also became not less popular than Forex trading.
Derivative - a type of financial contract, according to which parties have the right or undertake to perform certain actions with the underlying asset.
The underlying asset refers to securities, commodities, currencies.
First of all, binary options provide an opportunity to profit from trading in various markets around the world using broker services*.
Broker - a specialized company (legal entity), which operates in the financial markets on behalf of the client, as individuals can not legally speculate on stock exchanges on their own.
The meaning of binary options is not in selling the asset (stock, currency, commodity), but in the acquisition of a special contract with certain terms of expiration. All operations are performed via the Internet.
There are several types of binary options (derivatives):
Complex binary options:
The example uses the classic “ Up/Down" option. The chart shows that the US dollar exchange rate against the European currency is constantly changing.
The trader, after referring to the market situation, prepares a forecast based on which the US dollar exchange rate is going to go down in ten minutes, and will be lower than its current level.
An option 1000 dollars worth is bought in speculation of an asset price decline.
In case the prediction was correct, and the dollar exchange rate fell - the broker pays the trader, on average, the profit of 70% (or more) of the set amount, invested into the trade.
Ultimately, investing just 1000 dollars, you can earn 700 dollars in just 10 minutes of trading.
This example clearly shows what the trader does to successfully speculate on the financial market. Although, you are definitely not going to make such sums every time without any risk involved. This is a warning for those who still wear "rose-colored spectacles".
The ways of learning how to profitably trade binary options will be discussed in the article.
Following these rules, your probability of winning will increase many times, while the risk of taking loss will decrease, so go ahead, my friends, to the heights of exchange trading!
Try it, because as you know:
Nothing ventured, nothing made on the stock exchange :)
Step 1: Choose a broker for trading
Before starting to trade, the trader should choose the most suitable broker.
Binary options brokers' market is quite diverse, having both reliable companies and some not so.
The most important thing is to follow simple rules and make the right choice.
How to choose a binary options broker:
When choosing a broker company be sure to pay attention to the customer support, as well as the possibility of opening minimum deposit.
IQ Option broker meets all of the criteria above.
Conveniently, the beginner trader can order a free call from IQ Option manager. Personal manager will tell trader about trading strategies and answer his questions.
In some cases, you can find brokers that provide an opportunity to try yourself in the market of binary options without any investments.
In order to try yourself as a trader with no investments, just open a demo account and train your trading game.
Watch this short video about how to make money with binary options with IQ Option:
Step 2: Open an account
We open a trading account with one of the binary options brokers.
To do this you need to enter:
You also need to specify your country and accept the service conditions of the broker.
After completing the registration process, you can open a trading account with no problems.
Step 3: Demo account training
Before you start trading with your own money, be sure to test your knowledge and selected trading strategy on demo account.
Such an approach will make it possible not only to test you and fence against unpredictable losses, but also to correct the algorithm used (trading strategy).
It is worth noting that even many professional traders often use demo account to test new trading systems of their own development.
One of the distinguishing features of the binary derivatives trading terminals is simplicity and convenience, perfectly combined with the speed and technical excellence.
Available assets are located in the left side, which, incidentally, can be adjusted with filter so that only the most necessary are shown.
In the right corner of the terminal the price chart is placed, which is simply indispensable for the graphic strategies. All information about transactions is presented under the graphic display of prices.
The preparatory stage of your binary options trading is over. By the way, the same sequence of activities awaits you, if you are going to trade Forex or the stock market.
And in case you consider stock trading the way to make money (while not the easiest one), be sure to read our article “How does a beginner make money".
All trading algorithms existing today are divided into several major categories, which differ in the basic principles of trader's trading decisions:
All three categories are united by one thing - the precise rules as well as some advice on how to conduct operations in the options market.
For a better understanding we should consider them in detail.
Simple trading algorithms represent a collection of basic tools that take the key market analysis into account.
They are built based on the fundamental pricing principles and therefore relieve the trader from having to establish additional analysis systems. Among the most popular are:
All these strategies are primarily designed for beginners. They are simple and easy to practice and do not require any significant amounts of knowledge.
A great option for the profitable binary options start.
The technical indicator signal serves as the basis for entering the transaction relying on these strategies.
The most common are the following indicator strategies:
Almost every beginner trader gives his preference to the indicator systems due to the erroneous opinion that such trading is quite simple.
It is absolutely different in reality.
In order to trade profitably using indicators and oscillators, you must have considerable experience in the conclusion of actual transactions as well as an excellent understanding of the sequence of operation of a particular instrument (technical indicator).
Graphic trading strategies in the derivatives market are based on a thorough analysis of the price chart.
Trader's task here is to recognize the emerging chart pattern (a figure, which the price on the chart depicts), and to use it for the good of his trading account.
Now there are quite a lot of graphic patterns known, however, the most tested are “head and shoulders", Pennant, Wedge, Dodges and “Three Indians".
All these patterns will help you make stable profits here.
Before you start trading with real money, you should know that no trading strategy will make the trader rich unless he does not want to.
In other words, no matter how many indicators the professional speculator's corresponding algorithm includes.
Their only goal is to catch the trend, and that is what every beginner should start with.
But before we go on to analyzing the strategy, let us specify what a trend is*.
Trend - unidirectional movement of the price at which each successive maximum and minimum of the quote exceeds the previous one.
The downtrend in the reverse order
The main meaning of trend trading is to buy lower and sell higher, or vice versa, when trading on a price fall.
Trend trading algorithm:
If trading the downward trend, the “Put" contract is bought.
We must not forget that the financial markets trend following strategy works especially well over long time intervals - from several days to several months.
A logical extension of binary options trading on the live account is money management in the financial markets. We describe the basic rules of risk and proprietary capital management for beginners below, so that you avoid critical losses on trading account.
Money management is one of the conditions required for stable and profitable trading on the market. No matter how profitable trading strategy is, it can not guarantee absolute returns in each new trade (transaction).
Be aware that it is impossible to trade without any risk as it is always there!
The market is constantly changing, and therefore careless, aggressive, and sometimes emotional trading can reduce all previous successes to zero by a single losing trade. To ensure that does not happen, we must necessarily follow the rules below:
Following such rules will help you to effectively protect your account from possible strong drawdowns.
Dear friends, summing up the review of binary options trading, you can conclude that the earnings are absolutely real, and in some cases are even higher than in Forex or stock exchange trading.
The main thing is to stick to some simple rules:
By following these simple guidelines, you can easily achieve the desired results.
And, of course, you should never forget to improve yourself including your understanding of the financial market, which is known to be unstable and always presenting unexpected surprises.
It is difficult to make money with derivatives without investments so you still need money to start making profit here.
The only exception relates to experienced traders who can take someone else's capital for trust management and receive a percentage of the profits he makes when trading his investor's capital.
Assets trust management - a form of commercial cooperation between the manager (in this case the trader) and the investor (the person who provides money for management).
In this case, the trader receives a percentage of the successful investor's account management, however, the investor bears the risk of losses as he hopes to get a higher percentage for the invested capital than conservative investment instruments such as bank deposit can offer.
Trading binary options is one of many ways to make money online.
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