Binary options are an emerging fan favorite among the online trading community, with the novel trading format very quickly picking up speed within the industry. Many online brokers are now offering this format allowing their users to experience the new and exciting genre of online trading, with many more joining the party.
How Do They Work?
Trading with binary options allows you to trade a wide variety of stocks, FX pairs and commodities but with a twist. Binary options allows traders to choose a product and predict whether it will increase or decrease in value within a given time frame. Much like betting, the fundamentals are extremely simple, guess right you win, guess wrong you lose.
The twist comes when you notice that the size of your loss or gain depends on the size of the fluctuation in the price of the product you’re trading on. If the increase is big you get a big win, if the decrease is big you get a big loss, simple.
Now that you know the basics, below we’ve listed out the fundamental pros and cons of this format to help provide some insight before you get stuck in.
Stick to what you understand
As a rule of thumb, if you’re unsure of what you’re doing then back away. It’s also wise to avoid diving head first into waters that you haven’t tested before, so ensuring that you understand both the positive consequences, and the adverse results that may result from any given trade is key to ensuring that you don’t make any silly mistakes.
Before you start on any journey you obviously need to have some rough idea of where you’re going and how you’ll be getting there. Whether you’re striving to achieve financial independence or just trying to generate a little bit of extra income, it’s wise to outline a plan for at least the start of your trading career. Knowing what you constitute as failure and define as success is imperative to gaining the insight necessary for successful and efficient trading.
Keep it simple
Forex trading isn’t rocket science, however over-complicating things can make it feel like it. You needn’t be a maths genius or economics wiz to be successful. Clarity of vision alongside well-defined, carefully chosen goals and techniques offer the best path to a successful career.
Growing your account with organic gains, not greater deposits
A top tip for a novice in any form of trading is to begin with small sums and learn to grow your account through strategy and decision making. Growing your account through your trading choices is the way to go, if growth isn’t happening organically then there’s no logic behind pumping money through your account.
Greed, excitement, panic and fear are all normal instinctive reactions to given situations, but these have no place in a traders calculations. Finding a way to control your emotions and minimizing their effect on your decision making, will inevitably result in better trading. Allowing emotions to affect your decision making will both hinder your profit potential and increase your losses.
Sticking to the above tips is by no means a guaranteed money making strategy, but it will you to find your feet and give you a point of reference.