Trading binary options is far more complex than it seems at first, at least if you want to trade successfully. The key to being a profitable binary trader is to not only understand the markets, but to approach them in a logical way that increases your chances of making money, all while decreasing your risk of losing it. This is a very fine balance, though, and even experienced traders may find that their results are not as good as they expected them to be.
This brief guide is designed to help you think about trading binaries in a different light so that you can go from just getting by, to making as much money as possible.
If you are dealing with numbers and percentages and so on, doesn’t it make sense to approach it from a mathematical point of view? Yet, so many binary traders (and others, really) do not think like this. They see the rate of return, they see the price charts, and then they think, “the price looks like it will go up,” and then place a call option. That’s fine, but it’s not a sustainable strategy over the long haul. In fact, if it is successful at first, it will probably only instill a false sense of security, and lead to confusion when you start losing all that money that you had first earned. Think in terms of how math should translate into your decision making process, and you will find that you are executing trades that have a higher probability of success, and increase your long term profit rate.
Use the Right Tools
Many traders rely on a limited set of tools. If they are the right tools, they will have success. At least, until the right tools are no longer the right tools. Markets evolve. What worked 10 years ago doesn’t work anymore when it comes to short term price prediction. In some cases, what worked earlier this year no longer works. As things evolve, price prediction using old and outdated methods becomes impossible. It becomes a guessing game and suddenly you are in losing territory, and that completely defeats the point of trading. By knowing which tools are best, and which are most reliable, you can increase your chances of making money. By having a wide array that you are comfortable using and approaching your decisions from different angles, you can ensure that as markets shift, you will be aware of how your indicators predict this.
Use the Right Broker
This goes along with thinking mathematically, but it’s a little bit more out of your hands. Some brokers pay better than others. If you want to focus on Forex pairs with a 15 minute expiry, which makes more sense mathematically: the broker paying out 72 percent per trade, or the broker paying out 73 percent per trade? 1 percent is not a big number, until you make 1,000 trades at $100 each. Suddenly, that 1 percent is a four figure difference in your bank account. If switching brokers can make you an extra $1,000, why wouldn’t you do it? As long as that broker is trustworthy and allows traders from your area to use their services, then this is the smartest and easiest trading decision you will make. As far as bonuses go, they are important, but probably not as important as you might think. You also have to always consider customer service when picking a binary broker. This can make or break your experience. They should be a final consideration, and not your primary motivator.
This also goes along with thinking in mathematical terms. One of the hardest things for traders of any sort is to comprehend that there is far greater risk than at first glance. With binaries, there is a safety cushion already installed because of the fact that you are risking less per trade. That’s a good thing, but it still can create issues and false security. For example, if you are using a faulty money management system, you can find losses spiral out of control, even if you are correct on 55 or 60 percent of your trades. At this rate, you obviously know what you’re doing, so why are you losing money? It doesn’t come down to bad trading, but rather, bad money management and bad risk management. In the end, these can be just as important as your level of knowledge pertaining to the market. If you know what you’re doing, but are not approaching it safely, there’s a good chance of ruin. Think about driving a car. You can drive 100 miles at 100 miles per hour and get there in an hour. That doesn’t mean that it’s safe. You could crash or get arrested. It’s far more prudent to take the safer route as this is more indicative of long term success.