Last Updated on Mar 23, 2020 by James W
People are often apprehensive of binary trading, thinking wrongly that they cannot make money from it. For successful trading it is essential to understand the basics of binary option trading and conduct your trading via legitimate brokers.
What is binary option trading?
This method of trading is very simple – all you have to do is predict whether an asset of your choice will increase in value in a certain period of time. Since the prediction can either be ‘yes, it is going up’ or ‘no, it is going down’, the process is named binary trading. A little research and some effort put in to seriously understand the workings of binary trading will allow you to make educated and smart moves which may prove fruitful to you and make you money.
How does it work?
The process of making money in binary trading is pretty simple. You first purchase the binary option, thus making an investment, which can start from $5-10. Next, if you make a good call and the price of that asset rises in your chosen time window, you get back the investment along with the profits resulting from the increased price. Otherwise you lose the invested amount of money. It is essential to keep in mind that binary trading is not at all equivalent to gambling. If you pay attention to the news of the financial world, it is possible to make good calls – if you treat it as gambling and make random choices, nobody can assure you of making profits.
One long-term binary trading idea for beginners
Following big news events like Samsung, Microsoft or Apple product launches is a good idea for long-term trades. These companies announce launches some months ahead, and following the launches the stock prices of these companies almost always shoot up. You can buy a binary option one or two days before the launch date – and this is one of the easier ways of binary option trading. This will require some forethought and planning, but it is a good starting point for beginners.
A few tips to keep in mind while binary trading
- Do not make emotionally driven choices, or go with what you may call ‘gut feeling.’ There is only room for rational thought in trading – no one can make predictions from feelings.
- Do not be disheartened if you incur losses – they are a part of the learning curve. The true mistake is not to learn from these mistakes. Keeping a trading journal is a good idea to keep track of your trades, profits and losses. Try to spot patterns and timings of the assets and learn to make informed choices. Do not give up hope before you have even had time to learn.
- It would be inadvisable to invest heavily in one single trade – if you predict well, you may be a big winner, but in case you don’t, you will lose out on a lot of money.
