Do you need a simple guide to start trading and investing in financial assets? Do you consider binary options? It is a fast and extremely simple financial instrument that allows investors to speculate on whether the price goes up or down in the future. You can trade stock price of Google, Bitcoin, the USD/GBP exchange rate, or the price of oil, silver and gold. The time span can be as little as 60 seconds, making it possible to trade hundreds of times per day across any global market.
As a beginner you can find a trading platform and register an account. Trading is not gambling. To start trading you need to learn more about binary options trading, profitable strategies, indicators, trends, economic index and exchanges. It can be complicated and overwhelming.
Read a step-by-step guide from the experienced trader to learn more about binary options. Education and training will help you to become successful. Also before trading real money you should take advantage of a demo trading account and test your strategies.
Step 1. Learn terminology
You definitely need training. For example, here’s some specific terminology wrapped with binary options. Can you sell an option? No, but you can buy a “put” option. In order to understand what binary options trading are and how to make money, you need to learn the basics. You need to know the answer to the following questions:
- What is the electronic contract market? What is being traded here? How is the price formed? Where does the profit come from?
- Fundamental analysis. How economic indicators affect financial markets? How to track the situation on the market?
- Technical analysis. What is a trend? What indicators are important? How to determine the direction of the price?
- Trading terminal. Brokers trade in their accounts on the own trading platform. The platform at Pocket Option has an intuitive interface and a complete set of tools t you start trading.
Step 2. Risk Management
Trading binary options has an element of risk involved. You could lose all or most of your money in an instant if you are careless or greedy. As such, the concept of risk management is one that every binary options trader should take very seriously. Calculating your risk in binary options is actually very easy. Binary options brokers have made this very easy, because the moment a trader pushes the button to purchase a contract, the trader is immediately shown the cost of purchasing that contract. He cannot lose more than what he spent purchasing the binary options contract, so for every contract purchased, the amount at risk is known and the potential reward is also known. This enables the trader to do what is necessary in order to keep his risk within acceptable limits.
Step 3. Trading strategy
The basic requirement is to predict the direction in which the price of an asset will take. The price will either increase (call) or fall (put).
Successful binary options traders often gain great success utilizing simple methods and strategies. It is very important though, to understand which strategy to use in each situation and in every event, you should have a well thought out strategy for every market condition. Whatever indicators you are using to signal moves, or lack of moves, in the market now, are the same you would use for binary options. Additionally, as with any type of trading, even before having a sound strategy, you need to employ sensible money management. Start with 2-3 indicators and read more tips on the strategy: you strategy is good if you have profit/loss ratio is at least 70/30.
Step 4. Trading psychology
Trading real money is tough. It can be exciting and depressing at the same time. Discipline and risk-taking are two of the most critical aspects of trading psychology, since a trader’s implementation of these aspects is critical to the success of his or her trading plan. Under pressure new traders start to panic and make mistakes, deviating from the chosen strategy. Therefore, it is recommended to start with a minimum deposit and work on small stakes. Finally, you need to read a lot on how to become cool and composed. It will help you accept the risk involved in trading. As a result, you will always enter trades in a disciplined way.
Step 5. Trading system
The overall trading system includes all of the above. You need a set of rules to follow while trading. The components of your strategy include strategy, money management, psychology, trading schedule and potential financial goals.
As a last word of wisdom to the new traders, do not forget that we every successful trader finds his or her trading style and risk tolerance. As long as you can learn from your mistakes, you can become successful.
