Binary Options trading has been gaining popularity in the last 5 years due to the simplicity and flexibility it offers compared to traditional trading. Binary options is technical trading and with the help of great signal services, you can make genuine money. If you are a beginner and are wondering about this type of trading, let us show you the basics and then equip you with some incredible resources that will get you going.
What is binary options trading?
Breaking it into parts – binary meaning two. [0, 1], [true or false] or [up and down trend] in finance industry. Binary options trading is predicting an asset’s price movement, up or down, by a certain period of expiration. If the prognosis is bullish, trader can buy a CALL; bearish trader can buy a PUT.
Let’s take an example. We are predicting EUR/USD currency pair price to go up by 4pm GMT. We buy a CALL on this currency pair at the market value. At 4pmGMT, if the prediction is correct, the trader will win a predetermined profit. If not, the entire trade investment is lost.
With the up or down moving trend, profit is predetermined before entering into a trade position. Although with good technical indicators and successful strategies, the trader can win on average 70-90% the risk is losing the entire investment. It is a all-or-nothing trading. Win 70-90% depending on your entry criteria or lose all investment for that trade. Arming yourself with strategies, knowing how to read a technical chart becomes bread-and-butter of trading. There are also services that provides signals based on combination of technical criteria. Depending on the service plan and trading platform, they can be manual or automated. More on that on our Signals page.
What about Money and Risk Management?
As in with any vehicle of trading or financial investment, money management is crucial. Once you are invested, there are emotional and psychological reactions to the market movement. To minimize the risk of losing your money, the best industry practice is to invest 5% of the total capital per trade. For a $1000 portfolio account, invest $50 on each trade. Some brokers even allow a minimum of $25 per trade. We will deep dive into some trusted brokers with a list of their initial deposit shortly. [More…]
What Assets are being traded in binary options industry?
Forex currencies, commodities, indices and stocks can be traded. There are no commissions or broker fees to trade binary options. However be aware of scams. Binary options trading is not a quick cash or a get rich scheme. It is a technical and highly strategic endeavor. Traders who are armed with information and highly disciplined do make good amount of money. Some even consider their part income. Outsiders with misconceived notion looking in get the impression of “quick cash”. It’s a sad state and quite frankly with so many quick money scams, our only defense is to keep our audience well informed. Subscribe to our newsletter on the right so we can keep you posted on the latest binary options trading scams. DO NOT become a victim to the ever growing quick money autotrader scams.
How much time commitment is needed?
Some traders do this full-time as their active income and some choose to do this as part time, even as little as 1-2 hours a day. Binary options provide the flexibility of trading at your own convenience. For trading currencies, Forex market is global and starts with the Sydney exchange followed by Tokyo, London and then the New York exchanges. Unlike the stock market, Foreign Exchange is open 24 hours/5 days starting 5pm EST Sunday until 4pm EST Friday.
What are Binary Options Signal?
Signals are “buy” recommendations for assets with an expiration time frame. Expiration time frame can be 60 seconds, 5, 15, 30, 60 minutes, etc. The auto trader signals deliver onscreen, email or via text to the traders. The cost of the service varies based on the number of signals opted and their past performance. Some Brokers provide signals too after you make a large sum of deposit.
We recommend the Signal providers over broker signals. The former are operated by seasoned traders. They have high success rate backed with many years of trading experience.
What asset types are the signals for?
Providers vary in their services. In general, they provide signals for indices, stocks, currency pairs and commodities.
What is an Auto Trader?
Auto trader is automated trading system that executes trades on your behalf. This is ideal for members with less time investment. This type helps to obtain a passive income with simple trading software setup. The auto trading is as less as 60 seconds which a human trader would miss out without an automated setup. The downside to this is there is less opportunity to learn how to trade. A good example is the famous GD software, the leading auto trader in the industry.
Can I get Binary Options Signals for Free?
Yes! There are many services offering trial memberships. This allows you to test the system before purchasing. Some service providers also provide them for free if you open up a new trading account with a broker via the referral link. This is a great opportunity for those who are not registered yet with a broker or for traders who are looking to test a new Signal service or trading system.
Can I produce a monthly income with binary options signals?
Yes you can! Signals provide you with that opportunity. It is up to each individual to know their risk tolerance and be responsible trading assets. I have received many communications from members thanking for providing information on trusted signal services. They were able to quit their jobs and trade full-time. Binary Options trading is hard work. But the income potential is unlimited when you use reliable services.
Am I gambling or trading with Binary Options?
To answer this question, Allan Smith (Blogger, Finance Advisor and Reader) has very eloquently summarized in his HuffingtonPost article.
Many people associate trading binary options with online gambling. This association is made mainly because of the short expiration time – which can be as short as 60 seconds. The argument is that this time interval is too short to gain an understanding of how the market will move, so at the end of the day any CALL or PUT option is based on a gut feeling. There are, however, differences from gambling. A trader can track the market and use strategies such as the above mentioned ones to gain a better understanding of how the market will move. The most important thing to understand when putting your money down on the table is what are potential rewards against the risks regardless if it is gambling, vanilla options, or binary options.
Lastly, serious traders transitioning into binary options trading and would like to pursue a formal training, there are resources like OptionXE offering webinars, tailored one on one training to jump start learning curve for the novice traders. They also offer accelerated training to hone your skills. Might be worth exploring if you would like to fast track the learning process. If you are a go-at-your-own-pace kind of person, there are ample of resources to learn. Our brokers offer educational resources as well besides their normal services.