Binary options tips and tricks are essential to all traders, especially new traders. The binary options market offers great opportunities but many people, who rush to the gold and don’t mind the way, find pitfalls and obstacles and they end up losing their money. There are many aspects we need to take into consideration when making financial decisions with our money. We gathered here some general binary options tips and tricks that should assist you in making the right choices when invest and trade binary options.
- Education – Professional binary options traders are constantly “living the markets” and a significant share of their day is dedicated to education. They read about the market, relevant news, analysis, forecasts, and every relevant piece of information. Try to imitate this behavior and make sure you learn as much as you can to get better investment performance. Like any form of education, learning binary options costs money mostly in the form of losses when you practice (as you lose more often when you begin your practice). Make sure you understand that the more you practice the less you lose and therefore by practicing you pay for your financial education and invest in your future. It is important to practice with real money because fake trading doesn’t really represent the behavior of the market, of the broker, and of the trader. Only real trades qualify as actual practice.
- Broker – Good binary options brokers are an essential component in binary options success as a trader. Do not judge a broker only by its bonuses. There are many factors you need to take into consideration like minimum deposit, payouts, customer support, market alerts, trade room support and educations, account VIP level requirements, and more. We compiled an extensive guide on how to choose a binary options broker if you feel you want to learn more about the subject.
- Be active – Traders who make sure to be “present at the markets” for at least one hour a day and make 3 or more trades a day are usually more successful. In your first week or two dedicate this time to learn, watch the different graphs in the binary options platform you chose and perform only one trade (bid) a day. Be patient and try to locate triggers you should follow to make the trading decisions.
- The exposure golden rule – It is obvious why people want to cut the middlemen and the commissions and invest in a financial tool like binary options that offers direct access to the market, simplicity, and significant profit opportunities. Because it is very easy sometimes to predict whether a stock or a forex pair goes up or down, new traders are over confident and do mistakes that are followed by extreme losses. New traders need to be aware to the fact that they do their first steps in trading binary options and therefore walk in baby steps. For example, make sure you are cautious in your decisions, don’t act on a “gut feeling” but make more educated decisions. You can invest a large amount to make your account visible to the broker and gain benefits and bonuses BUT until you gain experience do not make bids you cannot afford to lose. A general rule of thumb states that the optimal bid is between 5-10% of your balance and that you should only have a maximum of 30% of your balance exposed at any given time. For new traders we suggest to choose the lower numbers of up to 5% bids and up to 15% exposure at any given time. Make sure you increase your confidence and the risks that you take after some education and practice to avoid losing too much because you want to give yourself the chance to make the profits you want and not to get burnt on your way before reaching these goals you set.
- Choose the right asset – The binary options asset is what you choose to trade on, it can be a Forex pair like the EUR/USD or a stock like facebook. We created a full binary options assets list that you can review. Depending on where they are traded, assets may have different trading hours so you need to choose an asset that is active when you usually trade. A main factor in your asset choice should be the behavior of the asset. Try to find an asset that you understand about, that you can easily isolate graphs patterns in, and that gives you confidence when you trade it. The optimal asset is an asset with a distinctive predictable behavior.
- Get constant market updates – Binary options are a financial tool that uses the markets behavior therefore, you need to get updated on the market and your chosen assets before you perform trades of large amounts. We recommend you get updated at least once a day and watch the graphs of your assets in a 5 minutes resolution before you log in to your binary options broker’s platform.
- Timing – Choose the right times to make your trading and place your bids. The timing is important because you need to be able to act fast on occasions so leaving short term trades opened and leave is a problematic strategy. Make your trades in times you know you can attend your account when needed. For new traders, timing also refers to the market’s volatility. New traders must not trade when the markets are volatile (jumpy) these are times when great profits and losses materialize.
- Keep emotions aside – Dealing with your money is no place to be emotional. Emotional decisions often transform decisions to a game of luck. Many new traders make emotional decisions after a loss and immediately place a bid for the next option to “cut losses” but accepting losses and get yourself together before the next bid is the right way to act. Follow this rule in your first steps and you save yourself the loss of hundreds of dollars (if you invested about 1000$ initial investment).
- Strategy – follow a strategy that fits you. A good strategy for you is one that is suited to your personality, to your schedule constraints, and your goals. Do not pick a strategy that requires you to make 20 trades a day if you only have one hour to trade, do not choose a strategy that requires you to trade on half of your money in each trade if you are not a risk taker, and so on. You can read about strategies in technical analysis books, you can find your own binary options strategy when you trade or use fundamental analysis tools like the economic calendar to identify a good strategy for a specific market or a specific asset.
- Don’t fall in love with a strategy / asset – The market changes and so is the assets’ behavior and one trading strategy cannot fit all market’s conditions. You have to be dynamic and rational and always be aware to the market changes and to your performance. When a significant change occurs either in the market or in your statistics, make sure to be cautious and research what adjustments are needed to be done to your trading routine.
When using the above binary options tips and tricks you improve your chances to be an experienced successful binary options trader.