How to make money on binary options trading Basic rules.

Best Binary Options Brokers 2020:
  • Binarium
    Binarium

    Best Binary Options Broker 2020!
    Perfect For Beginners!
    Free Demo Account!
    Free Trading Education!
    Get Your Sign-Up Bonus Now!

  • Binomo
    Binomo

    Good Choice For Experienced Traders! 2nd place in the ranking!

How to make money on binary options trading? Basic rules.

Advertising banners of earnings on Forex today is almost everywhere, no one is surprised, but financial markets are not standing still, and every year there are new tools for making a profit. One of the latest innovations are binary options. Despite their simplicity and availability, there are still doubting traders who do not admit that such a derivative is capable of making a profit.

A binary option is a financial contract, under which the parties assume certain obligations to perform the specified actions with the basis. A basis is any financial instrument – shares, raw materials, currency pairs. A trader does not buy the asset itself, but only a special contract with fixed profits and risks. If the conditions of the contract are fulfilled at the agreed time, then the trader will receive an income, if not – loses the stake and no more.

How to start earning on trading binary options?

To trade binary options really made a profit, you must initially take into account some of the nuances.

The first thing to emphasize is the choice of a broker. With the growing popularity of the financial instrument under consideration, a large number of companies offering brokerage services appeared. It is important not to make a mistake initially in order not to lose your starting capital, but to increase it in the future. Choosing a broker, give preference to companies that work in the market for more than a year, also pay attention to the availability of certificates and licenses of authoritative regulators.

The broker should have a convenient client service for you – a program that provides access to the customer’s trading space. Best of all, if there is a demo account for the opening of which you do not need to contribute, but by trading on it, you can determine the quality of the trading terminal. Also pay attention to the amount of the initial deposit and the minimum amount of the transaction.

Secondly, a trader, especially a beginner, should not immediately rush into the battle and try to conclude deals at random. It is better to spend a little time learning and developing your own strategy of behavior in the market. Only weighted and competent tactics will help to get the desired profit. Very well, if the broker chosen by you offers free training, video courses, e-books, dictionaries, and in the search for this information will not need to waste time on the Internet. Very good results are given by online seminars, which are conducted by experienced financiers. During these classes, you can not only receive new knowledge, but also ask questions of interest. Only after passing the thematic training and fixing it in practice can you start to trade binary options real trading.

How to choose a binary options trading strategy?

At once I want to note that no strategy is able to make a trader rich without his participation, desire and aspiration. How many indicators and complex algorithms it does not include, the trader still needs to be able to analyze the market independently and monitor its movement, rather than hoping that the indicators or advisers will do everything for it.

There are simple strategies, indicator and graphic systems, which include precise rules for opening transactions in the market of binary options. These rules must be strictly adhered to, at the same time the trader should be able to adjust technical tools to the specifics of his trade, understand market processes, and this can only be achieved in practice.

Trading in the financial markets, including binary options, do not forget about the management of capital. Even the most profitable strategy can not provide 100% profitability for each transaction, therefore it is necessary to observe such simple and at the same time important rules of risk management:

• risk no more than 5% of the total deposit in terms of 1 transaction;
• Do not try to recoup after a losing deal, it’s better to rest and relax;
• Initially, it is not necessary to conclude more than 3 transactions per day.

Compliance with these rules will protect your account from serious drawdowns.

Best Binary Options Brokers 2020:
  • Binarium
    Binarium

    Best Binary Options Broker 2020!
    Perfect For Beginners!
    Free Demo Account!
    Free Trading Education!
    Get Your Sign-Up Bonus Now!

  • Binomo
    Binomo

    Good Choice For Experienced Traders! 2nd place in the ranking!

Trading binary options is an art!

You have been trained, have chosen a strategy and worked it out on a demo account, now is the time to open a real account and start making money. The principle of bargaining on binary options is simple, but the very process of trading requires a good level of training and preparation:

• Choose an asset that you want to profit from trading;
• Set the expiration time of the option;
• make a forecast about the direction of the price movement at the time of expiration, determine whether it will be higher or lower than the current one;
• Determine the amount of investment and buy a contract.

If you know the basic nuances of working in the market of binary options and strictly observe them, then obtaining the desired profit is only a matter of time.

We recommend for trading a trading platform from a proven broker of binary options and the Forex market – Finmax:

“General Risk Warning: Binary options trading carry a high level of risk and can result in the loss of all your funds.”

10 Golden Rules Of Binary Options Trading

I’ve found a very brief, but very true article online. I can not remember where I found it, but here it is. It talks about 10 rules that were written for stock market trading, which is not too different from binary option trading, so we can use these rules and apply them for our options trading.

An excerpt from this eBook:

Just because the Forex market is online twenty-four hours a day does not mean that you have to trade all that time. If you are doubtful, do not trade at all. Instead, analyse the market and use the knowledge you get to make more profitable trades in the future.

10 Golden Rules eBook

The truth about Forex is that it’s a very intense and stressful activity that requires a complete control of emotions. Forex is merely an unrealized idea of “get-rich-quick”. Learning to trade Forex will require patience. Mastering the basics will, of course, require some time. Those not disciplined enough and impulsive will soon find themselves “loosing one’s shirt”. Those of you, that don’t follow the basic investment principles or those that can’t control their emotions, will soon find themselves loosing their investments. However, those of you who will follow the given investment principles will benefit greatly on the most variable and liquid markets. 100% return on investment within couple of days,won’t be anything extraordinary and actually 1000% return wouldn’t really surprise an experienced trader. It is well-known that Forex has become the most popular way of investment. As with any other company, even Forex has its own rules. Learn Forex, strive for success and make wise decisions. Our small book will introduce you to the 10 golden rules on Forex trading that every beginner should follow, if he wants to succeed.

  1. The market is always changing and these changes are sometimes really hard to follow. For the start, it is not a bad thing to use these changes for your own good, until you won’t be thoroughly prepared to trade on Forex.
  2. There are a lot of novice traders that trade in various directions. You have a great chance to make a profit on both upside or the downside of the trade. Trading in the direction of the trends give you a chance to make the best trades and increase your chances to win.
  3. Set up a demo account to thoroughly understand the Forex trading. Using the demo account will give you a chance to try how the real trading works and will also prepare you for it. On the other hand, it wouldn’t be a bad thing to stay realistic and always remember that using your demo fund require the same caution as operating the real funds. Otherwise trading on the demo account doesn’t have any point.
  4. There are a lot of companies making various programs aimed at predicting future trends. However the question is, if this program would really work, why would these companies share it? These kind of an opportunity or a secret is not normally publicly shared, is it?!
  5. Trading requires a lot of nerve and you’ll come across a lot of obstacles that will set you back to the beginning. The moment your emotions take over, it’ll force you to open the trade too early and eventually lead to a loss.
  6. There is no need to trade 24/7, even though you can do so, on Forex. If you have any doubts, it’s better to not trade at all. It’d be better to continue your analysis of the market to get the necessary skills that will make your trades more profitable.
  7. Because trading is a very emotional activity, you have to prepare your strategy. It’s necessary to follow the rules to protect you from yourself.
  8. Avoid complicated strategies that require a lot of complicated techniques. They will only make you more confused and you’ll miss a lot of good trading opportunities.
  9. Leverage can make you a lot of profit on Forex, but it also brings a great potential risk to loose your capital. As a novice, never risk more than 1-2% of your margin account. In the case of a long-term trade, it’ll provide you with a great profit and minimal risk of loosing your investments.
  10. Learn to habitually analyse both of your trades, the successful once and the once you’ve lost. This will give you an idea what it was that made the trade successful and you’ll be able to use it continually in the future.

It is true that these are the most basic rules for trading, but they are really necessary. If you enjoyed this book, make sure to leave us a comment below the article.

Author

More about the author J. Pro

Unlike Stephen (the other author) I have been thinking mainly about online business lately. I wasn’t very successfull with dropshipping on Amazon and other ways of making money online, and I’d only earn a few hundreds of dollars in years. But then binary options caught my attention with it’s simplicity. Now I’m glad it did because it really is worth it. More posts by this author

How To Make Money Trading Binary Options

Now that we have a basic idea on how binary option trades work, let’s take a look at a simple example.

Let’s say, you decide to trade EUR/USD with the assumption that price will rise.

You then look at your trading platform and see that the broker’s payout is 79% on a one hour option contract with a target strike of 1.3000.

After much deliberation, you finally decide to buy a “call” (or “up”) option and risk a $100.00 premium.

You could say it’s similar to going “long” on EUR/USD on the spot forex market.

Ending Scenarios After Entering a CALL Option Gain/Loss
Expiry price is above the strike price
(in-the-money)
$100.00 x 79% = $79
$100.00 + $79.00 = $179.00
You gain $179.00 on your account.
Expiry price is equal to or below the strike price
(out-of-the-money)
You lose your stake and your account declines by $100.00.

As you can see from the calculations above, the risk you take is limited to the premium paid on the option.

Payouts in Binary Options

Now that we’ve looked at the mechanics of a simple binary trade, we think it’s high time for you to learn how payouts are calculated.

More often than not, the payout will be determined by the size of your capital at risk per trade, whether you’re in- or out-of-the-money when the trade is closed, the type of option trade, and your broker’s commission rate.

In the example given above, you bet $100 that EUR/USD will close above 1.3000 after an hour with your broker offering a 79% payout rate. Let’s say that your analysis was spot on and your trade ends up being in-the-money. You would then get a payout of $179.

$100 (your initial investment) + $79 (79% of your initial capital) = $179

Easy peasy, right? Don’t get too excited just yet! You should know that there’s no one-size-fits-all formula for calculating payouts. There are a few other factors that affect them.

Factors in Payout Calculations

Each broker has its own payout rate. For starters, Forex Ninja’s intel shows that most brokers offer somewhere between 70% and 75% for the most basic option plays while there are those who offer as low at 65%.

Various factors come into play when determining the percentage payout.

The underlying asset traded and the time to expiration are a couple of big components to the equation.

Next, the broker’s “commission” is also factored into the payout rate. After all, brokers are providing a service for you, the trader, to play out your ideas in the market so they should be compensated for it.

The commission rate does vary widely among brokers, but since there are so many binary options brokers out there (and more coming along), the rates should become increasingly competitive over time.

When a Binary Option Trade is Closed

As mentioned before, binary options are typically “all-or-nothing” trading instruments in that the payout or loss is only given at contract expiration, but there are a few brokers that allow you to close a binary option trade ahead of expiration.

This usually depends on the type of option, and usually it’s only available within a certain timeframe (e.g., available 5 minutes after an option trade opens, up until 5 minutes before an option expiration).

When trading with a binary option broker that allows early closure of an option trade, the value of the option tends to move along with the value of the underlying asset.

For example, with a “put” (or “down”) option play, the value of the option contract increases as the market moves below the target (strike) price.

This means that, depending on how far it has moved passed the strike, the closing value of the option may be more than the risk premium paid (but never greater than the agreed maximum payout).

Conversely, if the underlying market moved higher, further out-of-the-money, the value of the option contract decreases and the option buyer would be returned much less than the premium paid if he/she closed early.

Of course, in both cases, the broker commission is factored into the payout of an option trade when closed early.

So before you decide to jump head first into trading binary options, make sure you do your research and find out what your broker’s payout rates and conditions are!

Best Binary Options Brokers 2020:
  • Binarium
    Binarium

    Best Binary Options Broker 2020!
    Perfect For Beginners!
    Free Demo Account!
    Free Trading Education!
    Get Your Sign-Up Bonus Now!

  • Binomo
    Binomo

    Good Choice For Experienced Traders! 2nd place in the ranking!

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Guide How To Become Binary Options Trader
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