Top 10 the most frequent mistakes in trading binary options

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Binary options contracts are options contracts that attract either a predetermined amount of money (in the case of successful outcomes) or nothing at all (in case the prediction happens to be wrong). As such, the basis of binary options trading is as simple as making a yes or no decision. It is its simplicity that has made it very popular.

In order to invest in the binary options market, one of the first decisions that you have to take is opening an account with a binary options platform provider, also referred to as a binary options broker. This could be a challenging task, especially if you are new to the market. This is because there are a number of brokers out there in the market. While some are genuine, some others are scammers. And, it goes without saying that you need to work with the best binary options brokers in order to achieve your financial goals. Read on to find out how you can identify the best binary options brokers.

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Regulation is probably the first aspect you should look for when choosing the best binary options broker to work with. Regulated binary options brokers are definitely more reliable than those that are not regulated. Such brokers keep your (traders’) money and their money in separate accounts. Moreover, they would be capitalized as stipulated by the regulator. All these mean that your money will be safe with regulated brokers. Therefore, it makes sense to work with a regulated binary options broker. However, you should also consider all the other criteria discussed in the article prior to choosing a broker that caters to your specific needs.

#1: Best binary options brokers often provide responsive customer service. You should take a serious look at this criterion because you may have to contact a customer service representative of the broker for various purposes. Further, time is the essence of binary options trading. If the customer service department is not responsive enough, you could lose a great deal of profits. Therefore, it pays to take some time and thoroughly check out the efficiency and effectiveness of shortlisted brokers prior to signing up.

#2: The types of trades offered brokers are different. Some brokers place restrictions to limit the profits you can accumulate. New traders may not be in a position to quickly discern the designs of unreliable brokers. If you are an experienced trader, you may easily find out such ploys employed by brokers. Therefore, it is important to exercise a lot of caution when choosing binary options brokers.

Actually, you should look for binary options brokers that offer transparent terms and conditions of trading. It is, therefore, a good idea to open a demo account and try out the broker’s platform to have a firsthand experience of the terms and conditions. Demo accounts often mimic the conditions prevailing on the real trading platform. Further, demo accounts can be used to try out various strategies before implementing them on the real trading platform.

#3: The binary options trading platform offered by top binary options brokers would be simple and easy to use. You need to check out the platform to see if you are able to execute orders quickly on the platform. This is very important because binary trading is a very time sensitive affair and you should be able to time your trades. You cannot afford to waste time searching for the buttons and navigating the platform. As such, you must ensure that the brokers you want to work with are offering platforms developed by reputed companies in the industry.

If travel a lot, it is important that the broker you want work with offers mobile apps. This will help you to access your account and execute trades on the go.

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!

#4: Payout provided by binary options brokers for successful trades is another aspect that you must check out. Often, best binary options brokers pay as much as 70 to 90 percent of the amount invested in a contract as profits. Some brokers even promise to return a part of your investment in a contract if your prediction happens to be incorrect, helping you to cut down your losses.

Generally speaking, a broker that pays you 70 to 80 percent of your investment for in-the-money trades and returns about 10 to 15 percent of the investment for out-of-the-money trades is the right broker to work with, keeping in mind the fact that your goal is to make money through binary options trading.

The factors that have been discussed above are the most important ones to be ascertained if your goal is to work with the best binary options brokers and generate profits. However, this is not an exhaustive or comprehensive list of aspects to be checked when choosing the best binary options broker. Some of the other aspects that you must consider are listed below for your immediate reference:

  • What kind of underlying assets does the broker offer to you for trading?
  • Are the underlying assets offered for trading represent assets from all the asset classes like the currencies, commodities, indices and stocks and from markets around the world?
  • Does the broker offer binary options contracts with different expiration times?
  • How much bonus does the broker offer on deposits?
  • How much money should you deposit to start binary options trading on the broker’s platform?
  • Does the broker offer platform and customer services in multiple languages? More importantly, you must check whether these services are available in the language you are most comfortable with.
  • What options in terms of currency and methods does the binary platform provider offer to you for depositing funds into your trading account?
  • Does the withdrawal policy of the broker suit your needs?

Ultimately, it all boils down to you investing some time and effort in order to carry out the research required to choose the best binary options brokers. Actually, now is the best time to explore the binary options market, especially because of the uncertainties prevailing in the financial markets around the world.

Top Ten Binary Options Trading Mistakes

Top Ten Binary Options Trading Mistakes

Submitted by adil on Fri, 01/18/2020 – 05:01

A few years ago, not many people had heard about Binary Options trading. But today it is quickly catching on as a proven way to make money on stocks. Many still consider making money from Binary Options as mere luck. What they don’t know is that a decision made in such trading has a lot of reasons and researched data behind it. It is not mere gambling but a calculated move, mathematically proven to get results. Initially it is important to not make the mistakes that most beginners make with Binary Options Trading.

It is very difficult for a trader to survive in such a competitive market without taking assistance from brokers. Traders usually rely on guesses and fake signals for taking their investment decisions. Investment based on fake information results in severe losses, which are hard to overcome.

Some traders fully rely on market alerts for buying and selling commodities or shares, which is not wise enough as market alerts are not always reliable.

Some markets are highly volatile in nature, which creates more problems for traders. When traders reach to any decision then market trend suddenly changes causing loss.

Some other traders fully depend on their luck, which is yet another mistake. They accept loss thinking that it was their bad luck. However, luck plays an important role in our success but this does not mean that we stop doing any effort to avoid loss.

If you have also come across such a loss then you are not alone, as thousands of other traders have already lost all their savings in trade due to their own little mistakes.

Now is the time to learn lessons from these mistakes. Instead of losing hope, you must try for one other time but this time you have to follow my advice. Following are Top 10 Things that you need to consider while trading.

Do Your Homework

You can’t expect to just make money all the time by basing your decisions on just luck. Try to understand and read the graphs. Check to see if you can predict the nature of the graph and practice doing that till you get it right most of the time. Only then invest your money.

Don’t be Greedy

Putting money on a risky move to get higher dividends may pay back once or twice but it is a risky move to pull unless you know what you are doing. Do not equate risk with profit.

Always Start Small

Don’t jump in by investing huge amounts. Try investing smaller amounts like a few dollars and see if you are making money. Test the waters. If your predictions are turning out to be right, try asking the professionals how they work with larger amounts. You can also check sites for videos and info on how others do it and learn.

“Gut Feelings” don’t always Work

Avoid basing your decisions on “gut feelings”. Yes they might work for you now and then but the odds are that you will lose money if you keep basing your decisions on emotions like that.

Don’t Try Hedging your Position

If you see your stocks slipping in the direction opposite to what you had initially predicted, do not fear. The market might take a few twists and turns. What you should never do is invest in a binary option opposite to your initial investment to cover your losses. This is a bad move. Instead wait it out.

Experience is your Best teacher

Nothing or none teaches you better than your own experience. So don’t miss out on it. Make sure you have loads of experience trading before making bigger investments.

Know When to Quit

his is a very important lesson. Most people say it’s best to quit when you are ahead before you it gets to your head and you make decisions you regret. Also remember that if you aren’t doing well, it is good to quit to. Make sure your decisions are based on your reading and charts and not on emotion.

Only Money can Help you Make Money

It takes good investment to make big money. You can keep trading with small investments and not make anything substantial at all. But this doesn’t not mean that you go with a large investment scheme. Always make calculated moves.

Weekends are Not for Beginers

Weekends might offer you more spoils of war but do not be tempted easily. It is quite possible that you might lose more during the weekends, so stay away from trading unless you are a professional.

Do It for the Fun of It

Binary Options trading is a smart way to make money rather than droning in your office for hours. However it requires its own preparation and loads of patience. So unless you start loving it you won’t get far. Enjoy making money this way and dedicate yourself to it. If you are having fun doing it, the chances are that you will get better at it naturally.

It takes time to learn about anything and it is the same with binary options trading. Take time and do your homework. It will pay you back in great dividends!

The Top Mistake Binary Option Traders Make

Thinking of binary options as a ‘yes or no only’ proposition is the top mistake binary option traders make.

Binary options have become a hot new topic. Most often binary options are thought of as a simple yes or no contract. Either the market will or will not expire above or below a certain price at a certain time.

If you choose correctly, you get the maximum profit payout. If not, you lose your investment.

So if this is what a binary contract is, then what’s the mistake?

Let’s look at three examples:

1) If a trader trades call or put options, whether it be strangles, butterflies, verticals, diagonals, calendars, or just plain vanilla calls and puts, most would agree that it is unwise to hold the trade to expiration.

2) Likewise, in futures contracts, traders do not buy or sell the future and hold onto it until the last trade date, and rarely ever until the delivery date.

3) A stock trader does not buy a stock and wait to cash it in until a company does a stock buyback program.

Why do stock traders, future traders, and option traders close their positions early?

There are a multitude of reasons such as:

  • Limiting the loss
  • Locking in a profit
  • Account size and margin issues
  • To relieve capital and move on to the next trade
  • The list can go on and on.

So why wouldn’t a binary option trader consistently close trades before expiration?

1) They incorrectly believe that binaries where meant to be held until you can’t hold it any longer.

This is no more true for a binary than any other financial instrument, option, future, stock or otherwise. Maybe they believe this as they have only seen bucket shop binaries or someone told them this is how they work. In any case, they are misinformed.

2) They do not know that a binary option contract can be closed early, as they have not traded on Nadex.

To be fair, many people are not aware that you can close a binary trade early. Although this is not the case with binaries everywhere, on the Nadex exchange, all contracts can be closed before expiration to limit losses or lock in profits. This can help a trader trade more advanced strategies and help keep a profitable trade from becoming a losing trade.

3) They are greedy and want maximum profit.

Traders will buy at $10 and see a binary go up to $95 (maximum value $100) and they want that last $5. Maybe they will get it. If not, it turns around and goes back to $0 and they just gave up an $85 profit. And if they do get the final $5 in profit, do they consider the cost? They could have closed the trade and opened a couple of additional contracts with the freed up capital instead of waiting for that small $5 profit.

4) They have not been taught effective take profit methods.

For example, a binary contract on Nadex will be priced at $50 (give or take a few dollars in bid/ask spread) when its strike is at the same price as the underlying market. So a trader can buy a low risk binary for about $20 risk, targeting a price level and exit when it hits it for about $50 per binary option.

Or a trader may choose a higher probability binary option with a risk of $70, (think deep out of the money credit spreads) with a maximum profit of $30. If it moves up to $95, they take a $25 profit. They don’t risk the market retracing and losing the profit and possibly a lot more. Or, they exit the trade if the market hits the strike at $50 and take a small $20 loss on the trade.

5) They do not understand that a binary option is delta.

It is representative of probability at expiration. So, if you buy a binary at $70 time and time again and hold until expiration, you should make $30 70% of the time and lose $70 30% of the time, resulting in a break even (less fees) result. Basically, a trader who does this is an inexperienced trader and though they may have some good fortune, the probabilities will catch up and wipe out all the profits eventually.

Exit before Expiration

In summary, if you are trading binary options, learn to take profits before expiration. Know at what price you will be taking profit and at what price you will be exiting to limit losses, when applicable. Though all losses on binary option contracts are limited, there is no need to take the maximum loss on a binary option trade any more than there is on any regular option trade.

Don’t lose the common sense that you apply to other trading instruments when it comes to having an exit versus a buy and hope plan. And you will be on the road to trading binary options more effectively .

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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