Binary options trading looks so easy – so what is the catch?
There are several trading instruments which different people relish, we have the forex and currency trading, the dividend trading, CFD trading and then we have binary options. This type of trading however greatly differs from other instruments, because you have to decide only whether the price will go up or down.
Your task is not to predict how much the price will change, and that’s the beauty of binary trading.
In this article, I would like to share my experience with binary trading. Many traders might have already heard about this type of trading and its advantages, however, not everyone knows how binary options look like in a real practice.
Let’s firstly explain what those binary options really are and where you can trade them. Binary options are a financial instrument which can be traded at binary brokers. And what can you trade? You trade underlying assets. So basically any stock, commodity, currency pair or index that you want.
Payouts from trading classic binary options are from 70% to 91%. These numbers are not exactly fascinating, however, if you trade with proper binary strategies you will see that you can make from this type of trading a very solid extra income.
You should also be aware of the fact that binary strategies don’t work in 100% cases of your trades and there is no trader on the planet who could make every single trade profitable, it just can’t be possibly done. But that’s fine, our goal is to make at least 60% + successful trades in order to earn some good money from trading binary options.
Let’s have a look how simple it is to create a trade.
Binary trading – real examples
- In the first step you are going to choose an underlying asset you want to trade – we have chosen the currency pair EUR/USD (the most traded asset)
- You decide how much you want to invest in this trade
- You pick when the trade should end, that is what we call the expiry time. Once the trade expires we will know whether we earned something.
- Predict the direction in which the price will move – Either Up or Down
- Your whole settings finish with clicking on the “buy’ icon.
What’s the catch with binary options trading?
As it was already mentioned, you only decide the direction in which the price will move.
So for inexperienced traders, this might look like an easy thing to do. However, in practice, it can be very difficult and without using binary strategies it would not be even possible to make any money.
Different traders like using different patterns and techniques when creating their trades. I like to keep it simple, for technical analysis, I use in most cases just price action and I check if there is any news to be published. You can check this information in any economic calendar.
You can either try trading on a real account with your real money, but I would not recommend it because it not very responsible, especially for beginning traders. There are some binary brokers who offer free demo account, where you can all of this test it for yourself, let’s see how they work
Binary trading on trial – demo account
Do you like the idea of trading binary options, but you are too scared that you won’t be successful right from the start? Try free binary demo account which will guarantee you that you won’t be throwing your money right from the window.
How does the demo work? Exactly the same way as a real account. Yes, that’s right, there is no difference between a real account and a demo account. Well, maybe one that you trade with imaginary funds and you can’t earn anything with them. But that’s okay if you are new to binary options. Some brokers offer demo version totally for free (you don’t even have to make your first deposit to your real account) and some others offer them after first deposit.
Therefore I highly recommend demo version to all novice traders who don’t have any real experience with trading yet. It’s a risk-free ticket, how you can pretty easily try to enter the world of binary trading. So don’t hesitate and create your demo account today, because you have got nothing to lose.
This was a guest post from Michael at Trading Beasts. While we have focused thus far on buying and holding equities, forex and binary options trading are things we’ve started to look into as possible future opportunities. Trading Beasts has plenty of great resources to get you started.
If you liked this guest post, check out this one from our friend Robbie at the Stock Street Blog. And if you are interested in sharing your own guest post or partnering up, get in touch via email or twitter!