How to Make Money with Binary Options Trading.
Binary options trading is no longer new – it has grown in popularity over the years. On a daily basis, people earn a lot of cash by just speculating whether or not a currency pair will rise or fall. If anyone is looking for a cool way to make good money without much investment, then binary options trading is the real thing.
The best thing about it is that you can trade at any time and from anywhere. That makes it a perfect earning option for everyone – whether as a side hustle or as full-time. In this post, we will be giving you some tips on how to make some money with binary options trading. So, read on!
Table of Contents.
What Is Binary Option And How Does It Work?
Binary options allow investors to predict whether an asset’s price will go up or down in the nearest future. This time span could be anything from 60 seconds to hours, giving you a wide option when it comes to how many times you can trade across any global market.
Binary options trading means choosing between two outcomes. For instance, you can choose a currency pair like EUR/USD and predict if the price will fall or rise after some time. If your prediction is correct, you will make some money, which is most times, double your initial money. However, if the prediction is wrong, you may lose your money. That is why you need to learn the rope and arm yourself will all the valuable tips you can get before venturing into binary options trading.
You Will Need a Broker To Start With.
Before you can start trading binary options, you will need a regulated broker account. This is very important as it can either make or maim you in your venture. So take your time when choosing a broker and only go for the best. If you are a beginner trader, open a demo account with a broker and try out the platform before you deposit any money. Compare the offers and features of the various brokers before making a decision.
Is Binary Options Trading Legal In the USA?
Yes, trading binary options is absolutely legal in the US. However, it is a heavily regulated market in order to protect the residents of the US – but it is completely legal. What is illegal is for non-US-based brokers – known as off shore brokers, to solicit US residents. This could bring heavy fines on any broker that did that. Because of that, the majority of brokers out there don’t accept traders based in the USA.
Does that mean there are no options for US traders? That is not it. There is still a wide range of options for US traders, where they can trade legally, at reputable brokers, fully regulated by the CFTC. A few among brokers that serve US residents are Nadex and CBOE.
What Are The Ways To Make Money With Binary Options Trading?
There are different ways to make money with binary options trading. While the most common type of binary option
is the simple "Up/Down" trade, there are also some other options available to investors. However, one thing common to them is that the outcome will have a "binary" result (Yes or No).
So, let’s take a look at some of the various types of binaries you can trade to make money.
Up/Down or High/Low: this is the most basic and most common type of binary option. Here, you will be required to predict whether the price of the underlying asset will finish higher or lower than the current price when the option expires. Touch/No Touch: these binaries have set levels, higher or lower than the current price of an asset. So, you will be required to predict whether the asset’s price will ‘touch’ those levels at any point before the option expires. This is also a very common type of instrument that many brokers offer. In/Out, Range options: here, options set a "high" and "low" figure. You will then be required to predict whether the price will finish within or outside the set levels before it expires. Ladder: these options behave like a normal Up/Down trade, but instead of using the current strike price, the ladder will have preset price levels.
Tips for Making Money with Binary Options Trading.
#1: Choose the right asset to trade.
This is the first decision any trader will take when looking to trade binary options. Of course, it is a very important one. You need to choose the right assets. There are more than 150 financial assets in the market which you can trade, including stocks, commodities, forex pairs, and indices. When choosing an asset, you need to go for one that has sufficient liquidity and volatility because money in binary options is made from price movement. Such assets include EURUSD, USDJPY, Oil, and Gold.
Also, different assets have different ideal times for trading. For instance, American stocks and indices are ideal for trading between 1300hrs-2300hrs GMT when the New York market is open.
#2: Incorporate a news trading strategy.
This can help minimize your trading risks and boost profitability. Economic data is one major catalyst for price movement in the binary options market. That means a trader who tracks economic data releases will have a better chance to profit greatly by anticipating such movements. You can track data releases using some economic calendars which can be found on most online sites.
#3: Diversify trades.
Don’t put all your eggs in one basket. Use a broker that allows you to trade different types of binary options contracts. Diversifying will also help boost your profitability in the market. That means you will be able to enjoy trade from a wide range of assets, hence increasing your chances of making a good profit from your trades. In some contracts such as weekend options, traders can make up to 500% on a single transaction. Now, if your broker doesn’t allow for such a trade, how will you benefit from it and make real cool cash during weekends?
#4: Protect your capital.
While beginner traders focus on making money, professional traders would rather concentrate on risk management. One sure way of achieving consistent success in the financial markets is to efficiently know how to manage risks. Make sure that you are not risking more than 5% of your capital on any one trade. Also, know that there are many trading opportunities scattered on the market and no trade is better than the other. Plus, take full advantage of the several innovative in-trade management features available to you on the platform on which you trade.
For instance, you can use a feature such as the Early Close feature present on most platforms to reduce your overall loss. The feature allows you to exit your positions before expiry. That can come in handy in helping you exit good trades that may potentially turn bad – and exiting early enough.
#5: Use robots and signals.
Keep yourself ahead of other traders by taking advantage of binary robots and signals. Robots are software usually offered by brokers to help you automatically trade even when you can’t. Whenever the opportunity comes based on the preferences that you have set, the robot kicks in and trades for you.
On the other hand, binary signals are a type of service that automatically notifies you when is the best time to put or call your chosen asset. If you are the type that is always on the go and couldn’t check for the latest market trends regularly, signals will come in handy to keep you informed so you can make informed financial decisions. Both beginners and expert traders use signals.