8 Money Management Techniques

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Stock Market Clipart 18The risk management approach taken by a trader can be the deciding factor in many cases as to the outcome of a trading session. In this article, we emphasize the importance of traders having a risks management strategy in place before they enter the market. That said we’ll go into the exact steps that should be taken by a trader to come up with an effective risk management strategy.

We will discuss 8 ways that will help any trader manage their losses. Each step will get traders a little bit closer to more mindful and hopefully responsible trading which minimizes loses.

1. The Tried and True Capital Management Approach

As a trader, there are two ways in which you can handle your capital. You can either choose the conservative approach for a more cautious trading strategy or a more aggressive approach which is generally reserved for traders with experience. Regardless of what strategy you choose, the important part is to make sure that you stick with it.

The conservative approach will mean using an investment which isn’t higher than 1% of your balance in a single deal, and probably not over 3% for the entire balance in a single go. For instance, you can only have three deals open at once, and the total investment across them shouldn’t exceed 3% of the total account balance. It is a method that’s often best for novice traders since they don’t require as much money to test the waters and get some small wins.

Another instance of this is that let’s say that your total balance is $100, you should only trade with around 3% at a time which is $3. So, you can only trade with a $1 investment for each asset or currency pair.

The more aggressive method will raise your investment cap to 5% in a single deal but not exceeding 15% of the total balance. So, a trader using this approach can open three deals, each with 5% of their total balance. The method is best used by more experienced and aggressive traders who understand what they are doing based on their experience. However, traders should always diversify their risks making sure that the losses they experience don’t exceed 5% at a time.

2. Asset diversification

The decision to choose either one or two assets only and stick with them can be risky. The market is unpredictable at best, and opening up multiple deals with the same two assets, for instance, can lead to unnecessary losses. Generally, an experienced trader will choose around 4-5 assets and mostly across different instruments, i.e. Forexf, Stocks, ETFs, Cryptos etc. Each type of asset is available at a different time, which means that there are different trading conditions. By diversifying, traders can manage loss more effectively while mitigating risks to a great extent.

3. Locating the right entry point

We agree! There is no way to be 100% sure when entering a deal that there was a better opportunity. In fact, there always are better opportunities. Generally, it includes utilizing technical indicators, relying on data received and following the news and not just a gut feeling. All trades or entries need to be executed by keeping risk management in mind, which will protect your capital and raise the odds of making a profit.

4. Holding Trades for long timeframes

While many traders rely on indicators, their signals aren’t perfect. They can also be slightly misleading often on extremely short timeframes. That’s why as a newbie trader you’ll want to trade on often longer timeframes. It goes without saying that short-term trading has many inherent risks involved, because traders will rely mainly on their intuition instead of hardcore analysis tools, and that leads to losses.

When you hold a trade for longer, it allows you to develop a more long-term strategy to analyze assets in-depth. That said the trading periods would heavily depend on the trader’s chosen methodologies.

5. Hedging

Hedging is a technique that when leveraged, will help to mitigate and manage risks considerably. The goal of hedging is to open a reverse position for the same asset to protect your capital if the price of that asset goes up often in the wrong direction. One instance of this is that traders will often open both a “Buy” and “Sell” position for the same asset like a currency pair to cover the loss regardless of which direction the asset moves in.

While hedging will help to manage losses, if misused, it can work against a trader since it eliminates their potential to make a profit from the outcome. That’s why it is a technique best reserved for seasoned traders.

6. Trading limit

Seasoned traders often follow a handful of rules when trading every day. The most significant of these rules is to set a limit for how many deals they will enter into a day and limit unsuccessful deals for the day. Setting a limit is important since it prevents a trader from giving in to emotions when they are exhausted. Taking a break in between trading sessions is necessary to cope with all the psychological and mental stress associated with it. Plus, a break allows traders to gather their thoughts.

7. Analyzing mistakes

Statics sadly show that up to 95% of traders aren’t analyzing their performance and aren’t tracking their deals. That’s why they aren’t able to recognize any mistakes they may be making, and because there is no record of it, those issues can’t be addressed. We strongly advise that all investments and the outcome from them should be tracked for a practical approach to trading. If not, you will be doomed to repeat those mistakes.

8. Regular withdrawal of profits

It is important to withdraw part of the income either every week or every month, depending on what a trader is comfortable with doing. Usually, 30%-50% should suffice. Even if those amounts aren’t substantial, it prevents you from getting discouraged, and that helps you focus on trading.

Now, these are 8 of the most effective trading tips which, when combined with a solid strategy, will mean profits. You will always need to take a careful and well thought of approach to be a successful trader.

Open a Free IQ Option Demo Account by Clicking the Green Button Below

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

Binary and digital options are prohibited in EEA

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. Between 74-89% of retail investor accounts lose money when trading CFDs. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. The financial products offered by the company carry a high level of risk and can result in the loss of all your funds. You should never invest money that you cannot afford to lose.

Start trading now with our recommended Binary Options Brokers.

Start trading now with Binary Option Robot

Recommended Brokers:

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What Is the Best Possible Time to Trade

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When Should You Trade?

Now one of the goals of any trader is to discover and then use the best entry point and then exit at the right time. In 80% of the cases finding the right time to enter determines how much money you will make. However, as easy as it may sound, the ever-changing markets make it challenging to find the optimal entry and exit points.

As seasoned traders, we understand that there is no single surefire way to know the best time to trade because if anything, we’ve learned that markets are unpredictable. However, as challenging as it may be, it is still possible to study the markets and find patterns, to find the best time to trade.

Following Trading Sessions

One of the best things about the financial markets is that they are always on 24/5. When a trading day ends in one part of the world, it is only the start in the other. Trading sessions also overlap each other, which creates brilliant opportunities for trades of all types.

Most traders will follow just 3x trading sessions with peak activity. Generally, it is the North American, European, and Asian trading markets that are followed. In particular, they tend to be Tokyo, New York, and London sessions.

When business is conducted in these regions, that’s when there is the most activity, since almost every bank or corporate entity will conduct their business in these markets. That being said, let’s examine trading sessions more closely.

Asian Trading Session

The trading session in Asia, aka Tokyo, starts at 23:00 GMT and runs till 8:00 GMT. While the Asian session mainly includes Japan, but it also includes New Zealand, China, and Australia. That’s why the timeline for the session extends slightly beyond Tokyo’s trading session.

It has been observed that the Asian session may set the trend for other sessions that follows it. That’s why many seasoned traders know that they should pay attention to the events during these sessions. Assets like currency pairs, especially where the JPY is involved, will fluctuate.

The European Trading Session

The European session tends to overlap somewhat with the Asian session and also the session in America. In Europe, the markets open up at 7:00 GMT, and the trading session will last till 16:00 GMT. The time zone has multiple markets, including Moscow, London, Paris, and Frankfurt. The popular currency pairs or assets include the EUR and GBP. Generally, volatility increases during these sessions.

The American Trading Session

The American exchange and trading session does not just include North America, but also countries like Canada, Brazil, and Mexico. The session starts at 12:00 GMT and will run till 20:00 GMT. Since as mentioned above, the European and American markets tend to overlap; it makes for more dynamic price fluctuations, especially for the EUR/USD currency pair.

It is important to understand the timings of each trading session and factor that into your trading strategy. The high volatility will contribute to gains, but it can also be attributed to losses. Traders need to keep a close eye on the situation and then adapt their strategy accordingly.

Keep an Eye on the News

We often tell people that following the trading sessions isn’t enough. It isn’t as important as understanding the underlying reasons for the decrease and increase in asset volatility. Traders should check the news and use their economic calendar to spot these instances.

Out of the many reasons, there could be national economic, regional tax policies, non-farm payroll, inflation rate, etc. Furthermore, there may be significant weather events, political turmoil like protests, or even a tweet by the President of America, that can influence the market.

It is important to see the bigger picture, and then make the right connections as that will help traders plan their deals accordingly.

Conclusion

We conclude by saying that there is no right or wrong time to trade. Furthermore, there isn’t the best time to trade either. It depends on many different components. The answer to this question will vary depending on your trading approach, the market being targeted, and the timeframe. So, you will want to follow the market and make sure to check the news so that you are updated with the latest developments.

Open a Free IQ Option Demo Account by Clicking the Green Button Below

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

Binary and digital options are prohibited in EEA

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. Between 74-89% of retail investor accounts lose money when trading CFDs. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. The financial products offered by the company carry a high level of risk and can result in the loss of all your funds. You should never invest money that you cannot afford to lose.

Start trading now with our recommended Binary Options Brokers.

Start trading now with Binary Option Robot

Recommended Brokers:

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How To Identify Seasonal Patterns in The Stock Market

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Patterns for Trading AnalysisNow it is important to start with an understanding that almost everything that people do has some type of seasonal cycle associated with it. The stock market, too, has a season associated with it. While the phenomenon is pretty complex and hard to explain in a few words, it is possible for traders to take advantage of it. Furthermore, mid and long-term investors can also benefit from these changes. Some short-term traders may also be able to make a few bucks based on this information.

Now it is a commonly accepted perception that the majority of money in the stock market is to be made between November 1st and April 30th, which is also incidentally winter. On the other hand, the period between May 1st and October 31st, i.e., the summer, should be avoided. That said, this is just a legend with no data to back it up.

The so-called legend led two Massey University professors to draft two articles on this very subject in 2012 entitled “Are Monthly Seasonal Real?”, The other was “Three Century Perspective and The Halloween Indicator: Everywhere and All the Time.” The papers included results from over 108 countries over a period of 319 years, which suggests that the divide between Winter and Summer is real.

The two most profitable months for traders are December and January; on the other hand, October and September tend to be the worst. So, there is reason to believe that winter tends to be on average more profitable as compared to the hot season, though it does not mean that the markets will swing in this same direction each year.

Now, if you are to observe over 300 years of history, there are going to be many outliers. However, the pattern, in general, is what needs to be looked at, as it outlines the nature of fluctuations in different seasons. At the end of the day, it is up to you to use this knowledge as a trader.

How can this information be helpful? Now, if you are a bullish investor, you will opt to trade during months where the return is highest, i.e., April, January, and December. On the other hand, an investor that chooses to short a position, i.e., a Bearish one, will decide to trade in October, September, and July.

While seasons do play a role as observed, it also depends on your trading strategy. Though when it comes to playing in the financial market, every little bit of information can potentially give you an edge.

Open a Free IQ Option Demo Account by Clicking the Green Button Below

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

Binary and digital options are prohibited in EEA

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. Between 74-89% of retail investor accounts lose money when trading CFDs. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. The financial products offered by the company carry a high level of risk and can result in the loss of all your funds. You should never invest money that you cannot afford to lose.

Start trading now with our recommended Binary Options Brokers.

Start trading now with Binary Option Robot

Recommended Brokers:

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iqoption
$1
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Gold
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FX Advisor
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The Best Way To Manage Risks in Trading

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Most traders and even those who are new know that there is risk associated with trading. However, a great deal depends on what trading strategies are used, and the trader’s knowledge and experience when it comes to managing losses. That being said, let us examine the steps that are required to come up with a good risk management strategy.

Understand the Market

One of the prime reasons why traders have to bear heavy losses is a lack of market knowledge. Interestingly both experienced and professional traders contrary to popular belief do not rush into trades before consulting their strategy. In other words, they don’t rely on luck. That’s why it is imperative to make sure that you know the market and understand its trend lines. Guessing isn’t strategy and ends up doing more harm than any good.

Traders need to employ fundamental analysis, which is critical to gaining a better understanding of prevailing market conditions. While it sounds complicated on paper, in reality, it isn’t. Take, for instance, many traders might start small and just focus on one market which interests them the most. For instance, if you are interested in technology, then you’ll enjoy trading mainly IT company stocks.

Good technical analysis is very important and hugely beneficial. We have a few indicators on our platform, which will help you evaluate assets.

Draft a Trading Plan

The other reason why many people lose money is trading hectically. You are probably selling for a very small profit only to realize that the asset’s price is increasing. You are hoping that the price will reverse, and then holding on to a losing deal means you might lose even further. When you have a trading plan, these are the types of things you can prevent because there is control. Mapped out correctly, a trading plan helps to eliminate the pressure associated with uncertainty and consequently ensure that you will not make any panicked moves.

It is imperative to plan out all the investments you are going to make. Then set limits and a budget. Think about how much you can afford to lose at this point if things go south. What type of returns can you expect? Then consider the instruments you are going to trade as well as the exit points of each deal. The best way to manage risks is to scheme every step. When you are organized, it pays off in the trading industry.

Don’t Let Your Emotions Control Your Actions

Emotions can interfere in your decision making power, and that can affect you greatly. It can result in lost opportunities and losses. Furthermore, never let anger take over as it can cause you to trade irrationally.

Losses are hard for everyone to accept, but you need to know that it is part of trading. Moving forward and learning from those losses is important. Traders will go through five different stages when there is a loss, i.e., denial, then anger, later bargaining, then some depression, and finally accepting it. Many times traders will lose money in the way of realization. That’s why when traders know how to avoid this broad spectrum of emotions, and know how to retain their composure, it allows them to plan and be successful.

It is worth noting that it is essential to focus on the trading plan. Don’t get carried away, stick to the plan, and it will ensure profits.

Conclusion

It is essential to take some time out to map your risk management strategy. When you have a plan written down, it helps put you in the right mindset, prioritize and strategize all actions while managing any losses that may come your way.

Open a Free IQ Option Demo Account by Clicking the Green Button Below

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

Binary and digital options are prohibited in EEA

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. Between 74-89% of retail investor accounts lose money when trading CFDs. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. The financial products offered by the company carry a high level of risk and can result in the loss of all your funds. You should never invest money that you cannot afford to lose.

Start trading now with our recommended Binary Options Brokers.

Start trading now with Binary Option Robot

Recommended Brokers:

 Min. InvestMin. DepositMax. Returns   
iqoption
$1
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Gold
Review
FX Advisor
$1
$10
91%
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All brokers >>

Developing a Trading Strategy of Your Own

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Now many newbie traders may not realize this, but it is possible to come up with your own unique trading strategy. However, it is difficult to come up with a strategy that can guarantee steady payouts. So, the question is, how should you choose trading strategies also what to avoid during the process? That’s what we will be discussing in this article.

Perhaps the first thing we’ll tell newbie traders is not to set your expectations too high. Initially, that trading strategy isn’t going to make your rich. Think of it more as a starting point. So, below is where you should start.

The Five C’s of Strategy Building

Choosing a market. Start with a market you are comfortable trading in. Most people choose Forex, but it is different from stocks, bonds, and cryptos. So, the factors that govern movement in currency isn’t the same as what would move your stock position. That said, the trading strategy should be market-specific.

Choose a time frame. You should have a time frame in mind. Every time frame should be traded successfully. You should put both long and short term deals in place. Regardless of the time frame, the long term and short term strategies shouldn’t be identical.

Choose the tools of your trade. Many traders strongly believe there are bad and good indicators, and if they can find the right combo, they won’t have to make trading decisions. In reality, it does not work that way. Every indicator is essential at some time. That’s why it is possible to trade without using any indicators. That said, for novice traders, an indicator or maybe a couple will help them better understand prevailing marketing conditions. That’s why you should find a tool that’s best suited to your style of trading.

Effective Money Management Strategy for Binary optionsChoose an entry signal or signals. As a trader, the gut feeling shouldn’t be guiding you. Not having enough trading experience makes it difficult for you to predict how the market will move based on instincts. So, to improve your chances of success, it is essential to make a list of all the entry triggers. Triggers are defined as conditions that would allow for a position to be taken. Take, for instance, a sudden reversal of the trend or a piece of news that may affect the market.

Choosing existing conditions is also important. Exiting is just as important, if not more imperative than entering. Existing is defined as when you move out on the deal, evaluate your past performance, and then adjust the strategy used accordingly. Having an exit strategy is the final ’C,’ and the outcome of your entire deal hinges on getting this right.

Factors All Newbie Traders Should Consider

To start with, your trading strategy should be simple. The biggest misconception amongst newbie traders is that the more indicators and triggers they follow, the better off they will be. Having an overly complex trading strategy rarely ever works and, in most cases, results in losses. So, keep things simple.

You shouldn’t be afraid to make changes because adapting is the key to surviving as a trader. Continue to fine-tune your trading strategy until there are steady returns. Also, when a strategy fails to work, then it is time to use a new one.

Copying the trading strategies of other traders is perfectly fine. When you’re starting, using a successful trader’s strategy is a good way to start making money. When you emulate, more experienced traders there will be a success. However, you’ll want to develop a strategy of your own in the long term as you gain experience in the industry.

Open a Free IQ Option Demo Account by Clicking the Green Button Below

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

Binary and digital options are prohibited in EEA

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. Between 74-89% of retail investor accounts lose money when trading CFDs. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. The financial products offered by the company carry a high level of risk and can result in the loss of all your funds. You should never invest money that you cannot afford to lose.

Start trading now with our recommended Binary Options Brokers.

Start trading now with Binary Option Robot

Recommended Brokers:

 Min. InvestMin. DepositMax. Returns   
iqoption
$1
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92%
Gold
Review
FX Advisor
$1
$10
91%
Review
All brokers >>

Opteck Launches a New Mobile Trading Platform

opteck-logoOpteck has been on our list of TOP recommended brokers for years and it still manages to positively surprise us. Only recently we have reported that this binary options and CFDs regulated broker added more cool features. Among them was the above mentioned CFD trading that put Opteck services on the entirely new level, price alerts, economic calendar and advanced reports.

Earlier this month Opteck managed to make news once again: the broker reported launching a brand new mobile platform. What does it look like and how will it benefit our readers? Let’s find out.

Opteck New Mobile Trading Platform

Launching a new mobile trading platform is yet another step in the Opteck strategy to expand its market and attract new traders by adding new features and trading possibilities.

The new platform is designed for any kind of mobile devices such as smartphones and various tablets. The app offers real-time binary options and CFD trading experience and includes over one thousand global assets: stocks, forex, indices and commodities. Basically, all the choices that traders have when trading from their laptop or computer.

The app is very visually appealing. A full dashboard trading platform is displayed on smaller devices without losing any of its functionality. The features that are available for mobile traders include one-click trading, risk management tools, advanced portfolio reports and, of course, price alerts.

The interface is very user-friendly. It is easy to navigate and opening a trade takes just a second with one-click trading feature. Also, traders can download educational materials to their mobile devices using this platform.

Screenshot

Conclusion

Opteck is one of the most attractive brokers one can choose for binary options trading. It holds a valid license issued by Cyprus Securities and Exchange Commission (CySec). It also offers great customer support in many languages such as Arabic, Russian, Turkish and most European languages. In addition, it offers fast withdrawals and is extremely easy to use. Now that it is also possible to trade using the new Opteck mobile trading platform, trading with this broker is easier than ever.

Read our full Opteck Broker review.

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TraderVC Broker available on Binary Options Robot

Binary Option Robot logoLast year we at 7BO were simply amazed by how many interesting and positive innovations Binary Options Robot has brought to the binary options world. It has implemented new features such as a pop-up window every time a new signal happens on the market. It has also made it possible for its platform users to trade with a well-known 24Option broker.

And it looks like in 2017 Binary Options Robot is not planning to stop! Earlier this month it has announced the newest addition to its broker family. Now it is possible for traders to sign up with TraderVC broker. Of course, we went ahead to find out more about it. Read on!

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Screenshot of the Website

Binary Option Robot Screenshot

TraderVC Broker: Basic Information

According to Binary Options Robot, TraderVC is one of the most reliable and attractive brokers on the market. It has a minimum deposit requirement of $250 (or $500 for those who are using bank wire), which is quite standard for the industry. The minimum trade is only $5.

As for the deposit and withdrawal methods, there are plenty. First of all, it is possible to use credit cards such as Visa, MasterCard or Maestro. Many e-wallets such as Skrill, Neteller,  WebMoney or PayPal are all available for traders. And, finally, the above-mentioned bank wire is also an option. The broker says to be working on adding more options in the nearest future. The withdrawal request takes up to 10 working days. One withdrawal per month can be done for free. Any additional withdrawal has a $30 fee.

All in all, as you can see, Trader VC seems to be quite standard in its trading conditions. It does seem to be quite promising, especially knowing that Binary Options Robot considers it to be safe and reliable. We are looking forward to hearing more about the results of this cooperation in the future.

How to Open an Account

The first step is, of course, registering with Binary Options Robot, if you haven’t done so already. The procedure is fast and simple and takes only a few minutes to complete. If in doubt, check out the explanatory video below.

After you complete the registration with Binary Options Robot, you can go to the dashboard and select “open account” button next to the TraderVC icon. It will automatically take to the broker registration page. There you will need to give your basic information, credit card details and verify your identity.

And just like that, you are ready to trade!

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Video Explaining How to Open an Account on Binary Options Robot

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Binary Option Robot releases an Android App

Binary Option Robot logoGreat news for Android users trading binary options! One of the most popular auto trading software, Binary Option Robot, presented its brand new Android App this week. This Binary Option Robot has proven to be one of the best in the market and currently supports only leading brokers. And now with the new mobile app, it is more accessible than ever.

If you are an Android user, all that you have to do to give it a try is heading to your Google Play Store and downloading this app completely free of charge. The app looks great and is easy to use while offering all the same features as Binary Option Robot desktop version. This means that you can get the exact same quality of trading while on the go.

When using the new Android App by Binary Option Robot, it is also very easy to make a deposit with a broker of your choice. If you wish to select a different broker, it is also possible to do with the mobile version of the Binary Option Robot.

binary-option-robot-android-1

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To sign in, you simply need to enter the email and password you were using with the desktop robot or choose to sign in with one of the social networks available (either Facebook of Google+). With this easy approach, you can keep up to date with your trading progress when traveling, working or simply hanging out with friends. We can all agree that in the era of mobile devices, this is a very useful addition for binary option traders.

How it works

The idea behind any auto trading software is relatively simple: it uses sophisticated algorithms by compiling a big amount of data from previous years to predict changes in the binary options market. This is particularly great for beginner traders who want to start working with binary options without understanding all the difficult details.

Another good thing about auto trading is that it is completely adaptable to trade’s preferences. One is absolutely free to choose a broker that is best for him, the level of risk, etc. You can consult different broker reviews to make your choice, find out about possible strategies or ask other traders for advice, but everything is still entirely up to you. This way, you are still in control of your trading process when using Binary Option Robot.

Video on How to Open an Account

Start trading now with our recommended Binary Options Brokers.

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Recommended Brokers:

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How to Trade Binary Options

How to Trade Binary OptionsIn Binary Options trading the investor has to merely predict whether the price of an asset will rise or fall at the end of a given period. These include indices, currencies, and so forth. This does not depend on the actual amount of the change in the price of the asset, etc, just solely on the fact that it will rise or fall by the end of the expiry time. Binary options can be very profitable, if the trader accurately predicts whether the price will decrease or increase from the opening prices. The expiry times in binary options range from 60 seconds to several hours.

If the trader makes the correct prediction (i.e.: it is “in the money”), the profit is determined based upon a predetermined percentage, which was decided upon at the start of the “life cycle” of that particular contract. If the market does not go as the trader predicted, the investment has expired “out of the money”, hence the trader will lose the entire amount they had invested.

In other words, Binary Options trading can be summarized as “all or nothing” trading and is similar to “Under/Over” sports betting, in which the player must choose between only two possible outcomes, either win or lose. Only in binary options the trader must choose between the rise or fall of the particular asset, commodity, etc.

binary option robot

Types of Binary Options

The most popular type of binary options are the “high/low fixed price.” The traders must determine if the underlying asset price will increase or decreases by the end of the expiry period.

In “On Touch,” or single fulfillment binary options, it is enough for the title value to “touch” the predetermined price at least once by the end of the expiry time for it to be profitable. This could be either a lower or higher price threshold.

With “Binary Range” contracts, the trader must predict whether the asset price will be within a predetermined range of values at the end of the expiry time or not.

Example of Binary Options Trading

Suppose the traders predicts that in four hours the price of silver will be higher than the current rate, but does not have to determine how much higher the amount will be. The trader will select the “Call” time for the product (i.e. 4 hours) and the amount he wants to trade (i.e. $100) Let’s say the yield of this trade is 80% preset.

In 4 hours, if the prices of silver has risen from the current rate, regardless of how much, the investor will receive $180, $100 from the original investment put $80 in profit from the 80% yield. If the price of gold fell below the current rate at the end of the 4 hour expiry time, the investor will lose the entire investment amount.

On the same token, when investors predict the fall in the price of the asset, they must chose the “Put” option. If the market price falls the contract will expire “in the money” while if it rises it is “out of the money.”

The investor has the ability to “close” the contact before the expiry time with some trading platforms. In this instance, the yields obtained will vary with the movement of the market at that time.

Advantages of Binary Options

Binary Options have a wide variety of assets that are traded on a worldwide market such as indices, commodities, equities, currencies with low monetary requirements. This opens possibilities for those who want to invest but do not have an excessive amount of funds available to them. It is also a good market for those who are new to the world of financial trading to gain some experience with little risk involved.

The premise of binary options is rather simple. It only requires the investor to predict if a specific trade will rise or fall during the specific time, regardless of the amount of change in prices during this period. However, binary options trading are ideal for day traders as they do not physically possess the underlying asset, and they allow risk management in open stock positions through hedging, hence do not burden others investors as well. The profit potential in binary options is clearly defined at the onset of the trade and can reach as high as 100%. The amount of risk if the investor predicts incorrectly is also predetermined at the start of the transaction.

Since binary options have a short expiry time, investors are asked to limit the number of trades they place at one time. This helps avoid “dips” in their trading account, as well as additional psychological stressors.

Binary Options are believed to gain a lot of interest and popularity over the coming years as more brokerages are made available and the range of options offered increase as more and more people turn to binary options trading as a means of investment.

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How to Become a Successful Binary Options Trader

How to Become a Successful Binary Options TraderHere are some useful hints to get you in the proper mindset for successful binary trades:

1) Set a goal of 10% profit as it is both realistic and does not require more than 3 trades. (And yes a profit of 200-300% is possible, but this means you have to bid larger amounts and spend more time trading). Then 10% daily compound profit with a $250 deposit can easily turn into 10K, over three months time.

2) Set a “Stop” limit in place for trading such as “I’ll stop once I hit my 10% profit” or when losing “I’ll stop once my balance hits $_____”

3) Only trade in the 30 minute and 1 hour duration options. Although the 1 minute option is quite tempting, it’s where the biggest losses occur.

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4) Be patient: It is important to that you know the lowest and highest points of your trade for that day. Always aim for the peak or low before placing your bid. You can bid more confidently when it is near the top or the bottom. Never bid when it’s in the middle.

5) Find the “guiding point.” Follow the trend of the 2 hour graph when bidding at the one hour option. Use the 1 minute graph as a guide to “bid” or “wait.”
For example, if the 2nd hour graph displays a downtrend, look at the 1 minute graph, if this is also down, go ahead and bit. Wait, if it’s uptrend. Wait til it starts to downtrend before bidding on the one 1 hour option.

6) Deposit only a minimum amount with which you feel comfortable. Feel free to ignore the bonus “bait” or broker’s threat. Set an amount; say $250 as a monthly deposit. When this starts making a profit, withdraw some of the profit per month as well. But always leave money for bidding. The initial aim is withdrawal the total you have deposited throughout the entire process.

Some of the above might seem a little too technical, but if you break it down, they are practical and will help you turn a profit.

Start trading now with Binary Option Robot

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Start trading now with our recommended Binary Options Brokers.

Recommended Brokers:

 Min. InvestMin. DepositMax. Returns   
iqoption
$1
$10
92%
Gold
Review
FX Advisor
$1
$10
91%
Review
All brokers >>