Binary options trading is a favorable means of making a lot of money. Traders can make profits within a short period but could also lose money quickly.
Binary options trading is a lucrative investment. Still, many people find it tricky to trade. Many people are interested in binary options trading but don’t know the basics of binary options trading.
Binary options trading is not rocket science. You just need the right information, guidance, and crucial tools to help you trade successfully.
This blog will help you to understand how to start trading binary options. We have compiled five (5) easy-to-use steps that would help you trade like a pro and make a profit. Keep reading.
Brief Explanation Of Binary Options Trading
Binary options are a type of trading (options contract) with two probable outcomes: the trader or investor might be rewarded with a predetermined profit for a right decision, or the trader or investor may lose the total investment for a decision amiss.
Five Easy-to-use Steps To Start Trading Binary Options
Don’t be rattled. Trying your hand at binary options is a smart move. You just need a few easy steps to become a pro trader.
Here is a (5) easy step-by-step guide to start trading binary options:
1.) Choose A Broker
Binary options trading is not gambling. You have to be careful with the choices you make in the market. And one key choice is your choice of broker.
You must choose a broker before carrying out any other trading activity. When choosing a broker, select a broker that suits your preferred trading style and your needs.
There are two types of brokers. The first is the high-risk takers, then those who prefer to manage their risks.
The high-risk takers offer more complex trading options, while those brokers who prefer to manage their risks to a minimum are more user-friendly for new traders or beginners.
Remember to conduct independent research on every broker you come across, and do not fall for mouthwatering offers.
Also, check out their reviews, and we advise you to work with trustworthy, reliable, and regulated brokers like IQcent.
2.) Create Your Account
After you have chosen a broker, the next step is to open an account with the broker. Creating an account is very easy and it takes about two minutes only.
Just like the common social media platforms you use, you have to connect your device to a stable internet connection when opening a binary options account.
A stable internet connection is crucial when opening an account and trading because unstable internet could lead to loss when trading in real-time, so make sure your internet access has a stable internet connection.
Now that you have a stable internet connection, you can create an account on your preferred broker.
You must provide personal information to sign up, such as your name, email address, password, phone number, country, currency, and more.
Once you sign up, you can trade with a demo and live accounts. The demo account can be used to practice or learn by trading dummy funds, while the live account can be activated with real funds alone.
3.) Select An Asset
After you create an account, the next step is to select an asset. Binary options offer numerous assets to trade with or invest in.
Traders can choose from indices, stocks, currencies like USD/EUR/GBP, or commodities like oil or gold.
Brokers determine the variety of assets you can trade with, yet most brokers offer the four popular markets listed above. So you are tasked with choosing the asset to trade with.
4.) Choose An Expiry Time
The expiry time or closure time is when the contract is carried out and closed.
The expiry time is classified into three groups; short-term, medium/normal, and long-term.
Initially, the binary market operated on a short expiry time alone; however, the market has grown and enabled wider ranges of expiry time.
Choosing an expiry time depends on your strategy and risk tolerance level. Remember, you can make a profit from any of the three expiry time groups.
5.) Predict Price Direction
After choosing an expiry time, the next and final step is to decide if the price of the asset you’ve chosen would go up or come down over the predetermined expiry time.
Predicting the price direction could also be called buy or sell. Buying the asset implies calling if the prices will rise while selling the asset implies putting the asset away because it is projected to fall.
Once you make your prediction, buy or sell, ensure you check that all details you placed are correct. Once that is confirmed, go ahead to confirm the trade.
We hope this guide has given you a detailed description of the steps you need to take to trade binary options.
Remember, ensure your trading strategy is right for reading the market conditions. This way, you can easily predict the market.
These simple steps are just a basic outline of how binary options trading works, but with just this knowledge alone, you could be well on your way to starting your journey to becoming an experienced trader.
Frequently Asked Questions (FAQs)
1.) What Are Binary Options Trading?
Binary options are a financial instrument (options contract) with two likely outcomes: profit or loss.
A profit is made if the underlying market moves beyond the strike price.
2.) How Can I Start Trading Binary Options?
Binary options trading is easy to understand. All you need is to follow the procedure because binary options trading is a process. This process consists of five major stages:
- Choose a broker.
- Create your account.
- Select an asset.
- Choose an expiry time.
- Predict price direction.
If you follow these stages, you can become a successful binary options trader.
3.) How Do Binary Options Work?
Binary options work based on three key elements:
- The underlying market that is used to trade
- The strike price is how trade is placed (above or below).
- The expiry time is grouped into three periods (short-term, medium/normal period, and long-term).