The popularity of binary options has grown due to their simplicity and high returns. While it is simple to place a binary options trade, it is not easy to consistently make profits in this market. In fact, various research studies have shown that less than 30% of traders achieve profitability in the markets. Nonetheless, retail traders can make money consistently if they have a sound and well thought out strategy. If you want to be one of those who trade binary options and make money, let us explore how you can do this.
To make money in binary options, traders need:
Education
Like in any field or industry, investors with the right education are well placed to achieve trading success. The sophisticated marketing strategies applied by binary options companies have deluded most investors into believing that binary options trading is very easy but this is far from the truth. To be successful in this market, traders need to fully grasp the basics of binary options such as, terminologies, types of contracts, assets, etc., and to master both fundamental and technical analysis.
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Traders also need to master trading psychology so they can build the mental edge required for success in this market. There is no end to trading education and traders should continue learning new tricks every trading day. It is also important to only access the right education as misleading information can be very costly. A good place to gain trading knowledge is from the education center of various brokerage firms. Banc De Binary is renowned for its comprehensive education center that is frequently updated. Speak to your binary options broker and check which educational trading tools they have available in order for you to use and to boost your understanding of this market.
Strict Risk Management
The allure of making money in binary options is very big. But where there is money to be made, there is also risk and traders should learn how to play their way around this. Managing your risk is the best way to survive and to ensure your longevity in the unpredictable and uncertain binary options market.
Most traders fail in binary options because of taking more than necessary risks in the market. To achieve success, it is important to devise a plan that will help you minimize risks and enhance profitability. This plan will help you determine the maximum stake you can place in the market at any given time. Most professionals usually advise traders not to risk more than 5% of their trading capital on any one trade. The binary options market is open 24 hours a day and there will always be plenty of trading opportunities throughout. Therefore, traders should not risk a significant amount of their capital on any one trade no matter how ‘sure’ they are about the outcome of the trade.
Traders can also reduce their trading risks by managing open trades efficiently. Traders can use the Early Close feature to exit bad trades thereby reducing their overall potential loss. This feature can also be applied to lock in trading profits. There is also the Rollover feature that allows traders to extend the expiry times of open trades and traders can use it when a potentially good trade is currently performing badly.
Diversify Your Trades
Many traders prefer trading the traditional Call/Put contracts. These are not the only trade contracts available in binary options and there are plenty of ways to trade the price movement of various assets offered on most platforms.
For instance, Ladder options offer traders an opportunity to enhance their profitability in a trending market by having multiple price targets that pay out when each of them is achieved. A trader can make up to 200% more by trading Ladder options rather than the standard Call/Put options in a trending market. Other innovative contracts binary options traders can trade include Touch Options, Pairs, One Touch, No Touch options, 60 Seconds and weekend options. Before signing up with a binary options broker, check that they offer a variety of trade options so that you can easily diversify your trading portfolio.
Track Economic Data Releases
Economic data releases usually spur big price movements in the market. Such movements can impact the trading activity of traders. Due to the wide range of tradable assets in binary options, there is usually at least one economic data release daily that will impact the price movement of any trader’s favorite asset. It is therefore vital that traders track the scheduled economic data releases and adjust their trading strategies accordingly. Economic data can be tracked using the economic tool that is available for free on many sites while many binary options platforms, such as Banc De Binary, also offer traders a comprehensive Economic Calendar for free.
Final Word
Success in binary options is the ability to churn out consistent profits. This can be achieved if traders formulate and diligently follow a sound plan in order to minimize their risks and boost their profits.
