Is Binary Options for me?
This is the most important question asked by any new trader. Binary options trading is the fastest way to increase your money if traded properly. Its also the fastest way to lose your money, if the trade doesn’t end in your favor. If you lose the trade, you lose 100% of your invested amount in that trade.
Hence trading binary options are defined as High Risk, High Return type of investment. In order to be successful binary options trader, you must follow the following guidelines.
- Discipline – Discipline is extremely important in Binary Options trading. Don’t just trade randomly, you may win few times, but eventually, you are certainly going lose your capital.
- Limit your trades to just 5 to 10 trades in a day, and stop after that. Wait for the best opportunity to appear, place your trade with 1-2 % of your capital. If you lose a trade, manage the losses with money management.
- Although broker accepts trades 24×7, it is not always the right time to place a trade. Look for the best opportunity by referring to Charts and Technical analysis, then place a trade. Just 3 -4 winning trades can grow your investment significantly over few months.
- Money Management – It is absolutely impossible to avoid losses in Binary options trading. But it can be overcome by proper money management. Consider the following example –
- Traders are advised to invest $5 in a trade for a $1000 balance in their account.
- If you lose the 1st trade, wait for next opportunity. When you find the next opportunity, place the 2nd trade for $10. If you win this trade, you recover your losses and make some profit.
- But if you lose your 2nd trade of $10, your cumulative loss becomes $15. Now be further careful and wait for next opportunity, place the 3rd trade of $25. If you win this trade you can recover your losses and make some profit too.
- After every recovery, get back to the trade size of $5. In case you lose the 3rd trade of $25, then STOP trading for some time. Take a break, come back with a fresh mind and start again with $5 trade. Never ever try to take revenge on the market. Nobody has ever been successful in doing so.
- Strategy – Follow some general charts and indicators on an MT4. Analyze your skill in a demo account before you start trading with your real money.
- Learn to follow Bollinger’s Band, in addition to RSI and Stochastics. Refer some materials about how to use them in combination for 5 minutes trades. Always trade in the direction of the trend, when you get the best opportunity. Remember – It is better not to trade than losing a trade.
- Don’t increase your trade size unnecessarily and risk to blow off your account. You can see how a small trade 0.5 % of your account balance can grow your account to millions. Its possible to achieve $ 700 return on a $1000 account by risking 0.5% ($5) in a trade, trading 7-10 trades in a day for 20 trading days in a month. If it is continued for just 12 months, it is huge $582,622.
- Learn when not to trade – Trade the best opportunity. Don’t just trade, because you are sitting in front of the computer and have to trade. We need only 5 successful trades in a day (including recovery as described above). Hence control yourself, learn when not to trade. Before every trade ask yourself, should I really trade now this opportunity?
- Control your Emotions – Don’t ever lose control of yourself, when you lose a trade. Don’t try to take revenge on the market and recover. Rather, wait for some time. Place your trade when you get next best opportunity as per your charts and indicators. Don’t keep on increasing your trade size beyond 2.5% in any trade. ($25 in a $1000 account). Get back to $5 trade, if you lose the 3rd trade.
- Binary Options Trading is not a computer game, a mobile game that you can play anytime and win.
- It involves real money, hence trade responsibly.
Don’t trade in a mobile platform blindly, because usually, you don’t have access (or very limited access) to any charts and indicators to help you take decision and place trade. Whereas on your desktop or laptop you can analyze the chart, study the indicators and place a trade.
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