Binary options where to start the trader’s path How to do it

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Binary options: where to start the trader’s path? How to do it?

Most people perceive the financial market and its trading processes as something very complex and inaccessible. This prevents ordinary investors from becoming successful and financially independent. But despite such difficulties, online trading today is gaining popularity and becomes an excellent way to earn money. In our material, we offer recommendations on how to become a successful participant in the market and how to achieve high financial results. We hope that with their help you will start a successful trader’s way on such an instrument of stock exchange trading as binary options.

So, the successful career of any trader of binary options should begin with the realization that this type of contract is a real opportunity for earning, as well as the fact that for this you need to make some efforts and spend time. On the binary market, nothing happens just like that!

The first thing a beginner trader should do is get training! Without knowledge, experience and a clear understanding of the technical processes of the market, it is impossible to consistently receive a high income. Only profound knowledge in the matter of technical analysis, proper market valuation and capital management issues can lead a trader to success and the expected financial result. Do not worry, you do not have to spend money on training and time to graduate from a specialized educational institution. In binary trading, training is offered completely free of charge and in an effective mode. You just need to turn to the services of a professional broker to get the necessary knowledge and skills on his free services.

The trading platform should be built on specialized information services that allow you to quickly learn technical analysis, understand the general principle of the market and gain skills in practical trading in the market of binary options. The broker system works on such types of technical services:

– knowledge base – a collection of terms and concepts that are used in the work on the market;

– an interactive textbook – a guide for novice traders, which reveal the secrets of successful trading;

– video lessons – materials that provide specific market situations and examples of trading operations;

– webinars – lectures from professional traders and financial market specialists, where recommendations are given on working with binary options;

– demo account – technical service for training and obtaining practical trading skills.

Having passed all steps of obtaining knowledge, you can professionally and effectively work in the market and get a stable trading result.

The second step on the path to success in the binary market is the choice of a reliable trading partner in the form of a broker of binary options. The problem here is the large choice of a variety of platforms, among which there are often frank scammers. Therefore, in order to work successfully, in a safe mode for investment funds and with comfort, we recommend carefully choosing a trading partner. To do this, there is a simple approach – choose a broker who has:

– the license of the regulatory body – this indicator will create the conditions of work that are as safe as possible for the capital;

Best Binary Options Brokers 2020:
  • Binarium

    Top Binary Options Broker 2020!
    Best Choice For Beginners!
    Big Sign-Up Bonus!
    Free Trading Education!
    Free Demo Account!

  • Binomo

    Only For Experienced Traders!

– a professional level terminal where all the necessary technical services and analysis tools will be available;

– Fast, the most simple mode of trading profit withdrawal;

– minimum conditions for launch on the binary market;

– high level of financial stability of the broker;

– Positive feedback on the network from the company’s customers.

A trading platform with such services and working conditions will allow you to professionally handle trading operations and will provide a full range of opportunities for success. Note that it is for such parameters that a really reliable broker should be available. Such a binary market provides a full list of technical and commercial services that are necessary for effective trading, and also creates maximum safety conditions for investors.

Having completed the training and choosing a reliable partner for themselves, any trader will increase his chances in trading binary options and will have at his disposal a simple, interesting and profitable earnings tool.

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

What You Need To Know About Binary Options Outside the U.S

What Do You Need To Know About Binary Options Outside the U.S?

Binary options let traders profit from price fluctuations in multiple global markets, but it’s important to understand the risks and rewards of these controversial and often-misunderstood financial instruments. Binary options bear little resemblance to traditional options, featuring different payouts, fees, and risks, as well as a unique liquidity structure and investment process.

Binary options traded outside the U.S. are also structured differently than those available on U.S. exchanges. They offer a viable alternative when speculating or hedging but only if the trader fully understands the two potential and opposing outcomes.

The Financial Industry Regulatory Authority (FINRA) summed up regulator skepticism about these exotic instruments, advising investors “to be particularly wary of non-U.S. companies that offer binary options trading platforms. These include trading applications with names that often imply an easy path to riches.” 

Key Takeaways

  • Binary options have a clear expiration date, time, and strike price.
  • Traders profit from price fluctuations in multiple global markets using binary options, though those traded outside the U.S. are structured differently than those available on U.S. exchanges.
  • Non-U.S. binary options typically have a fixed payout and risk, and are offered by individual brokers rather than directly on an exchange.
  • While typical high-low binary options are the most common type of binary option, international brokers typically offer several other types of binaries as well.

Binary options outside the U.S. are an alternative for speculating or hedging but come with advantages and disadvantages. The positives include a known risk and reward, no commissions, innumerable strike prices, and expiry dates. Negatives include non-ownership of the traded asset, little regulatory oversight, and a winning payout that is usually less than the loss on losing trades.

Understanding Binary Options Outside the U.S

What Are Binary Options?

Binary options are deceptively simple to understand, making them a popular choice for low-skilled traders. The most commonly traded instrument is a high-low or fixed-return option that provides access to stocks, indices, commodities, and foreign exchange.

These options have a clearly stated expiration date, time, and strike price. If a trader wagers correctly on the market’s direction and price at the time of expiration, they are paid a fixed return regardless of how much the instrument has moved since the transaction, while an incorrect wager loses the original investment.

The binary options trader buys a call when bullish on a stock, index, commodity, or currency pair, or a put on those instruments when bearish. For a call to make money, the market must trade above the strike price at the expiration time. For a put to make money, the market must trade below the strike price at the expiration time.

The broker discloses the strike price, expiration date, payout, and risk when the trade is first established. For most high-low binary options traded outside the U.S., the strike price is the current price or rate of the underlying financial product. Therefore, the trader is wagering whether the price on the expiration date will be higher or lower than the current price.

Binary Options Outside the US

Foreign Versus U.S. Binary Options

Non-U.S. binary options typically have a fixed payout and risk and are offered by individual brokers rather than directly on an exchange. These brokers profit from the difference between what they pay out on winning trades and what they collect on losing trades. While there are exceptions, these instruments are supposed to be held until expiration in an “all-or-nothing” payout structure.

Foreign brokers are not legally allowed to solicit U.S. residents unless registered with a U.S. regulatory body such as the Securities and Exchange Commission (SEC) or Commodities Futures Trading Commission (CFTC).

The Chicago Board Options Exchange (CBOE) began listing binary options for U.S. residents in 2008.   The SEC regulates the CBOE, which offers investors increased protection compared to over-the-counter markets. Chicago-based Nadex also runs a binary options exchange for U.S. residents, subject to oversight by the CFTC.

These options can be traded at any time, with the rate fluctuating between one and 100, based on the current probability of the position finishing in or out of the money. There is full transparency at all times and the trader can take the profit or loss they see on their screen prior to expiration.

They can also enter as the rate fluctuates, taking advantage of varying risk-to-reward scenarios, or hold until expiration and close the position with the maximum gain or loss documented at the time of entry. Each trade requires a willing buyer and seller because U.S. binary options trade through an exchange, which makes money through a fee that matches counter-parties.

High-Low Binary Option Example

Your analysis indicates the Standard & Poor’s 500 index will rally for the rest of the trading day and you to buy an index call option. It’s currently trading at 1,800 so you’re wagering the index’s price at expiration will be above that number. Since binary options are available for many time frames—from minutes to months away—you choose an expiration time or date that supports your analysis.

You choose an option that expires in 30 minutes, paying out 70% plus your original stake if the S&P 500 is above 1,800 at that time or you lose the entire stake if the S&P 500 is below 1,800. Minimum and maximum investments vary from broker to broker.

Say you invest $100 in the call that expires in 30 minutes. The S&P 500 price at expiration determines whether you make or lose money. The price at expiration may be the last quoted price, or the (bid + ask)/2. Each binary options broker outlines their own expiration price rules.

In this case, assume the last quote on the S&P 500 before expiration was 1,802. Therefore, you make a $70 profit (or 70% of $100) and maintain your original $100 investment. If the price finished below 1,800, you would lose your original $100 investment.

If the price expires exactly on the strike price, it is common for the trader to receive her/his money back with no profit or loss, although brokers may have different rules. The profit and/or original investment is automatically added to the trader’s account when the position is closed.

Other Types of Binary Options

The example above is for a typical high-low binary option—the most common type of binary option—outside the U.S. International brokers will typically offer several other types of binaries as well.

These include “one-touch” options, where the traded instrument needs to touch the strike price just once before expiration to make money. There is a target above and below the current price, so traders can pick which target they believe will be hit before the expiration date/time.

Meanwhile, a “range” binary option allows traders to select a price range the asset will trade within until expiration. A payout is received if price stays within the range, while the investment is lost if it exits the range.

As competition in the binary options space heats up, brokers are offering additional products that boast 50% to 500% payouts. While product structures and requirements may change, the risk and reward is always known at the trade’s outset, allowing the trader to potentially make more on a position than they lose. Of course, an option offering a 500% payout will be structured in such a way that the probability of winning the payout is very low.

Unlike their U.S. counterparts, some foreign brokers allow traders to exit positions before expiration, but most do not. Exiting a trade before expiration typically results in a lower payout (specified by broker) or small loss, but the trader won’t lose their entire investment.

The Upside and Downside

Risk and reward are known in advance, offering a major advantage. There are only two outcomes: win a fixed amount or lose a fixed amount, and there are generally no commissions or fees. They’re simple to use and there’s only one decision to make: Is the underlying asset going up or down?

In addition, there are also no liquidity concerns because the trader doesn’t own the underlying asset and brokers can offer innumerable strike prices and expiration times/dates, which is an attractive feature. The trader can also access multiple asset classes anytime a market is open somewhere in the world.

On the downside, the reward is always less than the risk when playing high-low binary options. As a result, the trader must be right a high percentage of the time to cover inevitable losses.

While payout and risk fluctuate from broker to broker and instrument to instrument, one thing remains constant: losing trades cost the trader more than they can make on winning trades. Other types of binary options may provide payouts where the reward is potentially greater than the risk but the percentage of winning trades will be lower.

Quest for truth: the thorny path of the trader

Trading on the financial market is currently considered one of the most interesting and highly profitable occupations. However, before you can really call yourself a trader, you have to go on the long, thorny path through the jungle of the financial market and the psychological traps of your brain. The thing is that being a trader is not an easier profession than that of a doctor or an engineer, so if you want to become a real trader and earn real money, you should have patience and enthusiasm. In this article we will describe the path that every beginner must take in order to become a successful trader.

In fact, when choosing financial trading as a method of profit making, only a few beginners will really understand what they are getting into and what they have to go through. Most of them simply imagine how in just a few months they will be able to earn enough for a car or, at the very least, the latest version of a trendy gadget. However, both types of people should expect the inevitable loss of their account balance. Because only beginners who initially understand that they will have to work hard and learn are more likely to get a stable profit in the end as opposed to those who perceive trading as an easy and quick way to earn money.

From beginner to pro — the trader’s path

So, if you’ve nevertheless decided to be a trader and invest your time, nerves, and money in this, prepare for a long path, which can be divided into 5 stages.

  1. The “green” newbie

It all begins with the person somehow learning about trading and its potential – from advertising on the internet, a YouTube video, or after watching a movie where an ordinary guy with $100 in his pocket is able to become a millionaire within a year. Of course, at first they are skeptical of this simple means of earning – only two buttons, UP and DOWN, and up to 90% in profit on one contract – it just seems too suspicious. But after they can no longer resist the desire to try themselves in the role of a trader and finally solve their financial problems or simply increase their capital, all doubts disappear. The newbie quickly signs up with the first, and best, in their opinion, company, credits an account, and ambitiously rushes to the financial market. Several unprofitable trades later, and there is only on a few dollars in their account instead of the several hundred they had anticipated. In fact, it’s a hazing ritual for traders. Now they are convinced from their own experience that the financial market is not a sandbox where you can make castles and get paid for it, that price movement on the chart is unpredictable, and that luck is not the most reliable assistant when it comes to concluding trades with the correct forecast of quote movement.

After that, the newbie finally comes to the conclusion that they should have gone through training, chosen an effective trading strategy, and practiced using it on a demo account. Take two – the beginner trader, like a sponge, absorbs all the basics of trading, watches video lessons, memorizes all the terminology by heart, and trains on a demo account on a trading strategy they found on the internet. The intersections of indicator lines and combinations of price candlesticks – already understanding a little about how this works, they determine those trading signals and close most of their trades with profit. They build their account up to several thousand dollars, confidently switch to a real account, and they transfer even more money there than they did the first time because this time everything is going to turn out right!

For a while, the trading is going really smoothly, and they manage to double or even triple their starting capital. But then something goes wrong again. As it turns out, those few strategies that they had chosen for trading don’t work in every market situation, and not all times of the day are actually suitable for trading. And now they again go into the red wrestling with what the problem is.

First of all, you should calm your ambitions and excess self-confidence. At the beginning, all newbies are in the same boat, with the exception of how much starting capital they have. You, like the others, can expect the same amount of work, and it doesn’t matter where you worked before or what you studied. Even if earlier you were a student of finance or economics at one of the most prestigious universities in the country, you still have no more chances of achieving success in trading than a salesperson, a truck driver, or even a college freshman. A trader is a person that will have to be trained from scratch. The training course that you complete on the trading platform will only provide you with the basic concepts of trading and methods of market analysis:

To continue to steadily increase your capital, you will have to constantly improve your knowledge, learning new ways and features of market forecasting.

  1. Studying the principles of technical and fundamental analysis

After being assured that it’s not so simple, and that even two trading strategies, for trends and for flats, aren’t enough to trade profitably, the beginner begins to delve into the principles of technical and fundamental analysis. On this stretch of the path, the question immediately arises: where can I get all the material I need to learn? Of course, they look for help on Google or another search engine and discover a lot of options that, in their quest for the truth, they begin to use one after the other:

  1. Schools for successful traders

On the internet today, there are a lot of different schools teaching newbies the wisdom of trading. As a rule, beginners sign up at these schools and the first thing they get is the same free theoretical basics that they already got on their company’s website. A more advanced course with the necessary books and webinars is offered, of course, for a couple hundred dollars, which the beginner pays without issue as they hope that this money invested in training will later pay for itself. Therefore, the “teacher” offers additional paid materials as well. Then you have to pay for the video lessons and then for something else very important and necessary. In the end, at least 500 dollars goes to training.

In addition to private schools, the beginner is also looking for the “secrets” of profitable trading on various forums, falling asleep with questions for traders who publish screenshots with tens of thousands of dollars in their accounts.

As a rule, after such a training course the trader’s  brain is so scrambled they don’t know how to use anything in practice; however, they do already better understand what support and resistance levels are, what candlestick analysis is, how an indicator is different from an oscillator, and how to apply the approaches of martingales, averaging, and hedging. And again they train on the demo account, transition to a real account, get a surge of profitable trades, and then lose their account again.

When the money spent on training doesn’t turn into a profit, the desperate beginner starts to look for ways to easily earn with the help of automatic signals and robots. Here everything ends much faster – both paid and free signals bring even less money than independent trading. The situation is even sadder with robots – the first automatic adviser loses the entire balance over the course of a day.

Additional training is really the right decision. The thing is that this is the only way to understand how it all works, which laws the financial market lives by, and what influences quote movement. However, it is not necessary to buy expensive courses for this, because the basic information found in them comes from free books available on the internet. Therefore, in order to save time and money, just look for the necessary training material on free resources dedicated to trading futures contracts.

  1. Studying the psychology of trading

During the third stage, after extensive training on the demo account and a few financial ups and downs on the real one, the trader begins to understand what the focus is, but steady increases in their account balance still aren’t there. In an attempt to understand why, the no longer a beginner but not yet a pro begins to comb through a lot of forums and discovers the factor of trading psychology. Here the notions of discipline, focus, and emotional control come to light.

Basically, how is a novice or a person who doesn’t know how to control the emotions of greed, fear, and excitement able to trade? At the peak of profitability, they generally forget about the rules of money management, and after an unprofitable trade, they try to recoup. Also, emotionally unbalanced and undisciplined traders often look for strategy holy grails and they trade chaotically, constantly using risky approaches and trying to adjust the market to themselves.

In this way, the trader discovers that their subconscious is building an algorithm of their wrong moves that lead to losses. The study of the psychology of trading takes some time, but this is what allows newbies to cultivate the necessary qualities in themselves, develop trading plans, and purposefully work toward success. Also, during this psychological education, previously unclear approaches to technical analysis become clearer.

Don’t ignore the importance of having the correct psychological attitude for trading, because it will dictate the algorithm of your actions. You see the entire financial market through the lens of your own consciousness. If the reality of the market, when passing through your consciousness, changes to the point that black begins to look like white, then even the most profitable strategy will never bring the desired result.

Having learned the nuances of market analysis and adjusted psychologically for trading, the trader makes an unexpected discovery. It turns out that the whole focus is not on a profitable technical indicator, or even on the rules of a trading strategy. You can earn money even with a single MACD oscillator, trend levels, or just on different candlestick combinations. And suddenly all the information makes sense in their head – even the most elementary strategy starts to provide good results, and if you adhere to the trading plan and the rules of money management, you can steadily trade with gains, gradually increasing your account balance.

At this stage, the trader already has their optimal trading time, their time frame and trading assets, as well as an arsenal of effective trading strategies, which they already know how to use with discretion depending on the current market situation. Also, the trader is beginning to understand that in many respects, success in trading depends on the trading terminal you choose, which should be as professional as possible:

If you get to the stage of opening, you can say that you are one step away from success, because here you will already see for sure what all the effort and work was for. Moreover, it’s impossible to jump straight from the first stage to the fourth one, because you cannot physically learn how to use all the knowledge in practice right away.

  1. The trader as a profession

This is the last stage of becoming a professional, and when the trader gets here they leave their main jobs. At this stage, market analysis and transaction conclusion transforms into an emotionless and almost automatic process. The trader is no longer surprised by anything – losses do not greatly upset them and profitable transactions are perceived as the norm and do not cause any special enthusiasm. All their trading goes according to plan, turning into a routine job which brings a good income.

Having reached this stage, you can call yourself a real trader, as earning on futures contracts will become your profession and your main source of income. It is these stages which form the path of each beginner trader who is attempting to find a true way of earning online with the help of futures contracts

“General Risk Warning: Binary options and cryptocurrency trading carry a high level of risk and can result in the loss of all your funds.”

Best Binary Options Brokers 2020:
  • Binarium

    Top Binary Options Broker 2020!
    Best Choice For Beginners!
    Big Sign-Up Bonus!
    Free Trading Education!
    Free Demo Account!

  • Binomo

    Only For Experienced Traders!

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