A binary options trader has the potential to earn a very lucrative income. But, as with most endeavors, preparation and planning are essential ingredients for success. To help you on your way to becoming a profitable trader, we have put together this post with some basic trading strategies and an overview of what you need to start trading successfully.
Trading binary options must be simple, right? It sounds simple enough: deposit, choose an option, select “High” or “Low,” invest your money, and submit your transaction. There are a lot of websites and commercials that will claim that trading binary options profitably is as simple as 1-2-3.
Here you will get the 10 ways to become a profitable Binary Options Trader.
1. Learn everything you can about binary options and trading
- 1. Learn everything you can about binary options and trading
- 2. Choose a great broker
- 3. Become knowledgeable about indicators
- 4. Backtest your trading method
- 5. Demo test your trading method
- 6. Live a balanced life
- 7. Trade in a regulated broker
- 8. Know when to take risks
- 9. Learn by watching others
- 10. Stay focused
A binary options trader must learn all they can learn about binary options and trading in general. We recommend reading books on the subject or taking an online course (which we will discuss shortly). This is important because, as a professional trader, you need to be able to interpret the financial markets effectively.
By knowing the basics and key indicators for volatile stocks, one should be able to make a more educated guess as to which stock will gain value and which will decrease in value.
2. Choose a great broker
A high-quality broker is essential to develop a steady profit for a successful binary options trader. Of course, it’s best if one can pick an affiliate as its broker. If you are new to binary options trading, you must start with an affiliate with the right service and a good reputation.
When choosing a broker, choose one that is reliable, reputable and has a nice earning potential. The cTrader forex brokers are a great example of this. These professional trading platforms offer great customer support and a very good platform for binary options traders.
3. Become knowledgeable about indicators
One must not only learn how to read the financial markets, but one must also learn to interpret the indicators in these markets. For instance, traders should learn about correlation and volume charts if they are interested in stocks.
In general, there are five types of indicators:
- Trend indicators: These are used to predict the future trends of a financial instrument. It measures the price of a stock between two points. If the price at a given point is higher than the price at a previous point, then the moving average line will be pointing up. The line will point down if the price is lower than in the past.
- Momentum indicators: These indicators are used to predict future trends in financial markets. The most common momentum indicator is RSI (Relative Strength Index). This indicator measures the strength of a financial instrument by calculating the number of times it reaches a certain level at its starting point.
- Cyclical indicators: These indicators predict cyclical movements in financial markets. They are best used during economic booms and busts.
- Volume indicators: These indicators are used to predict the future movements of a company’s stock price. Volume indicators can be divided into two types, Accumulation and distribution.
- Directional volume indicators: They indicate whether a given stock price is going up or down shortly. They consist of various oscillating scales. The most popular one is the moving average volume (MAV). It takes the average of previous prices and adds them to the current prices to calculate a new value for each point.
4. Backtest your trading method
It is very important to go back in time and test the method of trading you want to implement. Testing helps ensure that the model or system you are using is profitable. Backtesting can also provide valuable information about how a model will perform in real-time trading and how it will respond to certain historical events and circumstances.
The testing process for binary options traders involves developing and testing a trading strategy with predetermined parameters and then simulating these conditions on historical data.
5. Demo test your trading method
Writing a backtest is one thing, but testing it on the demo account of a broker is another. Before you test the strategy on your live account, you must first test it on a demo account to ensure that it is profitable and that there are no bugs in your code.
6. Live a balanced life
To be successful, binary options traders need a stable work-life balance. Their trading strategy should not depend on whether they are in the office or home. A balanced life means that binary options traders must be prepared and able to carry out trading activities during any day and situation, including weekends, vacations, etc.
7. Trade in a regulated broker
A regulated broker ensures that all trading activities are legal and follow the rules set by its regulatory body (for example, CySEC for Cyprus). They also have a trustworthy reputation, a safe trading platform, and great customer support.
8. Know when to take risks
It is important to know when to take risks and when not to. When considering whether or not to put a trade on, binary options traders should consider the following:
- Risk/reward ratio: If the potential reward is much greater than the risk, it may be a good idea to take the trade. If the reward is too small compared to the risk, one should not take this trade.
- Stop-loss points: Know where you should place your stop-loss points and when you should implement them. Depending on your trading strategy this may be different for each trade.
9. Learn by watching others
Binary options trading is hard work, but it is also an entertaining hobby for some people. Many people are on YouTube and other social networks, making it look easy. But by learning by watching, you will see that most people have to work hard in the beginning before they get rich.
10. Stay focused
Many traders make many mistakes during their trading careers when they are not focused because so many things are going on in their lives. Before starting a new job, take some time to get prepared for it and learn as much as possible about your new job.
Binary options trading is a great way to make money from home, and as a bonus, you can learn to trade on a live trading platform. Imagine being able to trade every day. All you need is time and the right broker for your strategy.