Executing Your First Trade - Binary Options Trading Checklist
The first binary trade in every trader’s life is very important and memorable. Binary Options Trading is no different.
It may or may not be profitable but at least you need to ensure certain tasks from your end to give your best .
Irrespective of how many training courses you attended and how long you tested the demo account; When it comes to your first trade, traders naturally tend to get anxious.
You should be proud of your first trade result irrespective of the result.
To prep you for your binary options trading journey, we have prepared a checklist that you can go through before you place your trade.
But first, let’s take a quick glance at why you should give binary options trading a try.
Why is Binary Options Trading Attractive?
Irrespective of what your trading capital is, you can still invest in binary option and can expect 60%-90% return on the same.
If you are looking for a way to trade without any complications, at present apart from binary option there is no other better option available.
Here predicting correctly is equal to earning money.
However it is essential to keep in mind, if you don’t stay smart, money can be lost equally well.
That being said, binary options are easier for beginners to get a grasp of compared to other forms of trading.
Learn more about the advantages and disadvantages that binary options offer.
The strategies are easy to understand and implement and we have a couple of beginner strategies that will help out.
Let’s go through some basic information on binary options before you jump into trading.
Basic Information on Binary Options Trading
We have summarized some key points of binary options to make it easier for you to understand.
- The risk in binary options is fixed upfront
- Trader won’t lose any amount more than what is investment
- Refund on losses is provided by some brokers
- The payout of binary option is fixed and pre-determined at the time of executing the trade.
- Leveraging or setting stop losses is not required in binary option trading
- Trader has either place put or call to open a position.
- The underlying asset is not bought.
- Binary options are fixed reward for fixed return
- A trader should have a winning rate of at least 50% over long term to become profitable
- Large return – 80% returns are perhaps the usual on most of the up or down trades.
- Large risk – 100%-85% of invested amount on the trade will be at risk subject
- Fast Trades – Binary option trades are short-term in nature
- U.S. traders are not accepted by all brokers
Binary Options Trading Checklist
It is crucial to be prepared to execute your first trade and here is the list of things you should keep in mind before you place your trade.
Pick a reliable and regulated broker:
There are hundreds of binary options brokers out there. Are all good for your trading? NO
A trader conducts his trading through the trading platform provided by the broker. All other aspects of trading such as deposits, withdrawals, demo, education, customer support depend on the service provided by the broker.
Therefore, it becomes crucial to choose the best binary options broker for you.
We regularly test and rate different binary options brokers on various criteria so you can find the best one according to your needs.
Go through our recommended list of brokers to find out which broker and trading platform you prefer.
With the help of this list compare various brokers and pick those that fit for your style of trading.
It is true that there is nothing called as “perfect broker”; But it is possible to get close to perfection.
This is the very reason why traders have more than one broker.
The features and asset facilities of one broker will not be available with another broker.
It is crucial to do this comparison before finalizing a broker for your trading activities.
If your broker is reliable and regulated 50% of your risk is sorted.
The rest will depend on the asset you choose, your trading decision and the time when you execute the trade.
Having a regulated broker is important to make any profit as there are lot of scam software and platforms who are very keen on stealing your hard earned money.
How to find if the broker is reliable and trustworthy, though there is no easy way and the answer is not direct.
You can go through the reviews and customer feedback to know how the platform works and if it is a trustworthy one.
Choose your asset class and create a portfolio:
Every trader should plan in his mind which assets to choose and accordingly should segregate the portfolio for trading activities.
Once this decision is done, you can log into a reliable platform to start executing the trades.
If you are an experienced trader, the process is this simple.
But if you are new to binary options trading, then you need to plan the assets and test them in the demo accounts to see if you can really trade them or not.
The decision should be on the basis of what is the return on investment, what is the risk associated to the same, is your trading style working with the asset choice and so on.
Also, the asset you choose should depend on how familiar you are with it, it’s market movement, and be able to carry out fundamental analysis for it.
Perform technical and fundamental analysis:
Suppose you are looking to invest on the underlying asset crude oil.
In that case you should start observing the trend of price fluctuation with the help of trend charts.
This will help you to determine what the price movement is and how often it is fluctuating.
Based on this analysis you can determine or predict what would be the price of crude oil after a certain time period.
Through your analysis, if your predictions go right, then you will win your payout.
There is definitely a need to use such skills as the market is turning more challenging and a lot of new styles of trading should be used.
Remember to use a combination of both fundamental and technical analysis and not ignore one for the other. You should also know the differences between the two.
Get to know potential trade outcomes:
To know the outcome of your investment you should have the patience to wait until the expiry of the trade.
You can calculate the potential results and check if it will be “in the money” or “out of the money”.
These are the only two outcomes for your trade.
If the trade is “in the money” it means you made a profit on your investment.
And when it is said as “out of the money”it simple means you are not making any profit out of the investment plus there is a certain amount of loss incurred.
Let’s take the same crude oil example in this case as well:
If a trade is placed on crude oil at trigger price 60$ and if the current market price goes over the trigger level prior to the expiration date, then there will be in-the-money on the trade.
On the other hand, if the market price goes below $60, then the trade will be “out-of-the-money”.
It cannot be said making money through binary options is tough;
However you should be ready to learn and spend certain amount of time on a regular basis.
The level of dedication and effort from each trader’s end will help in determining how easy trading of binary option is.
For some it is like a cake walk but for some even after months of trial, they are finding it difficult to make money. We recommend you learn binary options the right way.
And the reason for these could be they are yet to find out their strength and weakness.
The trader should be ready to keep improving his or her skills.
This way it will be possible to improve the skill as per latest market needs.
There are plenty ways of turning a person’s knowledge into profit and the above mentioned points are meant for the same.
Also many traders are losing in binary option trades as they are not considering right sources through which information and indicators are shared.
There are a lot of scam software that generates indicators and signals to traders.
There is no accuracy on this information and the source of information is also not disclosed.
Considering these it is crucial that the source of information and accuracy of the same should be taken into consideration.
Everyone will not make profits all the time. While some make money others lose and vice versa.
We hope, you now know what things to keep in mind before you start your first binary options trade.