10 Things You Need to Trade Binary Options
Thinking about getting started in the exciting world of binary options? Online trading is making investment possible for low- and moderate-income customers who might never have had a chance to try before. Trading stocks is quite challenging and has high entry barriers. You have to pay a fee for each of your trades, and it can be quite substantial. With binary options trading, there are no fees for your trades. You can get started with just a couple hundred dollars. Do you have everything you need to become a binary options trader? Let’s find out.
1. Investment capital.
The majority of binary options companies will allow you to sign up on their site and start trading with as little as $250 to invest. Some companies may even let you start with $100. The matter of investment capital is a little more complicated than this (not much though!). You also need to look at the minimum investment amount to see how much money you need to put down for an actual trade with a company.
Managing your money is really important if you want to win. You cannot deposit $100 and then invest $25 on each of your trades. In just four trades, a short losing streak, you could blow your bankroll and find yourself out of the game. You will need to choose a broker that allows you to invest an affordable percentage of your account. That in mind, you will want to either choose a broker that offers a low minimum investment amount ($5-10), or you will want to deposit more money than the bare minimum. $500 is a nice starting amount for a small account holder.
2. A computer or mobile device and an Internet connection.
To trade binary options, you will need to be able to get online on a regular basis. You can trade on your personal computer, and with many binary options companies, you can also trade on your mobile device. Many companies nowadays have apps for Android and iPhone. With those apps, you can trade on the go. You will need a stable internet connection wherever you trade, though.
3. A trading method.
If you do not care whether you win or lose, by all means, start trading armed with nothing but your Internet connection, mobile device or PC, and your initial investment amount. But if you do want to win, and win consistently, you absolutely must get a trading method, sometimes called a trading system. A trading method is a simple set of rules which you use to identify trade entries. When your trading method tells you to trade, you have a good shot at winning money. If it does not signal an entry, it helps you to avoid trades you would probably lose.
If you do not have a trading method, you can search online through thousands of free trading methods which have been developed and use effectively by others. You also have the option of building one from scratch, or you can start with a system developed by someone else and make it your own with modifications. A trading method is like a good horse. With it, you can ride out your profits for a long time and continue to grow your bankroll.
4. A trading plan.
Your trading method fits within the larger scheme of your trading plan. A trading plan includes not only a method, but a trading schedule, and notes about your goals and other aspects of business. Without a trading plan, there is no context for what you are doing, and you will have a hard time managing your business. And yes, binary options trading is a business, or can be, if you treat it like one. If you want to go pro, that is a must!
5. An accountability partner.
This is optional, but a very helpful thing to have, especially if you are a person who really struggles with self-discipline. An accountability partner is someone you can talk to about your trading. As the name implies, it is a person you are accountable to. You have to be honest with your accountability partner at all times, and you may even empower that person to stop your trading if you violate your own trading rules or money management rules. A trading partner can be anybody you trust. It might be a coach, a business partner, a friend, even a spouse.
6. A trading journal and spreadsheets.
These are tools you use to keep track of your trades and how they progress. In your spreadsheets, you record wins, losses, and basic information about your trade. This is as simple as opening Excel and setting up some columns and rows for your information. You can use Excel to calculate helpful statistics which you can then use in your analysis.
Your trading journal is simply a document where you write down more detailed information about your trades, and about trading in general. Here you can reflect and develop self-awareness. You can look for patterns in your wins and losses, which will help you become a better trader as time goes by.
7. A broker.
You certainly are not going to get too far without a binary options broker! Here you can view our list of recommended binary brokers. These companies have passed our tests for features, customer service, and reputation. Finding a good broker is not optional! Even if you are an amazing trader and even if you have the best trading system ever devised, you will fail if you do not have a trustworthy broker that gives you the features you need and allows you to make easy withdrawals that are hassle-free.
8. A demo account.
You need to find somewhere you can demo test before you trade live with real money. You may want to think about making this one of your requirements for evaluating binary options brokers, since some brokers like Marketsworld do offer demo accounts to traders. If not, you will need to find a broker where you can test and another where you plan to trade. Demo testing is a critical step, so do not neglect this aspect of binary options trading.
9. A goal.
You need to know why you are trading binary options before you jump in. Are you trading with the goal of having fun? Having fun and making a little money on the side? Or is making money your primary objective? Do you want to be able to unchain yourself from your desk at your 9 to 5 job, or would you just like to supplement your main stream of income with a little extra on the side? What do you want to do with the extra money? Retire? Build a house? Donate to charity? Support loved ones? Create something amazing? Whatever your goal is, having one will keep you focused and motivated when you need it the most.
10. The right attitude.
Perhaps the most important thing you need going into binary options trading is the right attitude! At a minimum, you need to be willing to trade responsibly and not exceed your finances. This is true whether you are trading to win or trading for entertainment. If you want to win, and win often, you also need to add self-discipline, self-awareness, and willpower into the mix.
While this list may be longer than you might have expected if you are a binary options novice, you will notice that most of the items on the list are cost-free. For this reason, trading is a great choice for a business to start on a shoestring. You need capital to finance your account, but a trading method is free, and so is the right attitude.