Five Binary Trading Essentials
1. Binary options trading involves FAST reward and FAST risk. The speed of which binary trading occurs is paced much quicker than traditional investing. Trades happen literally as fast as 60 seconds (we explain later). Just know that the pace of trades is far quicker than traditional trading. This poses psychological challenges to traders because the allure of huge returns literally only moments away are extremely tempting. This leads traders into making some rash decsions and bad trades that end up costing them money.
2. Binary trading is more like placing a “one or the other” bet on an assets price movement than the actual buying or shorting of an assets stock. You never take any ownership of the underlying asset. You just predict it’s price movement. That’s why you will hear binary trading referred to binary betting interchangeably. As the trader, you ‘bet’ up or down and make your trade accordingly.
3. Magnitude of price movement is not a factor in your return. If you win by 1 pip or 20 pips it matters not with binaries. What does matter is price movement. As far as determining if your trade finishs in the money our out of the money. Magnitude of movement does not change your return / payout. Win by a little or win by a lot, with binaries it matters not.
4. Beware Of Bonuses – Binary brokers fiercly compete for your business and they offer very attractive looking deposit bonus offers. Beware. They come with terms and conditions that many traders blindly accept without reading the fine print. Read it. Most bonuses require the traders to roll over, or trade their investment and bonus amount a certain amount of time before any withdrawal will be processed. If you take a bonus know that you will not be able to withdraw until you meet the t’s and c’s.
5. Trading with a legit broker is critical. I can not stress this enough. There are dozens upon dozens of binary options brokers, and I use the word ‘brokers’ loosely, these are really more like binary trading websites. The history of trading binary options online is littered with stories of rogue brokers, cheating, stealing and right out fraud. The good news is that today, in the latter part of 2012 there are a small handful of legit binary brokers you can trade with without getting ripped off.
These five rules of binary options are essential to your understanding of binary options trading.
Ready To Get Started?
If you are ready to give binary options betting a try then get out your credit card and make a deposit at one of our select brokers. You can try an industry leader like 24option.com and know you are trading at a site you will still be trading a year from now. If you want to learn more about binaries, check out our comprehensive guide to understanding binary options trading here.