Binary options are becoming increasingly widespread in our country and the CIS countries. Relatively recently, this was a topic of interest only to professional traders. Now the situation has changed thanks to active advertising. New players who lack the necessary information have begun to explore financial markets. Moreover, such problems concern not only beginners, but also those who already make money on binary options .
Below are answers to popular questions regarding binary options. Familiarization with them is a superficial study of the topic, although the amount of information offered is sufficient to make informed decisions when investing in financial markets.
What are binary options?
On our website there is a detailed article “ What are binary options in simple words ”, but if you turn to the Internet to find an answer to this question, you can “fish out” a lot of useless information. Mostly, the term “binary options” is deciphered at the level of general definitions - it is an agreement or contract to confirm a futures transaction, a financial instrument, and so on. Such knowledge cannot lead to losses or wins when trading options.
Initially, a financial instrument of this type confirmed the rights to purchase or sell a specific product. This is no longer the case. It is impossible to track the broker’s actions on concluded contracts. The trader has only one thing left to do - buy/sell an option within a given expiration time .
A binary option is a version of roulette, where the client guesses the direction of the price, and the broker guarantees payment of a reward in case of a successful outcome. The difference from a casino is the greater chance of winning if you delve into the topic: studying the theory, testing strategies on a demo account , and more.
Are binary options a scam?
Some people think that binary options are a scam , but the problem with binary options lies not in them, but in the brokers. With the help of such trades in financial markets you can make very good money. Advertising convinces that it will not take serious effort to achieve wealth in a short time, but this is a deception. You will have to take time to gain knowledge and relevant experience. And before you start earning consistently, you need to undergo training in binary options trading . As for deception, it is associated with unscrupulous brokers ( rating of reliable brokers ). Be aware of who you trust with money. At the same time, binary options still resemble gambling, which is determined by predicting the results. The main difference is the different accuracy of forecasts. Options are easy to calculate. This cannot be said about everything that is connected with the world of gambling.
What makes up brokers' income?
Brokers' profits come from traders who make unprofitable trades, which equally applies to the income of successful traders. Investors' money is used. If you want to earn money, determine correctly where the price will go.
It is believed that a broker takes more risks compared to a trader, since the probability of correctly predicting the forecasts is high. This is not entirely true. There is a constant influx of investors due to active advertising of binary options. At the same time, most of them are more engaged in gaming and fortune-telling, rather than trying to acquire the skills of traders, which leads to the loss of deposits . At the same time, many are not smart, refuse to develop and strive only for easy money. Such novice traders mostly lose money, which is what provides income to brokers.
You should take binary options seriously. With their help, a prosperous life can be built if a person studies the features of this type of income, constantly tests various strategies and tries something new. In this case, part of the broker's potential income ends up in the pockets of such investors.
How to learn to trade binary options?
Brokers not only provide a trading platform, but are also willing to share specialized knowledge. Such proposals are not uncommon. Access to such courses is provided on a paid or free basis. Examples of brokers where you can find basic training materials include the following brokers:
- Pocket Option ;
- Quotex ;
- Deriv ;
- Binary ;
- Binarium .
Some of these brokers also offer strategies for beginners that you can try out on a demo account.
Another source of information is educational sites where materials on binary options are posted.
Successful asset trading requires studying the markets where financial assets are traded. Forex and the stock exchange dictate basic rules, focusing on which leads to successful forecasting. Learn at least basic knowledge to simplify the trading process and eliminate uncontrolled transactions.
How long does it take to study binary options market analysis?
The specific period depends on the method of training. If you have an experienced trader who can help you understand the basics of trading, the process will go faster. It is also important how determined you are to absorb new information. Desire, commitment to goals and competence are factors influencing the speed of learning. An independent approach to the matter involves turning to the appropriate Internet resources where information on binary options is posted.
Typically, learning, whether done on your own or with a mentor, takes time, measured in hours rather than days. On average, at least 30 hours of practice are required. The emphasis is on practice, not theory. Only real trading can develop the required forecasting skills. At the same time, it is not necessary to risk real money at first. There are demo accounts with virtual currency. Use them for learning.
What are the benefits of a demo account?
The opportunity to practice using a demo account is provided by all brokers. Therefore, newbie traders should definitely start trading and learning with a demo account, which consists of virtual funds. Thanks to this, you can make any transactions for any amounts and not be afraid of losing your deposit.
In addition, a demo account allows you to understand how the trading platform of a binary options broker works, since 90% of platforms have different functionality and different types of binary options . Therefore, it is very important for beginners to start trading on a demo account.
Therefore, do not refuse a training account if there is such an opportunity. Although you can do without it. To do this, adhere to the following algorithm aimed at developing skills in determining how the price of an asset will change:
- Record the current value (write it down).
- Note the forecast time.
- Fix the final cost at the end of the set period of time.
- Check the accuracy of the forecast. Compare the initial and final costs, if the trend is guessed, then give yourself a plus, otherwise – a minus. The number of pluses should be 2-3 times greater than the minuses in order for there to be grounds for entering a real account. The total number of transactions for testing is from 20.
Is trading available to a novice trader on the first day?
Anyone can start trading right away. The meaning of the question seems to be how high is the probability of starting immediate trading without draining the deposit in a few hours. If you have the appropriate knowledge of technical or fundamental analysis , and have the skills of a trader, then a successful start on the first day is a reality. You just need to analyze the market and predict the trend of a trading asset. Otherwise, when you don’t have the necessary knowledge and skills, you will have to learn a little and only then try yourself as a trader.
Many people have the desire to make money quickly. When it comes to binary options, there is no need to rush. Without knowledge and experience, counting only on luck, you cannot build a working earnings scheme. If you still can’t wait, then act thoughtfully. Choose one of the strategies and follow the proposed algorithm.
How important is money management and risk management in binary options?
The rules of money management and risk management are very important in binary options trading, as they allow the trader to save most of his deposit even with a long series of losing trades. To put it simply, if you adhere to the rules, you will be able to make transactions without fear of losing your entire deposit. This becomes possible due to the fact that according to the rules of capital management, you should not risk more than 2-5% of the deposit in one transaction. The best option is when you risk only 1% per trade. For example, you want to buy a Call option on the EUR/USD currency pair , and you have $100 on your deposit. Then you buy an option for an amount of $2-5 (2-5%). Of course, the profit on such an option will be small, but you won’t be able to lose much.
Minimum deposit for binary options
The minimum deposit with most binary options brokers is $10, allowing anyone to start trading with real money. But please note that the minimum amount to complete a transaction is $1. Therefore, it makes sense to top up your account with $10 only to try out trading, but you cannot talk about serious profits with such an amount. Therefore, as mentioned earlier, it is better to practice on a demo account, and only then replenish a real account, starting with larger amounts.
To familiarize yourself with the trading conditions of various brokers, you can check out our rating of binary options brokers .
Conclusion
In this article, we tried to answer the most popular question about binary options from beginners. We briefly looked at what binary options are and whether they are a scam. We also found out how brokers make money and how to learn and start trading binary options in the shortest possible time.
Finally, I would like to say that always practice a professional approach to business so that trading binary options turns into a business and not a casino. Become a professional binary options trader.
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