Binary options trading is relatively simple compared to some other forms. You choose an underlying asset, decide on your stake and place a call option if you think it will increase in price by a set time or a put option if you expect it to fall. However, like any form of trading, you are looking to make a profit but it will take time to learn and gain experience.
The best way to learn is to adopt some strategies from the outset and, because you’re a beginner, these can be kept simple. The first strategy to adopt is to always trade in a reasoned manner. Don’t be reckless, don’t follow hunches but always analyse the asset you’re going to trade and make sure your trade is based on sound facts rather than on emotions.
As regards the assets, always trade one that you know something about. If you work in finance, trade the forex market or in banking shares. If you’re employed in the oil industry, trade the price of oil. It’s usually best to start with a relatively small number of underlying assets so you can analyse them thoroughly. Once you gain experience and see how they’re performing, you can widen the number and type of assets you trade.
Limit your Stake
Money management is perhaps the most important strategy you can adopt as a beginner in binary options trading. Since you’re more likely to make incorrect predictions and incur losses when you start, you will soon run out of money if you’re not careful. Never trade with a bigger stake than you can afford to lose. A good thing about binary options trading is that you can choose the level of your stake and know that’s the most you can lose. Therefore, when you’re a beginner, you can set the stakes low and increase them as you gain in confidence.
Even more significant is that you can adjust the amount of your stake depending on whether you’re being successful or unsuccessful. It’s often recommended that you never risk more than 10% of your remaining account balance so you’ve always got ten losing trades before you run out of money. If you stick to this percentage, this means your stake will decrease as your balance falls but will increase once you start to make winning trades. As a result, you’ll make bigger trades when you’re on a successful run and so will maximise your profits but will limit your losses at other times.
Another important strategy whether you’re a beginner or not is always to follow trends. Don’t think you know best and can beat the markets because you’ll normally lose.