5 tips for binary options traders
Learning the basics
Traditionally binary options trading is considered as a simplified form of investing. For some points it's true but it's hardly as easy as it might seem at first sight.
Many investors who are just getting started think that market is totally unpredictable, therefore it's not really possible to get to know its further movements. As you understand, if that was true, there wouldn't be any place for all forms of investing. So, how can we get a clue about what's going to happen next?
Firstly, you need to learn the basics: what are the main factors that influence the market, how does your trading platform work, what type of options you can choose from, which tools can you use, etc.
Don't stop learning when you get the basics. Self-improvement is never-ending process, so always keep your eye on the new trends and discoveries.
Stick to your strategy
Binary options trading requires a cold mind and all your attention. When you are only starting to discover this world, you can be tempted by plenty of opportunities which seem 100% nice at first but end up as a total failure in the end. That's one of the main reasons why professional traders always stick to the chosen strategy. Being greedy can cost you a lot.
One of the main rules of successful trading is a risk and money management strategy. The main purpose of this strategy is to help you manage your assets well and achieve your goal winning ratio.
To avoid losing your funds, pick a risk management strategy that meets your needs the most. There are 3 different levels available: low, medium and high-risk strategies. The majority of professional binary options traders don't invest more than 5% of the account size. For instance, if you have $1000 on your balance, you shouldn't invest more than $50 in one trade or several simultaneously opened ones.
Test is everything
Once you find a strategy which works for you, don’t rush into trading right away. Even the best strategies require testing and most likely adjustments on your side. The worst that can happen is you going broke, so, a test is always a must.
The simplest way to test whether your strategy works is trying it on the demo. Not every broker offers a free demo but Ayrex does. Just trade your strategy there for a while and compare your demo balance to what it was before. How to understand if it’s working? If your initial balance was $1000 and now you see $1500 then you are doing great. If instead of the bigger number you get $500, there is something wrong and you need to improve this strategy or even get a new one.
Start testing your strategy on our free demo
Keep a trading diary
When you are only starting your career as a binary options trader, try keeping a trading journal, where you can document all your trades. Why? It’s very likely that the first strategy that you find won’t be working as good as you hoped it would be. So, when you finally find the one that works best for you, you will be relieved to find it described in details in your trading journal. However, this is not the only reason why keeping a diary is awesome.
The main secret that you can learn from binary options trading is analyzing what actually happens in the process. From now on, it doesn’t matter if you win or lose (you are still on the demo) because every trade is a lesson which you need to learn. Start writing down date and time, asset, type of option, investment, entry and expiry prices and your result.
You can write down everything that seems important and when the trade is over analyse your actions. This way when the similar opportunity arrives, you will be ready to win.
Be ready for success and failure
I have not failed. I have just found 10,000 ways that won’t work. - Thomas A. Edison
Failures are what help us become better. Trading is no exception. You are allowed to make mistakes, especially when you are only learning to trade. Analyse your actions and results and try to understand how to avoid making the same mistakes next time.
Learning binary options trading is a never-ending process. Each day new features are being introduced, market reports getting published while anonymous heroes create new technical indicators. Time spent on learning is priceless and it always bears fruit.