Are you considering binary options as a trading instrument but cannot make a final decision? Our guide will help you understand whether it is for you or not. We will tell you about the main pros, cons, and pitfalls. Also, you will learn how to try it at no risk at all.
Let us find out what is the essence of this trading tool so that we can talk the same language. Binary options are option contracts that imply a “yes or no” payment scheme. So, a trader must forecast whether an asset chosen will go up or down in price within a period agreed. If his supposition turns out to be correct, he gets back the sum he bet before together with a return that can reach 70–80% and even more. Another crucial point to mention is that a trader knows beforehand how much money he may earn or lose depending on the correctness of his forecast.
Here are the key pros of binary options for beginners:
- easy to understand and use;
- extremely high returns of 80 % and more;
- potential returns and losses are known beforehand.
Still, one must note that such trading implies high risks as well. The best strategy is to stick to small bets ― about 1–2% of the general capital. When a novice trader chases big money and puts a significant part of his capital at risk, he usually ends up with huge losses. In addition, a trader must take into account that he will have to constantly spend much time and effort on analyzing the market and determining the trends to make winning bets.
Now, you probably want to know how to start trading.
- Do deep research on the basics. Study the types of options, terminology, strategies, trading tips from experts. Decide whether such a risky tool suits you.
- Select a broker. In practice, you can turn to any brokerage company with a proper reputation, but make sure it offers a large selection of assets, an affordable minimum deposit limit, low fees, attractive bonuses, effective research and educational tools. We recommend you choose from Binary.com, IQ Options, PocketOption ― these services are a safe pick for both beginners and professionals.
- Test your knowledge via a demo account. It is a free and riskless method to try your hand at binary trading.
- Create a real account and make your first bet, but, again, do not risk more than 2% of your budget.
Also Read: How Old Do You Have to Be to Buy Stocks: Tips for Teenagers and Their Parents
To sum up, binary trading is an advantageous option for you as a beginner under the condition that you pay enough time to market analysis, as well as watch the risks.