8 Things you didn’t know about Binary Trading

Whilst Binary Options are growing in popularity, there are still a lot of misconceptions that are associated with them. This has led people to be unsure about trading with Binary Options, when, in reality, they are an excellent tool, and a great and effective way to trade.

We are experts in Binary Options, and are proud to offer the service that we do to our customers. We have listed common misconceptions and things that new traders might not realise about Binary Options, to help those who have not traded before to learn and understand the pitfalls. Education and research is absolute key when it comes to trading Binary Options, and the more you know, the more likely you will be to make profits.

1) Binary Options Is Not A Scam

One of the biggest misconceptions surrounding Binary Options is that it is a scam. Whilst any sort of trading comes with an element of risks, trading with Binary Options is a legitimate trading platform. So where does this belief come from. Sadly, from the fact that there are some bogus traders out there. Binary options is still a relatively new trading platform, and because of this, people are still learning about it. Unfortunately, there are some con-artist brokers out there, who will go about cheating you out of winning trades. You, therefore need to be careful when you are looking for a trader, to ensure that they are fully licensed and registered. Do not let this put you off trading binary options though, and rest assured that the majority of brokers are completely legitimate, but when trading, always remember the rule that if it seems too good to be true, then it probably is.

Another reason that binary options get a bad reputation, and people feel that it is like a scam is down to inexperienced and, dare we say it, foolish traders. The traders, who will throw money at binary options, before they really understand what it is that they are doing. They come in with unrealistic expectations of winning fortunes overnight, and when this does not happen, they put it down to the fact that it must be a scan, as opposed to the error lying with them. Binary options are a nice easy way to trade, as long as you know what you are doing. Take your time to get to know the system and how it works, and make sure that you carry out thorough research, before spending money, so you can really see just how beneficial trading with binary options is.

2) They Are A Really Easy Way To Trade

Compared to other forms of investment and trading, binary trading is a very easy way to trade. This is mostly down to the fact that the account requirements and mechanics are different to others, making it a simplified form of trading. It is, actually, a really great platform for new traders to begin with.

With other types of trading, there is a lot of leverage, which can make it very high risk. It is often harder to make a profit, even if the positions have moved as predicted. Binary trading is a lot simpler that this, whereby, you will pay a set price at the beginning of the trade, and you are only exposed to a loss of that amount, as well as a fixed return when the contract expires at the closing time. All you have to do is move the underlying asset in the direction of your choice – if your prediction is right, you win; if it is not, you will lose that amount. It really is that simple.

Don’t read this to mean that you will make a profit every time though. Although the trading is easy; being successful is not always. You will find that the most profitable traders have spent years and years learning the market, and getting a really in-depth knowledge about how to trade. Even though binary trading is simple to do, it does not mean that you should go into it blind. The underlying market and technical analysis are the same as other forms of trading, and will require the same knowledge and experience in order for you to produce profits every time you trade.

3) You Can Make Fast Money, But Not Get Rich Quick

Many new traders have an unrealistic expectation that they will be able to make thousands and thousands of dollars in a day as soon as they start trading binary options. That said, the difference with binary options is that you know the payout from the outset, and these can vary from between 70-500% of your investment, depending on what type of option you are trading. It is possible to make fast money in the sense that some binaries will expire in just 60 seconds, which means that you could have a profit after one minute of trading. If you make several of these trades, it is possible to literally make money quickly, due to the high speed of return; however, it is so important that this is not confused with getting rich quickly.

Any type of trading comes with an element of risk, and therefore is difficult to do successfully. Although it is physically possible to make money quickly with binary trading, it is also possible to lose it just as fast. That said, the advantage you have with trading binary options is that you know the amount of money that you will lose. Many traders will set factors in place that will prevent them from making too many losses, and this is a good plan for all traders to follow, but particularly new ones, as a way of managing your money better.

4) You Can Absolutely Trade With A Small Account

Another misconception is that you cannot trade binary options with a small account. In fact, it is advisable to start with a small amount in your account, and if you trade well, your account will grow. The reason behind this assumption has some meaning to it, and that is that you only risk a small percentage of your account on each of your trades – the usual amount is about three percent. So, if you have opened your account with just a small amount, you will not be making a lot of money at first; whereas, if you open with a large amount, if you win, you will see your account grow quicker. You will also see it decrease quickly if you are not successful.

It is completely possible to trade with a smaller account, but to see noticeable profits, you have to be patient. In fact, it is completely advisable to start with a smaller account if you are new to trading, as you will be taking smaller risks, which is perfect for practice. As you get better at trading, naturally your account will grow.

5) You Should Expect To Have Losses

One of the biggest mistakes that people make when trading binary options is when they expect wins every time. So many new traders get caught up on the fact that trading with binary options is simple compared to other trading platforms, and that this automatically means big wins every time. Don’t quit your job just yet, as, like we have mentioned in our previous point, it takes a long time to become a successful trader, and even then, you should expect some losses. Only approximately 2 percent of traders are able to make any sort of a living from it, and that comes from hard work and dedication.

The trick is, not to have unrealistic expectations. Don’t work on the assumption that you are going to triple your money every night; instead, work on the assumption that you will lose whatever you invest. That way, any wins will be a bonus.

Another mistake that a lot of new traders fall into as well is to trust your instinct and only rely on your gut to make a winning trade. It is time to be realistic though – no one can have this sort of connection to the market, and relying and believing solely on your gut instinct will only see greater losses for you later on. The only way that you can truly become successful at trading binary options is to look at reliable and consistent methods. Look at charts and learn how to identify the different trends in the market that will help you to predict which direction the trade is likely to go.

6) Demo Accounts Are Just As Important

One mistake that people often make when trading binary options is to ignore the demo accounts that are often offered to them, as they believe that it is a waste of time. Demo accounts are such a vital tool, and essentially lets you trade with virtual money before you trade with real money. Trading with your demo account is the time to make mistakes and learn how binary options work.

Regardless of whether you have carried out a lot of research before making any trades, when you first start out, the likelihood is that you will lose trades, but it is far less detrimental to lose trades using virtual money than real money. It is so important to be patient and responsible, which means learning as you trade. The same should be applied if you carry out a different type of binary trade; for example, if you are used to trading long time trades, and then start participating in 60 second trades. Demo accounts are just as important, if not essential to your active account.

7) They Have Longevity

Binary options are not going anywhere fast, and despite many traders being sceptical of them, and doubting the longevity of binary options, they are only gaining in popularity, with more and more traders choosing this type of trading option.

More and more trading platforms are offering their customers the chance to trade with binary options, which shows how popular and accepted it is becoming. Europe has easier access to trade with binary options than America and Canada; however, even this is slowly changing, with it being more and more accepted.

8) There Are Different Binary Options

Many traders are put off trading with Binary Options as they believe that there is not any variety to how you can trade. There is a basis to this assumption, and that is that the structure of all binary options is essentially the same. By that, we mean that if you predict correctly, you make a profit, and if you predict incorrectly, you lose. However; the assumption that all binary options are the same is not a fact, and there are in fact, a number of different types.

The most basic and common is High/Low option, where you are simply asking yourself if your asset will be higher or lower than the current price, at the time of expiration; One touch/No touch options, where you will ask yourself if your asset will reach a certain point by the expiry time; Boundary/Range option, where you decide whether your asset will stay within a certain boundary or range at the time of expiration; a 60 second/Short term option, which is perhaps the hardest of the binary options, and operates very much like a high/low option but over a very short space of time; a long term binary option is the opposite and can expire after a few weeks or even months! Essentially again, it works the same as a high/low option, just over a longer period. These are just a few of the main types of binary options that are available to traders, but it just goes to show that the belief that they are all the same is very off, and there is actually a lot of choice, and something to suit all traders.

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The Longevity Factor Pre-Conference Workshop – A5M 2012 Conference


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