Binary Option Trading – What You Need To Know?
Of all the investment instruments, binary options is one of the most talked about. The reason being it is simple to understand and do.
The main activity involved in binary option trading is prediction about the movement in price of the asset within a certain time frame. The asset can be stocks, gold, or commodities etc. Simply put, you will win if your prediction goes right and lose if your prediction goes wrong.
In financial world, neither profits nor losses are guaranteed. Influenced by multiple factors, things can go quite against expectations. All you have to do is to stay alert and trade strategically.
Binary Options trading presents awesome money making opportunities both for traders and brokers. However, not to be taken for granted, it needs to be processed strategically in order to minimize risk and increase chances of profit. Moreover, for successful trading you should have complete understanding of industry and underlying risks.
Here are some basic things that you should ensure to know before you step into binary option trading.
Binary option trading is a zero sum game and involves a significant level of risk. It gives you either all or nothing. Although it is risky, but its risk is defined. You can only invest that money which you afford to lose. As it is all about speculation, it can go wrong unexpectedly. Therefore, invest only that money losing which may not bankrupt you. Start with a reliable broker and only after completely understanding the terms and conditions of trading. Understand the risk, and then proceed accordingly.
All binary option brokers out there flatter about binary option trading presenting it as one of the most profitable and less risky investment option. Yes it is profitable but it is not without risk. To attract the attention of traders, many brokers offer deposit bonus. The bonus is usually a fixed percentage on your deposit. Yes they do offer bonus but it is not absolutely free. In turn of this bonus, they require traders to trade a certain volume and impose certain conditions on profit withdrawal. There are many brokers who deduct their bonus money from your balance. So before you get into bonus trap, make sure to read and understand the bonus terms so as to remove any ambiguity.
Charts are must:
Almost every binary option broker claims their platform as one of the best in industry. Remember, the best platform is only one that gives you required information (charts: Candlesticks) to carry out technical analysis. The fact is there are very less brokers who provide pricing charts. So make sure that your broker is giving you charts to carry on technical analysis such as trend line and moving average so that you may speculate accurately. Say, if you are satisfied with the price and other terms of the broker but he is not giving you charts, you should use any third party charting software. But never do trading without technical analysis otherwise chances for wrong speculation will increase.
Be Aware of Scams:
No doubt binary options industry is a profitable one. There are a lot of brokers who are offering reliable services. But amongst those, there are also scam brokers who take benefit from novice traders as they do not know about the industry. Playing with innocence of traders, scam brokers entrap them in their false claims. After the trader deposit money they either disappear or invert the game on trader as if he has not complied with any term or condition. So be aware from these scammers and choose to trade only through reliable brokers with proven track record.
Summing up the article I would say that binary option trading is easy but not that much easy. As claimed by brokers it is only about pick the asset, speculate the direction and click trade. But the game is all about which asset to pick and which direction to go. To do it profitably, you have to put hard work and learn basics about binary option trading.
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