The key to become a successful binary trader is to develop a good trading strategy. A good strategy is the cornerstone for success. Once you have a good strategy you an improve your success by developing good money management and risk management strategies.
A good strategy is a strategy that allows you to consistently make money. A binary option have two different possible outcomes. They can either end out of the money. If they do you loose all of your money. The second possible outcome is that the option can end in the money. If they do you will earn a return of around 90%. This means that you will need to choose binary options with a success rate of over 50% to earn money over time.
The exact return you get when a binary option end in the money vary from broker to broker. This means the success rate you need for your predictions also will vary depending on which broker you are registered at. Most brokers offers a return of around 90%. This means that you will need a success rate of around 55% to break even. If you have a success rate that is higher than 55% than you usually earn money.
A kind of betting
Trading with binary options have a lot of similarities with sport betting and you will need to use similar techniques to develop a winning strategy. As a sports bettor your goal is to find bets that offer you a good expected value, a good expectancy. You calculated the expected value by dividing the possible return of the investment with the likelihood of the option ending in the money. The better expected value an option offer the better investment it makes. Theoretically there is value to be had in investing in all options that offer a positive value. In reality it is better to set a minimum value that need to be met for you to invest in a option. The higher minimum value you set the higher the likelihood that you earn money but it will also be harder to find investment opportunities that offer you what you are looking for. You should never make a trade with a negative expected value.
When deciding the expected value you should consider the underlying trends as well as fundamentals. There are a lot of different methods for calculating the value of different investments. You can use simple strategies or more advanced strategies. A more advanced strategy is not always better then a simple one. We recommend that you use the strategy that you have most experience using. If you have never used any strategies for predicting the market movements then we suggest that you try as many strategies as possible than use the one you like the best.
Example of techniques that you can use to predict the market includes:
- Fundamental-analysis: Fundamental-analysis is the basis for most investments. It gives you a good indicator for how stock is likely to develop in the future. Fundamental-analysis do however only offer a very limited value for binary option traders. This is due to the fact that binary options have short time frames. Fundamentals usually have very little affect on the movement of financial instruments over short time spans. Fundamental-analysis can still provide a good base for future analysis and can offer limited value for long term binary options. Some brokers offer super long binary options with a maturity of several months. Fundamentals can offer good guidance when trading with these super long binary options.
- Technical analysis: Technical analysis is a way to use historic data and market movements to predict future movements. There are several techniques and software that you can use to predict the market. There are plenty of guides online that can help you to learn technical analysis. Many of these guides are much better than anything we could write. We will therefor not teach you how to do technical analysis. If you want to learn we recommend that you Google how to.
If you do not want to evaluate your own trades than you can can subscribe to a signal service that evaluate different trades for you and provide you with information on the trades they think offer good value. If you do you have to make sure that you choose a good signal service. It is worth paying a high price for a good signal service as it will allow you to earn a lot of money.
Don’t trade with loaned money
Never finance your tradings with loans as you can end up in large debts if you lose, specially not before you read a guide about how to do it safely. Binary trading and any kind of stock/money trading is a game that can be very addictive. Keep in mind that you always should build up your bankroll and never play more then you can afford to buy with.