So you wanna be a trader. Easier said than done, my friend. A lot of guys step up and believe they can be successful at the game with no prior training, but this is actually the first step towards losing their money. Binaries are easy to understand, easy to use and can be profitable… if you are willing to put in the work and treat trading how it should be treated: like a business. After reading this article you will not be a trader, but it will help you get started and hopefully you will have the proper mindset.
Psychology
No, I’m not going to hypnotize you or anything like that, but I want you to realize that a trader must have a certain mental approach to this business. Trading binaries has similarities to gambling…this is one of the greatest traps set for new traders and you must do everything in your power to make sure you don’t fall into it. Don’t think for a second that a Call or a Put is Red or Black on the roulette. I’ve seen “traders” make this mistake and it didn’t turn out well for their accounts. Yes, a gambler can win a couple of trades, but that will not make him a trader and soon his account will be depleted. You must always keep in mind that you are a trader that makes informed decisions and luck has nothing to do with it.
The basics
Ok, by now you know better than to treat binaries like a casino, but what’s next? I said above that every decision must be an informed one but to be able to make an informed decision, you have to know the basics of technical and fundamental analysis. Things like Support and Resistance, trend recognition and retracement trading are the backbone of analyzing everything that can be charted and you cannot jump in the middle of the action without having a basic understanding of those aspects.
Political and financial news, economic indicators, central bank interest rate decisions are all part of Fundamental analysis and you also need a good understanding of these factors if you want to become a great trader. If a country’s economy is thriving, it’s most likely that its currency will strengthen and we can profit from this fact if we are aware of it and if we know how to read the signs. I’m not saying you need to be an expert in all aspects of technical and fundamental analysis, but you definitely need to know the basics…and a little more if possible.
You can find more articles on technical and fundamental analysis for binary options trades here: http://www.binaryoptions.com/
Money Management
You definitely don’t need an Economics degree for this, just common sense and you need to be prepared for the worst. I’m not trying to scare you, but it’s not always milk and honey out there and you are going to lose some and win some; the trick is to survive those losing trades. Think about this: if you open a $300 account and you trade $100 per trade, it takes just three consecutive losing trades to blow the entire account, but if you use some common sense and trade just $30, it will take 10 consecutive bad trades to blow the account. To get 10 losers in a row is highly unlikely, but three…let’s just say it’s very probable, especially while you are still learning. This was just an example but the main idea is to adjust your amount invested on a single trade in a way which will protect you from a bad period and will allow you to trade another day.
Beware of scams
The Binary Options industry is one of the fastest growing on the internet at the moment. Whenever something is getting a lot of attention, inevitably scammers and con artists will be drawn to it like moths to a light bulb. Unfortunately this is the case with binaries too and there are a lot of scammers out there, trying to sell you the “Holy Grail” of trading, a strategy which will supposedly always win, promises of overnight riches, “secret” training that will instantly turn you in a George Soros of Binary options trading. Don’t fall for it and keep a clear head.
Like I said, the things above will not make you a pro, but ignore them at your own risk. Following them will get you started on the right track and headed in the right direction!
See Also:
- Trading Volatility
- Control Risk With Options
- Trade Considerations for Option Expiration Week
- “Time” – Key Factor for Options Traders
- Understanding Implied Volatility
Recommended:
- Options for the Beginner and Beyond: Unlock the Opportunities and Minimize the Risks
- Uncle Bob’s Money: Generating Income with Conservative Options Trades
- Get Rich with Options: Four Winning Strategies Straight from the Exchange Floor (Agora Series)
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