There are basically three steps to follow if you want to know how to trade binary options online, and if you follow all the advice here you can also significantly reduce your risk:
- understand what binary options are,
- follow a predetermined trading strategy, and
- open a binary options trading account with a reputable broker (and we can strongly recommend GTOptions for the reasons below).
At the outset, we must reiterate that as exciting and potentially lucrative is the trading of binary options, it does carry significant risk. But now some pointers to help reduce that risk.
What are Binary Options?
A binary option (sometimes called a digital option) is an abbreviated form of options trading which allows an investor to take a simple and quick position on an underlying asset.
This asset can be a commodity (like gold), a stock index (such as the Dow Jones), a currency pair (for example the Euro and US dollar) or a stock (Coca Cola is good global example).
Binary options have only two possible outcomes – either the price rises (a “call”) or falls (a “put”) within the time frame of the contract. If you, as the investor, predict correctly you receive a predetermined amount and if not, you lose the amount you invested.
How to be successful at trading binary options depends on understanding two key fundamentals: it only requires a small movement (up or down) in the price of the underlying asset to generate a significant profit, and the investor always knows how much he will lose on a trade if it does not go to plan.
How to Develop a Binary Options Trading Strategy
To become a successful binary options trader requires experience and knowledge, and of course you are lacking both when you are just starting out in your financial trading career.
So the best way to learn, gain experience and avoid losses initially is to use a practice account (also known as a demo or virtual account). This lets you experience the full binary options trading experience without risking any real money. Our preferred binary options broker, GTOptions, provides such a facility.
An important element of any trading strategy is discipline. The successful traders follow the markets in a predetermined way and apply their learning to each trade they make. There is no hit and miss in their trading – everything is done with careful planning and application of discipline.
Having trading discipline also means that you accept there will be losses at times. There is nothing to be gained by becoming emotional and upset if losses occur – the key to success is to learn from the losses and apply that new knowledge to future trades.
The successful investor also shows commitment to his chosen vocation. To do anything well, and for a prolonged period of time, requires commitment to the cause. A lack of trading commitment shows itself when an investor quits after a couple of losses. On the other hand, the committed trader cuts his losses, works out what went wrong and gets on with the next trade.
If you would like to know more about the psychology which typifies successful financial traders, read our article on the trading mindset.
How to Open a Binary Options Trading Account
It is only a few years ago that binary options trading was only available to elite professional traders but now the opportunity is available to anybody.
As a result it is a simple process to open an online account with a options broker and start trading.
The hard part is finding a quality, reputable broker who provides support to its customers and that is why we recommend GTOptions for binary options trading.
Here are some of the things we like about GTOptions:
- no registration fee
- free demo account
- trade in either US Dollars (USD) or Euros (EUR)
- minimum deposit amount only 250 (USD or EUR)
- can trade currencies (Forex), commodities, stocks and indices
- can trade around the clock (24×7)
- high payouts (up to 600%)
- completely secure trading
- great trading and training tools
- live chat with a broker
- variety of trading bonuses, and lots more.
So the steps to trade binary options online while reducing risk amount to understanding what you are doing and adopting a trading strategy, plus of course opening a GToptions online trading account.
To your trading success.