Binary trading involves an investor predicting the price of an asset within a given period. If he/she is right, the investor gets back his investment with a bonus. If the investor’s prediction is wrong, he/she loses the entire amount of invested money; however, how much can you make trading binary options?
The amount of money you can make trading binary options depends on your skills and luck because making an accurate prediction can be easy or difficult. To be able to make it a full-time job, you would need a lot of experience and training.
The rest of this article will give a detailed explanation of how to make money through binary trading and a step-by-step guide on how to trade.
IMPORTANT SIDENOTE: I surveyed 1500+ traders to understand how social trading impacted their trading outcomes. The results shocked my belief system! Read my latest article: ‘Exploring Social Trading: Community, Profit, and Collaboration’ for my in-depth findings through the data collected from this survey!
Table of Contents
What You Should Know and Do When Commencing Binary Trade?
It is possible to make money through binary trading, but making significant profits won’t happen as soon as you expect. Although it may seem lucrative, you need to be realistic and consider the following.
Learn and Perform Research on Binary Options
Before you place a trade, avoid making the mistake of treating binary options like a kind of gambling. You will only be successful if you research the trading market and keep learning by reading free or paid educational materials online. Educate yourself on how to analyze news headlines involving finances and study graphs/charts.
With knowledge of the basics and chart patterns, you will understand price activity predictions through price movements carried out in the past. You will also become knowledgeable about the most suitable binaries to invest in and make profits fast.
Don’t Let the Emotions Overcome You
When you’re a newbie, it’s easy to succumb to your emotions and make a wrong investment out of over-confidence or fear. Whether you are in high spirits or feeling dull, always place an investment rationally. Be aware of your emotions, avoid stress, and relax.
Manage Your Finances and Only Invest What You Can Afford
With binary options, there are many risks involved. If you’re not careful, you will end up diminishing your capital if you lose regularly. Manage and control your trade investments; don’t put all your savings into it. If you’re an expert, invest 5% of your capital, and 1% if you’re a newbie. Also, do not trade with borrowed money or funds needed for your daily expenses.
Check the amount of funds you have in savings; it should be enough to cover expenses for at least six months if an emergency comes up. Determine how much you can use from your salary to trade, come up with a budget, and set realistic goals about the profits you wish to make from binary options trading. You can use a probability spreadsheet to estimate your earnings depending on your starting capital, percentage invested, and daily trades.
Consider All Fees Charged by the Broker
Many brokers will require that you make a minimum deposit; ensure you have adequate funds for it so that you can open an account. Also, there are withdrawal and extra fees that they will cut from your earnings. Before signing up for a trading account, liaise with them to get information on the various fees and the minimum amount for withdrawal.
If you’re a newbie and skeptical about risking your money through deposits, you can try out legitimate demo accounts. They will assist you in familiarizing yourself with binary trade until you become accustomed to that platform.
Ensure Your Broker Has a License
There are several brokers in the market because trading binary options is a profitable business; however, not all binary option brokers are genuine. Carry out a considerable amount of research on every broker by checking reviews of binary options’ sites.
You can also check forums where customers try to uncover issues regarding withdrawal fees, customer support, and deposits through complaints. This way, you will narrow your options down to a reliable and affordable broker.
How Binary Options Trade Works?
There are various types of binary options to work with, “Up/Down” or “High/Low” trade being the most common. In this type, the price result is either lower than the current one during expiry time or higher. Other types include:
- Boundary, In/Out, or Range. A “low” or “high” figure is set when using this option. Traders then predict if the price will end outside or within these boundaries.
- Ladder. They are similar to High/Low trade, only that the price levels are preset as opposed to using the prevalent strike price. These options require a substantial price move and payouts often exceed 100%.
- No Touch/Touch. They have levels set lower or higher than the existing price. The binary options trader predicts whether the correct price will fall under those levels during any time between the trade and expiry. Keep in mind that with the touch option, the trade will close if the price level is reached before expiry. The payout will then be made immediately, even if the price later shifts from the touch level.
A Step-by-Step Guide on How to Trade Binary Options
Select a Credible Broker
With fraud being one of the significant problems facing binary option trades, ensure that the broker is licensed, check broker reviews, and compare different deals involving deposits, demo accounts, and minimum deposits.
Compare Asset Lists
You can trade on various assets, but the asset diversity and count vary from one broker to another. They include forex pairs like GBP/USD, EUR/USD, and USD/JPY. Major stock indices include Dow Jones Industrial, FTSE, and S&P 500, while commodities for trade like silver, gold, and oil are also offered.
You can trade individual equities and stocks, although not all will be available. The demand is growing, but you can choose roughly between 25 and 100 stocks that are popular such as Apple and Google. You will find all assets available to trade with various trading platforms and brokers on their respective websites and review sites.
Choose a Suitable Expiry Time
Expiry time is when a trade ends and a payout is made, except for the touch option. Periods for expiry range between thirty seconds and one year, but with increased demand, the expiry time range is broadening. There are three categories, namely:
- Turbo or Short Term: expiry time is below five minutes.
- Normal: The expiry range is between five minutes until the end of the day when the market for that asset is over.
- Long term: Includes any expiry period that goes beyond a day and could go up to a year.
Select the Amount of Investment You Want to Place
Carefully consider the amount of money to place because you risk losing it all. Depending on the label provided, click on the button of your choice (sell, buy, put, or call); whether the value of the asset will fall or rise.
Check Details and Confirm Your Trade
Various trading platforms will allow you to ensure that your details are accurate before approving the trade.
Here is a YouTube Video on how to trade binary options.
Pros of Binary Trade Options to Make Profit
Listed below are some of the most prominent advantages of trading binary options to make money –
- You can make double the amount of investment in a few minutes.
- With basic knowledge and deposit, you can start trading as soon as your account is verified.
- You can pursue many trades because there are short expiries and immediate payouts; it enables you to withdraw and re-invest, hence making more money.
Author’s Recommendations: Top Trading and Investment Resources To Consider
Before concluding this article, I wanted to share few trading and investment resources that I have vetted, with the help of 50+ consistently profitable traders, for you. I am confident that you will greatly benefit in your trading journey by considering one or more of these resources.
- Roadmap to Becoming a Consistently Profitable Trader: I surveyed 5000+ traders (and interviewed 50+ profitable traders) to create the best possible step by step trading guide for you. Read my article: ‘7 Proven Steps To Profitable Trading’ to learn about my findings from surveying 5000+ traders, and to learn how these learnings can be leveraged to your advantage.
- Best Broker For Trading Success: I reviewed 15+ brokers and discussed my findings with 50+ consistently profitable traders. Post all that assessment, the best all round broker that our collective minds picked was M1 Finance. If you are looking to open a brokerage account, choose M1 Finance. You just cannot go wrong with it! Click Here To Sign Up for M1 Finance Today!
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Bottom Line
You can make a significant amount of money through trading binary options. However, how much you make entirely depends on your skills, amount of investment, and sometimes luck. Before you start trading, ensure you do your research and learn about the market. Choose a reliable broker who is licensed, choose the assets to trade on, and use a demo account to familiarize yourself with the platform. Remember, there is a risk involved; invest wisely.
BEFORE YOU GO: Don’t forget to check out my latest article – ‘Exploring Social Trading: Community, Profit, and Collaboration’. I surveyed 1500+ traders to identify the impact social trading can have on your trading performance, and shared all my findings in this article. No matter where you are in your trading journey today, I am confident that you will find this article helpful!
Affiliate Disclosure: We participate in several affiliate programs and may be compensated if you make a purchase using our referral link, at no additional cost to you. You can, however, trust the integrity of our recommendation. Affiliate programs exist even for products that we are not recommending. We only choose to recommend you the products that we actually believe in.
