How Do Binary Options Work?
Binary options are very simple. They are essentially a trade on a “yes” or “no” question.
You choose a market, a commodity, or a pair of currencies. You purchase your options on whether or not you think the price will be above or below a certain price point in a certain amount of time.
For example, you might bet that the price of natural gas will go above 2.494 in the next hour. If you’re right, you’ll win your trade and gain some amount of money for being right. Usually, you’d place a $50 trade and get $100 back if you’re right.
If you’re wrong, of course, you lose the $50.
Can you really make money with binary options?
Yes, though nobody gets rich overnight.
You have to learn the markets, manage your money carefully, and choose a strategy that works for you. Don’t just jump onto a platform and start trading. Read up on what experts expect the markets to do. Look at the trends. Make reasoned decisions.
As you grow your account you can make larger trades. As you grow your skills you can make more money faster.
How do you trade binary options successfully?
Good money management is key. What makes binary options so safe is they aren’t leveraged. You put a certain amount of money into an account and that’s all you have to work with. The account grows as you make successful trades or depletes as you make bad ones.
Successful binary options traders set a maximum number of trades each day, stop after a certain number of wins and losses each day, and set a loss percentage. Some days things just don’t go your way, and you don’t want to invest too much money on the days when your judgment is off.
It’s also important to set aside a certain amount that you won’t use for trading.
Let’s say you start with $50 and grow your account to $500. You may decide you won’t trade any more than $250. You’ll leave $250 in the account no matter what, ensuring you’re $200 ahead no matter what.
Are binary options like gambling?
Binary options are less risky than gambling because they move on market factors. If you choose a market you know well you’re making reasoned investment risks based on what you know.
For example, gold and silver go up when there is political turmoil. It also goes up in times of natural disasters. When the stock market starts doing well and people start feeling optimistic, the price of gold goes down. You can use that information to your advantage.