Binary options traders make money by predicting market trends. They pick a market such as precious metals, crude oil, corn, NASDAQ, or foreign exchange. They predict whether the price of any given market will be above or below a certain point at a certain time of day. If they’re right, they get paid an agreed-upon amount.
If they’re wrong, of course, they lose what they put in. To make money as a binary options trader you have to understand the markets you choose to play in, and you have to know how to read the trends.
Can you, the trader, really make money with binary options?
Absolutely. Traders who get very good at binary options and who develop a solid strategy tend to be right about 70% of the time, which is more than enough to make a net profit off of their trades.
If they manage their money well and build their account over time they may even make a living off of their trading, or become very wealthy over time.
People who get into trouble tend to try to play the markets on the basis of “gut” or “emotions.” They don’t take the time to learn about the markets or to develop a strategy. This gets them into trouble. You, of course, don’t have to be like that. In fact, we recommend you open a practice account before you start using real money, which will give you the opportunity to develop a strategy and to find out how good you are at trading.
How does the broker make money with binary options?
The broker makes money on binary options when you fail to predict the trade correctly. They get to take the money you used to buy the option. So if you put up $50, then they take the $50.
They also make a small fee on every trade, both when you purchase the trade and when you win one. Different brokers have different policies, and you should research those policies before you begin trading.
Are binary options like gambling?
Binary options help you manage risk. They’re different from gambling because the underlying market provides some basic data that you can use to make your predictions. You’re not just drawing guesses out of thin air.
That doesn’t mean you won’t lose occasionally. It just means that they’re a legitimate form of trading. In the casinos, the House (almost) always wins. In binary options, it comes down to your understanding of the markets and your ability to be disciplined as you work them.
Ready to get started?
You can get started on Binary.com at just $5. Many brokers require $250. You can get a taste of binary options trading without indulging in a great deal of risk—and you can have a lot of fun, too.