How to Succeed with Binary Options Trading at Home

With the coronavirus pandemic, working from home is the new trend and the better option to curb the spread. One of the best things investors can do from home is binary options trading. If you have been considering entering into this venture from home, but you don’t know where to begin, then this article is for you. Read through up to the end to get started right away and learn how to do it like a pro!

What is a Binary Options Trading and How Does it Work?

Before you get started on any business, you need to understand what it is and how it works. The same applies to binary options trading. So, what is it? Well, a binary option is an extremely simple and fast financial instrument that lets investors speculate on the future price of an asset, such as the price of Bitcoin, the stock price of Google, or the USD/GBP exchange rate. The time span maybe even as short as 1 minute, making it possible for an investor to trade several times a day across a global market.

For you to make money, your prediction must be correct. Before placing a trade, you will know exactly how much you would gain in case your prediction turns out to be correct. Normally, if you are 70-95% correct in your prediction and you invest $100 USD, you will gain get a credit of about $170-$195 USD on a successful trade. That makes trading decisions and risk management decisions simpler. The outcome is usually a No or Yes answer. In other words, you either lose it completely or win it all – thus the term ‘binary’ option. The reward and risk are known in advance before the decision to trade are made. This structured payoff is among the things that make binary options trading attractive to investors.

Also available today are exchange trade binaries that allow investors to trade freely without trading against any broker. With the US online gambling industry opening up, Many gambling companies are becoming attractive investing options.

In order to get started on trading, you need a licensed or regulated broker account first. Be sure that you are picking a trustworthy broker. You might not be able to tell whether brokers are trustworthy or not, especially if you are a new trader to binary options. If that is the case, then you can go ahead and open demo accounts with the brokers you are considering to choose and try out their platform to find out what it is like to trade. That will give you an opportunity to know what to expect when you deposit real money.

Binary options trading chart

Types of Binary Options

There are several options types. UP/Down trade is the most popular type. However, there are different option types. The common factor of all these types of options is that the result will have a ‘binary’ outcome (No or Yes). Some of the most common types include:

  • High/Low or Up/Down – The most common and basic binary option. Investors speculate whether a price will finish lower or higher than the current price at the expiry time.
  • Ladder – These option types compare closely to the normal Up/Down trade in their behavior. However, unlike Up/Down trade types that use the current strike price, these options will have preset price levels that are laddered progressively down or up. Generally, these option types need a substantial price move. Therefore, payouts will usually exceed 100% through both sides of the trade could be unavailable.
  • Touch/No Touch – This option has set levels, lower or higher, compared to the current price. As a trader, you need to predict if the actual price is going to ‘touch’ those lower or higher price levels at any point from the time you trade to the time of expiry. It is important to note that with a touch option type, the trade can actually close even before the time of expiry provided the price level has been touched. In such a case, the ‘Touch’ option is going to payout straight away, irrespective of whether or not the price of the asset moves away from the set touch level after that.
  • In/Out, Boundary, or Range – These set “low” figures and “high” figures. Investors predict whether the price the price is going to finish outside of, or within these levels, or within the boundaries.

A Guide on How to Trade

Follow the below steps to place a binary trade:

  1. Pick a broker – Finding the best and most reliable binary trade site is the first step to succeeding with binary options trading.
  2. Choose the market or asset to trade – The lists of assets are vast, and cover Indices, Forex, Cryptocurrency, or Stocks. Examples are the Apple stock price or the price of oil.
  3. Choose the expiry time – Trading options can expire between thirty seconds up to one year or 12 months
  4. Set the trade size – While setting the size of the trade, you should keep in mind that your entire investment is at risk. So, be very careful when considering the trade amount.
  5. Click Sell / Buy or Put / Call – Find out whether the asset value will fall or rise? Some brokers may label their buttons differently.
  6. Check the details and confirm the trade – Most brokers will give traders an opportunity to check and ensure that the details are correct. Confirm the trade only after ensuring that the details you have entered are correct.

Choose a Broker

This is an important step in ensuring that you are succeeding with binary options trading from the comfort of your home. Over the recent past, options fraud has become a common problem. The exploitation of binary options by unlicensed and fraudulent operators has been widely witnessed. The good news is, the regulators have started acting on these operators, and they are slowly disappearing. But still, you should insist on looking for licensed and regulated brokers.

Do your research well and avoid using services or trading with brokers that have been blacklisted. Be sure not to trade with scammers. To help you decide which broker is best for you, we advise that you use the following guidelines:

  • Compare brokers – You need to have a list of the most recommended brokers and then compare their features
  • Offers and bonuses – You definitely want to ensure that you are getting some extra money to trade with and other offers and promotions. So, look for brokers that provide you with the best offers and bonuses.
  • Halal Brokers – I case you are a Muslim trader, then Halal Brokers are what will be work best for you
  • Low minimum deposit brokers – You definitely want to start trading without having to actually deposit large amounts of money. Low minimum deposit traders are the best ones for a beginner like you
  • Demo Accounts – You should check out the demos of your potential brokers without making any deposit to see how they work, and it means to trade through them.

Setting Up a Trade

To be able to successfully trade various types of binary options, you should have an in-depth understanding of certain concepts. Some of these concepts include price barrier or strike price, expiry date, and settlement. All trades have specific expiry dates.

At the expiry of the trade, the action of the price behavior according to the selected price will determine whether it is in out-of-the-money (a loss position) or in the money (profit position). Besides, the price goals or targets are important levels that a trader sets as standard to determine the outcomes. We are going to explain various types for you to see how price targets are applied.

There are 3 types of trades, with each having different variations. Let’s take a closer look at each of them.

  1. High/Low
  2. In/Out
  3. Touch/No Touch

High/Low

The High/Low, also referred to as the Up/Down binary trade is a type of trade in which the principle is to predict whether the asset will end up lower or higher than the selected target price (the strike price) before the time of expiry. If the trader believes that the price will go up (the “High” or “Up” trade), they buy a call option. However, the trader will buy a put option if he predicts that the price will head downwards (“Down” or “Low”). The expiry period can be as low as five minutes.

It is important to note that some brokers may categorize Up/Down as different types. In such a case, if a trader’s expectation is that the price will go upwards, passing the current price, he or she buys a call option. On the same note, if the trader expects a fall in price below the current one, they will buy a put option. On certain platforms, this could be named as Rise/Fall type.

In/Out

Also known as the “boundary trade” or the “tunnel trade,” the In/Out type is basically used in trading price breakouts (“Out”) and consolidations (“in”). This is how it works. First, as a trader, you form a price range by setting two price targets. You then buy an option to predict whether the price will move beyond or out the price range (Out), or it will remain within the price tunnel/range until expiration (In).

If you want to get the most out of using the tunnel binaries, then you should always ensure that you are using the pivot points of any asset. You should not find it hard to trade this type if you have the knowledge of pivot points in the forex trading.

Touch/No Touch

The Touch/No Touch is a type that is predicted based on the price activity touching or not touching the price barrier. The “Touch” option is the type of trade in which the trader buys a contract that is going to deliver them profit in case the price of the stock or asset they have bought touches the target price, which has been set once or more before expiration. In case the price activity fails to touch the strike price or the targeted price before the expiry time, the trade will be ending up simply as a loss.

In this type of trading, the “No Touch” is actually the opposite of a “Touch.” In a “No Touch,” you are placing a bet on a price activity of the principal asset not touching the price targeted before the expiry.

There are also Durable No Touch and Durable Touch as variations of Touch/No Touch type. For these variations, you can set 2 price targets and buy a contract which bets on the price, not touching any of the targets before expiry (Double Touch) or touching both the target prices before expiry (Double No Touch). Usually, you would use the Double Touch trade only if there is strong market instability, and the prices are likely to take out a number of price levels.

While some brokers only offer two types, there are brokers that offer traders all the three types. Furthermore, some brokers may also put restrictions regarding expiry dates and periods set. For you to get the most of the various types, you should choose who will give you maximum flexibility regarding types as well as expiration times, which can be set.

Trading Stock Binary Options

In case you don’t know, stocks create one of the asset by-products which investors can trade on, particularly on a binary options trading market. Brokers generally list a number of stocks from the various stock exchanges around the world, making it possible for you as a trader to have the capability of trading hundreds of stocks. The image below shows the trading floor of Mongolian stock.

stock-trading

There are several factors to consider when trading stocks. These are the factors that cause stock prices to move. Among these factors are:

  • Market sentiment

    Market sentiment is a major factor that you should always consider whenever you are trading stocks. When the market sentiment is gloomy, and there is worry concerning the global economy, many investors will likely put their stock holdings on sale and hold cash. This will cause stock prices to fall.

  • Government policies

    Government policies could affect stock prices negatively or positively. For instance, if the government increases import duties on the raw materials used in a given industry, the policy could eat into the profit margins of the affected companies, thereby affecting their capability to continue being competitive against foreign products. Conversely, if the import duty is waivered, the action could enhance the general profitability of the companies affected.

  • Mergers and Acquisitions

    An acquisition or merger is meant to generally improve the competitiveness and standing of the affected companies. This usually impacts the involved companies positively.

Now that you are familiar with the most important factors, it is now time to go ahead and start trading. Trading in stock binary options should not be as complicated as it sounds. First, you need to ascertain the direction in which the stock is most likely to head to after a news release influencing the company’s share price. From there, you are free to select any binary options trade type that fits your trade profile. For example, the report on earnings can result in a continued response that may last several days. Generally, in such a case, you can decide to trade a Touch/No Touch option, with the right barrier as you also consider any recent resistance levels or supports.

In case there is any specific strong news release that has the potential of causing the price of a company’s share to rise in any direction, you can opt to trade any available high-yield varieties.

How to Become a Millionaire through Binary Options Trading at Home

So, is it possible to be a millionaire by trading binary options? Well, this is a question that everyone asks. Considering that the fortunes for investors like Warren Buffett and George Soros were made mainly from trading financial instruments, then the answer to this question is definitely “Yes.” However, the answer is not without substantial caution.

While this is something that can be achieved, especially on paper, its practicality is something that most traders find very difficult or impossible to achieve. This is not one day’s job. It takes a well-structured plan, time, patients, and probably several years to achieve. Generally, a strategy to become a millionaire on trading binary options will be based almost entirely on “compounding.” With a good strategy, you can get rich within 5 years or so with a small starting capital like $500. When it comes to binary options trading, slowly but steady always wins the race.

All you need to do is build wealth through compounding. Let’s assume that your starting capital is only $500. If the rate of return is 15% per month, you will earn only $75 for that first month. Usually, there are twenty trading days in every month. To get a good return, you should use the lowest possible risk. I fact, risk control is what is most important here. It is possible to get rich through binary options trading. The first and most important step is to get started. Get $500 or so and start compounding it faithfully and dutifully for the next five years. You might be surprised how far you may go with a well-structured plan.

Trading via Mobile Apps

You can easily trade through your mobile now since major brokers are providing mobile trading apps that are fully developed. Most major trading platforms are friendly to mobile devices. It is because they have been developed with the users of mobile devices in mind. Therefore, the mobile version of such trading platforms will be the same or similar to the full web version on a traditional website.

mobile-trading

You should choose a broker that caters to both Android and iOS devices. It should also produce versions for each of these devices. That way, you will be able to trade at home and on the go provided you have your mobile phone, or tablet or laptop. Downloads should be quick, and you should be able to sign up and sign in through the mobile site. Each broker has its own mobile app as they know that this is a rapidly growing space of trading. As a trader, you would want to react to market updates and news events immediately. So, you need a broker that provides trading tools for you wherever you are on whatever device you are using.