Whether you are one of those professional traders or have just stepped into binary options trading, you may have come across a common question regarding binary options success stories and their authenticity.
While the internet is filled with encouraging and motivating success stories, most can't be backed up with data or authenticated. Some stories even seem wildly unrealistic. To make it to the list of binary options millionaires, you'll need to be effective at risk management and unprecedented money management, and only through long-term binary options trading.
We've put together this article to understand binary options better, know the mistakes to avoid, tips for success, and the traits of successful traders. While you won't be reading different success stories, the information here can set you on your path to becoming a profitable trader.
The Process of Trading Binary Options
A binary options trader makes a profit during swings in the asset price. While it's undoubtedly a risky financial tool, most new traders need help understanding how binary option works. The investing methods, costs, associated risks, and the payout structure of binary options are different from standard options traded in the stock market.
Even a low-skilled trader can start trading binary options due to the availability of widely traded instruments and a clear risk and profit ratio. When conducting a binary trade, stats like the strike price, binary options expiration time, and date are clearly mentioned.
The trader must predict the price and market trend at the expiry time. If the prediction is correct, the trader will gain a fixed return, whereas failing to predict correctly can make an investor lose their initial investment.
Can Someone Become a Successful Binary Options Trader?
Success in binary options trading is possible but requires in-depth research of the relevant markets, understanding the factors influencing binary trading, skills, and minimizing risk funds.
The amount of profits earned from binary options is typically fixed, whereas the difference between the asset and strike price determines traditional forex trading. It's easy to trade binary options than most traders in other markets.
In a nutshell, it's possible to make money regularly through binary options. Still, it requires time, effort, dedication, working with a reliable broker, and, most importantly, the will to learn binary options.
Steps to Become a Success Story Yourself
- Dedicate some time to studying the underlying asset, the available trading opportunities, the associated risks, and the market trends if you want to gain financial independence as a day trader.
- The next step is to choose a binary options broker. Always compare the services offered by binary options brokers and read reviews to avoid falling for fraudulent brokers.
- Devise trading strategies and test them on a demo account before making your first trade on a live trading account. Most platforms and brokers offer a free account before requiring any type of registration or usage fee.
- Invest only 5% of your total capital when trading binary options. Due to the high risk, experienced traders only risk 3% of their total capital. Most novice traders lose all their money by putting in less money on a specific binary option.
An Example of a Successful Binary Options Trader
While finding authentic binary options success stories is challenging, let's read a story about a fictional binary options trader.
Bob works 9 to 5 at a marketing firm and is still looking for a career progression. He wants to be successful and live life on his own terms.
Bob's friend recently traded binary options and earned a handsome profit in a short period. His friend shares his accomplishment, leading Bob to consider investing and trading binary options, but he has only a few hundred dollars to invest.
Based on his gut feeling, Bob understands the risks involved with binary options trading and wants to maintain his investment by trading with adequate knowledge and trade.
After quitting his day job, Bob devotes himself to learning about financial markets, understanding the principles of money trading, learning how to manage risk, studying different trading patterns, and practicing on demo accounts until he figures out the right strategy.
He tries the available trading systems and picks one he believes will make a profit. After several months of backtesting his strategy, he finally tries a trade from a real account but is not pleased with the results.
He starts reviewing where he went wrong and what he could do in the future to ensure a profitable trade. After reviewing what he had learned in the past several months, Bob starts again investing at most 5% on each deal he believes will yield better outcomes.
Over the following years, he stays consistent and maintains a win rate of 80% on all his deals, eventually becoming a successful binary options trader.
While trading binary options seems simple, it can take a few years for a person to make enough money trading and enjoy long-term success.
Tips From Binary Options Trading Professionals
- Don't be afraid to fail, and don't stick to a single trading strategy when you are not getting the desired outcomes.
- You can start losing money if you are making haphazard trading decisions.
- Most accomplished traders spend months demo testing their trading plans, so make it a habit of going back to the drawing board and running demo tests multiple times to find a great strategy to follow.
- Constantly monitor and keep a log of your stats. Whether you lose money or earn a profit, note down everything and evaluate your performance to improve.
- It's imperative to manage risk and practice effective money management if you want to be financially responsible.
- Instead of working on multiple trades, limit to the trades you believe will maximize gains.
- Expand your portfolio by studying different markets and assets.
- Avoid risking large sums on a single trade.
- If you have started binary options trading recently, focus on only one or two assets instead of opening positions in markets you need to gain knowledge about.
- When you have gained enough exposure and are maintaining your trading status as a successful trader, explore other types of binary options.
- While trading signals, binary trading robots, and several technical indicators can aid in making a better decision, relying on this information entirely can make you lose money.
Common Mistakes Aspiring Binary Options Traders Make
Choosing a Platform
If you are not careful in choosing the right binary options platform, you might be dealing with unreliable brokers. Most novice traders need to research better when choosing a platform, ending up losing trades.
Quality Matters
While most new traders believe setting up multiple trades is a way to earn money, maintaining quality over quantity is pivotal when you want to achieve success.
Take Your Time
Never rush in a while making trades, and take your time to achieve desirable results.
Understand the Risks
While managing risk can decrease the chances of loss, remember that binary options trading is like coin flips; either you make money or lose your initial investment in the binary option.
Avoid Frequent Investments
While it's possible to earn a decent living from binary options trading, investing too much over a short span should always be avoided until you have all the information about the relevant markets.
Common Traits of Successful Traders
- A competent binary trader will always be prepared for long-term success and will never take a few consecutive wins for granted. Successful traders keep learning and improving their trading skills and refining relevant techniques.
- Accomplished traders keep their emotions in check and never get overwhelmed, stressed, or too excited when making a trade. Being calm and maintaining composure is crucial as these emotions can lead the trader to make a wrong decision that could affect their success rate.
- Reviewing different trading patterns, you'll notice that vetted binary options traders deeply understand every factor influencing the market, allowing them to make a forecast and bag huge profits.
- A professional trader will never risk making a trade if they do not anticipate a positive outcome. Maintaining this approach will make you invest in winning trades and stop you from losing money on poorly executed trades.
- These traders always use trading signals to predict a better forecast. Most trading platforms and reliable brokers are responsible for sending these trading signals. While every other broker will promote their signals as authentic, always review what past users say about the signals and decide accordingly.
Final Thoughts
While reading success stories is easier, trading and making profits using the trading platform will undoubtedly take time. When making trades, always review the factors that could lead to a loss and control emotions like greed or fear, as these feelings can influence you in making mistakes.
In-depth planning, the use of already tested strategies, and determination are necessary when you want to keep winning trades in binary options trading.
Always remember that success takes work, particularly when you are interested in binary options trading. Dedicate the required time to learning and use the knowledge you gained to turn in profits.
