Binary options are one of the best ways to make money as a day trader, offering returns of up to 80% on one minute option contracts. Just like more traditional forms of trading however, a trader is only going to make money in the long run if they have a good strategy and stick to it at all times. With that in mind, here are the top binary option trading tips from How We Trade.
1. Keep in mind that the only thing that matters is having your contract expire in the money. You don’t need big volatile moves, focus on the highest probability, most predictable trades. You only need to be correct by 1 penny, there are no bonus points for winning big here.
2. Develop a strategy with small trades first, and then ramp up your trade size when you can prove your strategy is effective over time.
3. Never risk more than 10% of your account value on any one trade. Binary options contracts have huge returns for traders on winning trades, but just like regular option contracts traders lose 100% when a contract expires out of the money. Never let one trade destroy your account.
4. Always trade with a reputable broker. Binary options are not under the same regulation as equity trading. Tradorax is our chosen broker. They are the biggest and most reputable brokerage. Trade with them or a similar broker always.
5.Use the S&P500 (ticker SPY) as an indicator for direction for other stocks, especially after 9:45 AM Eastern Standard Time. Just like we do when we trade traditional equities, we watch the SPY closely because individual stocks move in a very high correlation with the S&P500 index during trading hours.
6. Look for times of low volatility. Binary Options do not have spreads a trader must make up to have a trade “in the money”. Just pick the correct direction and you will make a lot of money.
7.The most popular trade is not always the best, look for stocks that you have a good read on direction with, don’t just trade what everyone else is.
8.Concentrate on the securities that works for you, and what you know best. You don’t need to trade every security being offered. Learn something well and profit from what you learn.
9.Don’t trade between 9:30 a.m. and 9:45 a.m. unless you are experienced, the direction of movement often changes very rapidly during this volatile time.
10.Take advantage of the convenience of binary options. The short duration of contracts allow you to trade them during a lunch hour, or a free time during the day. You don’t need to watch a position all day to begin trading.
If you would like to begin trading binary options start by opening an account below with our broker. You do not need to fund your account immediately to open.