Binary Options Social Trading

researchFor a lot of people, the very future of the world of online options trading as well as investing in different assets rests in the hands of a new feature called social trading.

This type of trading has been able to enter the market with little to no resistance, and has already got millions of traders all over the world falling head over heels in love with it.

Whether as a follower or as a trader who sets as example for the rest to follow, social trading is something all traders engage in at some point or the other. In fact, this form of trading has pretty much changed the way the game works for good. It has redefined how traders approach all of the different trades and assets, and has made some changes to how money is managed as well.

Why do People Love Social Trading?

Two of the key features of social trading that make it so attractive to traders are transparency and openness. Traders can look at the actions of some of the most professional and expert traders out there and then copy their trades without having to feel bad about it.

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They can also talk to these experts and find out more about the different strategies that they use. While the advantages of this form of trading are many indeed, and while there are countless new opportunities and avenues to success that have been opened up by the penetration of this type of trading into the binary options market, it isn’t like the profits are going to come in just because you follow the actions of some random people.

Analyze the Market to be Successful

The only way in which you can achieve success with this type of trading is to analyze the market as best as you can. You have to be able to identify and create new and improved strategies for trading. These will, in turn, show you as a trader which of the plans, tactics and decisions you make are good for you financially and which are bad. There are a lot of people out there who claim to have the right type of guide to allow you to maximize your social trading profits. The truth is that most of these people barely know what they are doing! You need to follow the advice of true experts if you want to be successful with this type of trading. Take on some of the more practical tips and tricks that you can put into effect in order to be a more effective trader on the social aspect of things.

Social Traders Exist in Millions

The first thing you need to realize is that it isn’t an easy process. One does not simply switch on their computer and become the best social trader the broker has ever seen. In order to become successful and effective at placing and winning your trades, you need to be willing to dedicate your time to the system.

You have to explore every inch of the platform, as well as all the tools and features that are offered to the people trading on it. For the most part, brokers have their own standalone social trading platform that is offered to account holders free of charge. There are other platforms from third parties that exist for the traders who don’t have this luxury. There is also the glaring fact that there are millions of traders doing the same thing, so it might take a while to find the right crowd to follow.

If you are entering a social trading platform for the first time ever, the first thing you need to do in order to maximize your profits is find out who the popular crowd is. You have to get in with the cool kids if you want to be a success in this virtual high school environment. Do a people search and look for the traders who are trending at any given time, and have been for a while. These are the people that you need to keep an eye out for. With the right kind of planning and the right people being followed and used for inspiration, you should be able to make the perfect, profitable social trades in no time at all.

how to win binary options

How to Win in Binary Options Trading

Every wondered how you can become a winner in binary options trading? Winning is not as simple as placing a trade because there are a lot you need to learn. You should know that winning in binary options is not something that can occur overnight as it takes years of learning and experiences. You will slowly become a more professional trader through reading tips and getting advice from other experienced traders. The following is a few tips on how you can increase your winning rate in binary options trading.

Don’t Choose a VIP Account

Many brokers offer VIP accounts and claim that you can increase your profits significantly when you sign up for this account. VIP account requires a large deposits that is at least tens of thousands of dollars which can be expensive for those who are with small capitals. VIP account is only suitable for experienced traders who already know how to quickly flip their investment into profits. If you are new, you should just sign up for a standard account and deposit a small amount to start trading. Many brokers have basic accounts with a minimum deposit that starts from $100 – $250.

Do Research on the Company You Are Trading

To win in binary options, you should access a financial portal site because here you will find up to date information on different stock companies and assets. During your research, you can look up for the publication of the company to learn more about its background. You can join forums to get insights from other traders who more experiences than you in binary trading. YouTube has a lot of videos on binary options system that you can watch for free. You can easily find any tip on binary options trading by performing a search on YouTube.

Learn How to Read Different Charts

You should learn how to read the different types of charts in binary options as it will make it easier for you to perform comparison across different trading strategies. The tick chart shows the movements of the assets’ prices in the last few minutes. The tick chart is ideal for monitoring a trade with short expir y time frame such as 5 – 30 minutes.

Line chart displays the price movement for a period of a few hours or days so it is suitable for monitoring trades that has an expiry of a few hours or more. Candlestick chart displays more information that the other two charts. Candlestick chart is more visual, cleaner, and also look more jerky. The fluorescent jerky movement on the candlestick chart lets you clearly see whether the price is going up or down.

Use a Binary Options Signal Software

You can use a binary options signals software to get more accurate predictions on the price movement. The software will scan different charts and other resources to give an accurate estimate of the price movement. However, before subscribing to a signals provider, you should check to see if they offer free trials so that you can test them out.

You should sign up for a few binary options free trials so that you can compare the result and determine which one is the best. It is important to do a lot of research before using a binary options signal software to automate your trade. Most signals software come with its own approved brokers but some allows you to choose your own broker. Another thing is that the software should have at least 70% of accuracy.

Use Social Copy Trading to Improve Your Trading Skills

Many binary options brokers offer social copy trading feature on their trading platforms, which allows traders to copy the trading strategies of other successful traders. Some platforms allow traders to automatically publish their actions on the forum so that other traders can provide feedback. New traders can improve their trading skill by studying the trades of the experienced traders. Afterwards, it is up to them to decide whether they want to copy the action and place a similar trade.

So how do you win in binary options trading? You must be able to perform the right analysis in order to become a winning trader. There is no shortcut way and the best way to become a successful trader is to practice trading a lot. It is important to learn the inside and out of the platform and test it with a demo account before placing a real trade.

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Minimize Risks in Binary Options

Binary options trading is a risky investment, so you want to make sure that you take steps to minimize these risks. If trade carelessly, without taking any precaution steps, you will find yourself losing a lot of money. The following are seven tips on how you can reduce the risks in binary options trading.

1. Money Management

You have to get disciplined in money management, because you will be the one deciding how much money you want to invest into the binary trading. Getting disciplined in money managements means you are to set a limit for how many wins and losses are to be allowed in one day. You must, by no means, control yourself and stop trading when the limit you have proposed is reached. You can make a proposal to yourself to stop trading based on the number of wins/losses, percentage of losses, amount of wins/losses and winning ratio. For example, you can propose to yourself to stop trading when you win 10 times/lose 5 times.

2. Trade on a Small Amount

As a rule of thumb, you should always trade in small amounts, no matter how high the ROI rate is. It can be tempting to invest all the money in your trading account when the broker offers a high ROI of 95%, but it is better not to do so. This is because you won’t make the right prediction every time in reality. For example, if you $300 in your account, you should start by just trading $30 in each trade. Trading in small amounts can help you to accumulate into a large amount of profits over time while minimizing your losses at the same time.

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3. Choose a Broker with High Out-of-Money Rate

You should choose a broker that offers some refund for trades that end out-of-money. For example, the broker may offer a refund 10% for out of money trades. This means that you will get back 10% of the capital you invested, if you lose the trade. To find out how much return rate the broker offers, you can check the FAQ section or ask the representative.

4. Monitor the News in the Market

It is essential that you perform a research by using technical analysis tools and monitoring the news in the market, if you want to increase the chances of making a correct prediction. The source of the financial news you rely on, must be up to date. You should get educated on binary options trading by reading books and watching tutorial videos.

5. Implements Hedging Strategy

The hedging strategy requires you to place a trade in both, the call and put positions, to reduce the risks in a volatile market. You will have to predict the highest or lowest level within a certain trading period. The best trading period would be when the movement of the price is within the symmetric channel. You should place a put when the price touch the previous high resistant level and place a call when it touches the previous low support.

6. Choose a Broker with Sell Back Feature

There are a number of brokers that offer the sell back feature on the platform. The sell back feature allows you to end your trade prior to the expiry if you know that you have predicted the wrong direction and will lose. Using the sell back option can help you to get back a portion of your capital that range from 40% – 60%. Although you didn’t get back the full amount of your capital, you still manage to get back almost half of your capital. This is better than you end up with nothing in the event that your trade end out-of-money.

7. Diversify Your Portfolio

You can also reduce your risks by diversifying your trades across different types of asset classes. For example, you can trade on stocks while trading on forex currency pair on a single brokerage account. Apart from diversifying the asset classes, you should also diversify your trading strategies. You can implement both short term and long term trading strategies to reduce your risk.

The key to success in binary trading is to maintain a balance in between the profits and risks. You should always set a budget before executing a binary options trading activity.

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Make A Living Trading Binary Options

Everyone wants to live an easy life by generating a stable income from binary options and the truth is you can make a living trading binary options. Many people have used binary options to make an extra income but there are very few people who managed to use binary options trading to replace their day job. Before continuing with this article, make sure you check out the Can a beginner make money with binary options. If you dream of become successful in binary options trading, you must know how to grab hold of opportunities and learn as much as possible on the topic. The following are 6 tips on how to make money from trading in binary options.

1. Trading on a Major News Event

The key to make a living with binary options trading is to wait for a major news to come out in the headline because these news can have impact on the market movement. For example, Apple usually release a new product in between September and October, so placing a trade around this date will surely make you some profits. There are lots of big companies that you can trade on binary options such as Google and Microsoft. You can do research on the major events associated with these companies and place a new trade when they are about to launch a product. Trading on major news is usually for people who choose long term trades and it can yield an accuracy of about 80% – 90%.

2. Trading on Short Term Options

When become more experienced, you can start trading short term options with expiry time that last for only a few seconds or minutes. For short term trades, you must study the charts to analyze the trends. Trend can let you predict the direction of the movement for the particular asset because it is likely that the pattern will continue moving in the same direction for some time. The candlestick chart as well as the Bollinger band are great ways for you to perform analysis for short term options.

3. Binary Options is More Predictable

Binary options is not like stock trading and you don’t have to be an expert to win and make a profit. This is because binary options is more predictable as the prediction is almost always correct when you rely on a major news event or your own common sense. For example, you can easily guess that conversion value of USD and other currencies and place trades accordingly. The most important thing is to only trade with a legitimate broker that is confirmed to be trustworthy through the positive reviews of other traders.

4. Learn How to Study a Candlestick Chart

It is necessary that you learn how to read the candlestick chart because this type of chart will show lots of details on the historical price movements. It may seem like a difficult task to study the candlestick chart at first but it is actually easy to understand them once you are familiar with the different patterns. There are a few common patterns in the candlestick chart including doji, hammer, morning star, and harami. When you are able to recognize the different candlestick chart pattern, it will be more likely for you to place a profitable trade.

5. Don’t Trade Against the Price Trends

You should watch out for the price trend and place the trade accordingly. For example, if the price of oil has been going up consistently, you should place a trade on the upward price movement instead of reverse price movement. Trading against the trend is likely to cause you to lose money especially when you are trading on short term options.

6. Understanding Your Risk Tolerance

Every trader who wants to succeed must first get familiar with their risk tolerances. Risk tolerance refers to how much you are willing to risk your money in order to make the money. For example, are you willing to risk $250 to earn $2,500. Everyone has different degree of risk tolerance and it depends on how the person’s perceive about the risk. Educating yourself more and more on binary options trading can help to ease your anxiousness and fear but you will still have the same level of risk tolerance. Understanding your level of risk tolerance is important to help you avoid risky investment.

Binary options trading can be profitable if you are willing to invest your time in learning and doing research on the market. You can definitely make a living trading binary options. You should only use your own money to place the trade and never go to borrow a loan to trade. This is because you never know you will win or lose in the trade and it could land you in financial trouble if you lose. You can start with a small capital and put in more money if it becomes profitable over time.

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How Safe Are Binary Options

Binary options is more predictable compared to other forms of trading because you are trading on a fixed amount of investment. The trading system is as easy as making a yes or no prediction and this is the reason why many new traders are attracted to it. Binary options trading seems easier to traders because it is carried out on an online trading platform.

Earnings and Losses in Binary Options are Predictable

The payout percentage and the potential earnings you will make are displayed on the platform so you know how much money you will make. The risk is capped so you never lose more money than what you originally invested. The profits will not be affected by the price after the expiry. Binary trading allows you to make money on both directions of the price movement. You will make money when you successfully predict whether the price will go up or down by the expiry. In forex and stock trading, you only make money when the price of the asset is rising.

On average, many brokers allows you to earn between 80% – 90% on standard call/put options. Standard call/put options with long expiry time are safer to trade compared to one touch options. If you lose the trade, you may get back some of your money if the broker offer refund. You get to decide the amount of money you want to invest and you can also set the timeframe.

Constant Fluctuation of Price Due to the Economy

Binary options is risky because of the nature of the fluctuation of the economy of the country. There are a lot of factors that affect the price of the asset so you can never know for sure whether the asset you are trading will be profitable. The key is to have a good knowledge in the type of asset you want to trade if you want to have a higher winning rate. The lack of trading tools is another reason why many traders lose money in binary options trading.

Scam Brokers

Another reason why binary options is risky is because there are many scam brokers operating around. Scam brokers are usually new brokers that have not yet obtained licensed and has many negative reviews from previous traders. Scam brokers can lie by claiming that they are regulated and putting the regulated broker seal on their website. It is your responsibility to do research and determine whether the broker is licensed. If the broker is licensed with a recognized broker regulator, you will have to check whether the license is valid and not yet expired.

Complaints about these scam brokers can be found all over the web so if you just Google up a broker, you should be able to find out if it is a legitimate broker that operates as advertised. There are all kinds of complaints including customers who complaint that broker freeze their account for no reason, identity theft and the use of a software to cause traders to lose trades. To trade safely, you should always choose a licensed broker that has been in the binary options industry for many years. If the broker is recommended by many traders and review sites, then it is safe to say that the broker is legitimate.

Choose a Regulated and Licensed Broker

There are a few recognized broker regulators responsible for governing brokers in different countries. For example, CySEC governs brokers in the European Union while NADEX acts as a regulator for brokers that are operating out of the North America. The regulator will perform inspection on the brokers from time to time to make sure that they adhere to the rules. With a licensed broker, your money will be safe as it will be deposited in a bank with good standing. Besides, they will also offer insurance coverage for up to a certain percentage on the money in your trading account. You can get a peace of mind because the site of a reputable broker is secure and protected with a powerful encryption system.

Binary options trading carries risks just like other forms of trading but you can minimize this risk by increasing your knowledge. It is best to stick to trading with a licensed binary options broker that offers reasonable minimum deposit requirement, good educational resources and many trading tools.

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How to Read Binary Options Signals

Binary options signals can alert you whenever there is any news that will affect the asset’s price. If you keep using binary options signals, you will slowly become familiar with the pattern of the price movement of a particular asset. These signals are not completely accurate and do not guarantee that you will win in the trade if you follow them. Before trading software exist, traders used to subscribe to binary options signals service. There are both free and paid signals and you can choose to receive the signals through email, or text messaging. Nowadays, there are binary options signals software that can automate the trading process by placing the trade on your behalf after analyzing the market.

The signals are created based on two types of analysis including technical analysis and fundamental analysis. Many different types of financial indicators are used in forming the binary signals including relative strength index (RSI), stochastic oscillator and MACD (Moving Average Convergence Divergence).

Relative Strength Index (RSI)

There are two regions in the RSI scales, with the first region starting from 0 – 30 and the second region starting from 70 – 100. If the trading signal is located in the region of 0 – 30, it means that the currency pair is oversold so the market trend will reverse. You should place a call if you see bullish reversal candlestick formation such as evening doji star or chart pattern such as falling wedge.

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If the RSI value is located in the 70 – 100 region, it means that the currency pair is overbought and so the rate is falling. You should place a put if you see bearish reversal candlestick such as morning doji star and chart pattern such as rising wedge. You can also use the RSI as a trend indicator to determine the trend of the price of the asset. For example, the trend will go downward if the RSI is under 50 so this is a good opportunity to choose Touch in the Touch/No Touch option. The price will move in upward direction if the RSI is above 50, which means you should choose No Touch.

Stochastic Oscillator

Stochastic oscillator, also called K%D, allows you to make accurate prediction on the price movement by making comparison between the asset’s price and trading range. There are two lines in the stochastic oscillator including %K line and %D line. If the %K line has a zero value, the trading range is at the lowest point. If the %D line has a value of 100, the trading range is at the highest point. The value of the stochastic oscillator will drop when the price arrive at the double top. This is the best time to place a put for options with longer expiry time the downward trend of the price movement. If you want to wait for the D% line to cross the %K line, you should choose options with shorter expiry time.

MACD (Moving Average Convergence Divergence)

MACD is suitable to be used for call/put options as well as touch/no touch options. If you want to use the MACD strategy, you must make sure the asset is trending. You can use the MACD histogram to find out if there is any changes on the trend. You should place a call if the red 50 period line is situated higher than the blue 110 period line. In this scenario, the prices of the asset has bounce off from the line of the 50 period EMA.

On the other hand, you should place a put if the red 50 period EMA line is located under the blue 110 period line. There is a pullback on the price of the asset at the 50 period EMA line. The time frame you should choose depend on the time frame of the chart you are using. The timeframe should be set about 4 candlestick apart so if you are using a chart with 30 minutes time frame, you should select an expiry time that last for 2 hours. It is recommended that you don’t trade more than 5% of your investment if you are using MACD indicator.

Learning how to read the trading signals allow traders to easily analyze opportunities and implement a trading strategy. This enables you to place more trades and maximize your returns in binary options trading.

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How Binary Options Brokers Make Money

There are several ways that a binary options broker can make money from the traders’ investment. Legitimate brokers make money by marking up the price of the asset on the trading platform. Usually, the pricing structure of the different types of assets are derived from the liquidity provider. The asset’s price has been marked up to be slightly higher than the original market.

In-the-Money Trades

Binary options brokers actually make money on both in-the-money trades and out-of-money trades. For in-the-money trades, they earn a portion of the profits when you make the right prediction and win in the trade. The payout ratio displayed on the platform is not calculated based on the actual percentage on the original market so that is how the broker profit on a portion of your payout.

Out-of-Money Trades

For out-of-money trades, the broker profits on your capital investment plus the payout rate when you make the wrong prediction. For example, if the payout rate is 85% and you place a trade of $100 on the USD/EUR currency. You predict that it will go up but the result end up that the USD/EUR currency go down.

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You lose your capital investment and didn’t get any return. In this case, total amount that broker earn will be $185 including your capital investment plus the payout rate of 85%. Everyday, there may be 10 or more out-of-money trades so the broker can easily earn tens of thousands or hundreds of thousands of dollars per day. There are some brokers that offer refunds for out-of-money trades, which is usually 5% – 15% of your initial investment.

If most of the traders are winning, the broker would be losing money and close down. In truth, the majority of the trades will be losing trades for most of the time so this makes a lucrative business for binary options brokers. A survey report that was released in Japan revealed that 85% of the trader lose in their trading. Most traders are not able attain a high winning rate because they lack the patience to learn about trading binary options. Those who do spend time to educate themselves such as reading guides, watching video tutorials and attend webinar will learn how to earn a consistent income over a long term. Therefore, it is all up to you on whether you will make money or lose money binary options trading.

How Peer 2 Peer Brokers Make Money

Some brokers operate on a peer 2 peer network which allows traders to trade against one another. In peer 2 peer network, clients can create options with different types of payouts and the buyers will decide how much they want to invest and place the trade within a single click. If the buyer predict the price movement incorrectly, the seller will profit.

The broker does not profit on the out-of-money trade but they make money by charging a commission whenever the trader purchase a contract. The commission ranges from ten dollars to twenty dollars. This means that the seller won’t earn the full amount on out-of-money trade because the commission will be deducted from here. Hence, both the traditional and the peer 2 peer model are the same because the brokers will end up making the same range of income.

Welcome Bonus

Another way binary options brokers make money is by offering bonus that match with their deposits. They advertise the bonus as an incentive to help new traders to get started in the trading. New traders often get tricked and assume that they will be able to withdraw the bonus from their account. There is a string attached to the bonus, and that is you need to fulfill a certain amount of trading volumes, for example your trading volume must be 30 times of the bonus, before you can withdraw them from your account. The minimum trading volume you must reach is stated in the terms and conditions .

Illegitimate Brokers

An illegitimate broker will attempt to cheat your money in many ways for example charging your credit card for hidden fees you don’t know. This is why it is important to only trade with broker that is transparent about all their fees and lay them out upfront on the trading platform. Scam brokers will find all sorts of excuse to lock the funds in your account so that you won’t be able to withdraw the funds.

It is possible for you to consistently win in your binary options trades if you are patient and willing to spend time to learn all about it. As a rule of thumb, you should only trade with a legitimate broker that is equipped with proper licensing to avoid situation where they try to cheat your money by preventing you from making a withdrawal.

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binary options taxes

How Are Binary Options Taxed

Some visitors of this website asked me the other day: How are Binary Options Taxed?

The taxes on the profits you make from binary options will depend on where you are living. There are a few countries where traders are not required to file for the income tax. Many new binary options traders wonder if they have to declare the earnings they made from their trading activities. The brokers are not responsible for maintaining a record of your profits and losses according to the law. Therefore, you are solely responsible for keeping a track record on every profit/loss.

I am not an accountant or lawyer and I cannot guarantee that the information on this page is accurate. To make 100% sure, please contact your accountant.

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Taxes of Binary Options in USA

Binary options have been classified as capital gains in a number of countries including Australia, USA and Canada. Aside from capital gains, there are also other forms of taxes including income tax and tax for gaming. Binary options brokers are not casinos so they are not required to issue the tax form. You can declare it as extra earnings if you are just earning a small amount. If you earn a big amount from binary options, you have to declare it as capital gains.

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All income derived from binary options trading are taxable no matter if you file it as a business or self employment income. It is classified into a taxable income even if you receive it as a gift from a relative. The profits you earn from options trading is taxed similarly as capital gains in stock trading and you should report it in the tax year. For example, if you place a trade in November and it expire in-the-money on January, you must declare it in your income tax in the new year.

Deductions for the Binary Options Tax

In the USA, you are allowed to deduct up to $3,000 from the total losses. For example, if you make a profit of $15,000 in options trading, you are to declare taxes on the $15,000 earnings. If you lose $15,000, you can deduct $3,000 and the rest of the $12,000 will be rolled over to the future years.

You can use any type of expenses to claim the deduction for the binary options’ taxes. However, you must be able to demonstrate how your purchase is only used for the trading activities so that it will be approved by the revenue agency. Examples of expenses you can claim for tax deductions are trading material, and PC.

Binary Options Tax Forms in USA

There are two income tax forms USA traders have to fill if you have more than $10,000 in your balance. Form 8938 should be filed if the total you earn meets the threshold of $50,000 on the last day to file the income tax or the total reach $75,000 at anytime within the tax year. You should fill the FinCEN Form 114 if your total earnings reach $10,000 at anytime within the tax year. If your total earning is less than $1,500, they will tax you at the marginal rate. If it is above $1,500, you will be taxed up to 20%.

Is Binary Options Taxable in Europe

If you are a trader in Europe, it will depend on whether your country treat it as a capital gain or gambling. EU traders should check with the local authorities to determine whether they are supposed to pay taxes on their binary options. Despite that, it is possible that the European Union will soon make a change on this and starts to require traders to declare their binary options profits in their income tax.

How to File for the Taxes of the Binary Options

This is why it is important that you always keep a record of every single transaction on the trading platform. You must record every deposit and withdrawal you make no matter if it is in-the-money or out-of-money. Recording down all your transactions will make it easier for you to manage the tax preparation at the due date when you are supposed to file for your income tax. You can use a spreadsheet to keep track of the deposits/withdrawal as well as calculating how much you profit or loss. When the time comes for you to file the income tax, you just need to refer to the excel sheet you have created.

There are some brokers that allow traders to generate a report of the historical transactions you made on the trading platform. You can generate this report from the trading platform for tax purposes at anytime.

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Many traders are confused when it comes to filing for the binary options’ taxes because of the lack of information. It is best that you hire a tax accountant if this is the first year you are trading in binary options. Hiring an accountant is useful for help you to get bigger deductions in your binary options’ tax if you earn a lot.

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How to Trade Binary Options Successfully

Many traders are constantly trying to find a way that can help them to significantly improve their profits in binary options trading. There are lots of things you have to learn if you just started to enter into the binary options trading. The following is 7 tips that you can follow to help you trade more successfully in binary options.

1. Choose a Licensed Broker

The most important priority is to find a good binary options broker that is respected in the industry and has many positive reviews. Choosing a bad broker can be very risky as they may freeze your account and prevent you from withdrawing your profits. If possible, you should sign up with a broker that has obtained proper licensing with an authority regulator such as CySEC. You should do as much research as possible on the broker’s background and find out what other traders are saying about it. You must not be lured by the cheap rate as cheap brokers will compromise in many ways.

2. Diversify Across Different Types of Asset Classes

You should diversify your investment in a variety of assets classes to minimize the risk of losses. In this way, if one asset did not do so well because of a major catastrophe, you will still be making money from other types of assets. Diversifying across different asset classes is important because there are many potential risks that can affect the particular asset class.

3. Diversify Among Several Brokers

Apart from diversifying the asset classes, you should also diversify the brokers. It is not recommended to just use one broker because you don’t know if something will happen to the broker and cause you to lose your entire investment. If you trade with several brokers, you won’t lose all your money if one broker close down. You can diversify across 7 – 8 brokers to get favorable result in binary trading in the long term.

4. Never Stop Learning and Educating Yourself

If this is the first time you are trading, you should get familiar with how the binary options trading system work. Reading the glossary allows you to understand how to use the different features on the trading platform. There are lots of free e-books that teach you about the strategies of winning in binary options. There are also videos that demonstrate how to study the chart/graph and analyze the market situation. Besides, you can also join binary options forum to discuss with other traders to expand your knowledge in trading. Learning is for all time and you must continue to educate yourself on different binary options tips and strategies if you to succeed.

5. Long Term Options Over Short Term Options

It is often advertised that short term binary options such as sixty seconds option is the most profitable but what you don’t know is that this type of option has very low winning rate. Instead, choosing long term option that last for a few days or weeks is able to bring in a stable income.

6. Never Over Invest More than You Can Afford

You must set a budget and not invest more than what you can afford especially when you are a new trader. Many new traders suffer a great financial loss for over investing. You must be clear in your head and don’t let your emotions override your decision. If you are feeling emotional, you should stop trading temporary until you have calm down. It is no good to become too tense and serious in your trading but relax yourself and have fun. This will enable you to make better decision and increase your chances of earning more profits in binary trading.

7. Study the Market Before Placing a Trade

Prior to placing a trade, you should first study the market by reviewing the movement of the price in the graph. Besides, you should also pay attention for any breaking news that is in the headline as these news are the ones that can affect the market condition. When you understand the situation in the market, you will be able to more accurately predict whether the price of the asset will rise or fall.

It isn’t easy to make a steady income from binary trading when you are new,so you have to learn as much as you can. The most important thing is to learn from your mistakes and never give up.

New To Binary Options- Start Slow

If you are just beginning to trade binary options, there are a lot of reasons why you should be very careful at first.  Binary options are an extremely risk investment even for experienced traders.  While day traders have the ability to make a lot of money with binary options very quickly, they also can lose a lot of money just as fast.  Learn why you should take it slow, and how you should prepare yourself to trade with larger size trades.

When You Lose, It’s All Gone

A binary option is a very simple instrument.  When you win, you win a high return pre-specified payout amount, and when you lose, you lose your entire position.  The allure of scoring a huge trade causes many people to wager big amounts on binary option trades, especially right when they start trading.  They may even take a position using their entire account value.

When you are trading your whole account value, it only takes 1 wrong trade to lose everything you put into it.  More often than not, a loss comes quickly to those who try this ill conceived practice.  When it does, they are left feeling depressed and dejected.  This is a mistake that can easily be avoided.

Realize That You Will Lose

A big part of being a successful day trader is managing expectations.  People who have been trading for a long time are under no illusions that they will be able to avoid losses.  Having losing trades is an inevitable and unavoidable part of day trading.

They key to being successful trading is to manage your losses, keep them small, and realize that as long as your strategy is net profitable, you can simply increase your trade size over time and make a lot of money.

While there are different strategies to limiting losses depending upon what you are trading and your trading style, every trade must come to the conclusion that a dollar saved in a losing trade is a dollar earned.  An equities trader may use a stop loss, an options trader may take positional hedges, and binary options traders must develop their own strategies.

Small Size Means Less Loss

A good way to limit losses when you are just starting to trade binary options is to keep your position size very small.  While this may seem frustrating to the beginner who instantly wants to make a lot of money, they must keep their expectations realistic.  Very rarely does a trader become rich over night, and when they do it is always luck.  Since luck is out of your control, you should decide instead for the most optimal outcome.

No matter how well you think your strategy will work, unless you are using it with real trades and real money, it is not proven.  The first step that any beginner needs to take is to prove that they are profitable with small positions.

Beginners Want To Stick Around

A beginner wants to stay in the game long enough to get better, improve their trading, and eventually make a lot of money.  If you lose a lot of money quickly, you will not have enough time to develop and learn.

The name of the game for anyone learning to trade is longevity.  Most traders fail very quickly because they do not allow themselves enough time to get skilled at the craft.  Successful traders know that they will have a learning curve and they either have so much capital to begin with that large losses don’t stop them from trading, or they were smart enough (or lucky enough to be told by a teacher or mentor) to know that they need to trade for a decent amount of time before they will be skilled enough to be consistently profitable.

If you can not turn profits on a consistent basis such as weekly or monthly, you should only be taking the smallest positions.  Only after creating a track record which proves your profitability do you have any right to take larger position sizes.  This lesson is very expensive for most new traders.  If you heed this advice today, you will save yourself a lot of money.

How Long Do Binary Options Trades Last?

Binary option trades can take place for a range of times.  The most common binary option trades are 1 minute or 5 minutes in length, but there are many other trade lengths available to suit different traders preferences.

Binary Options Trades Only Have Value Upon Expiry

Unlike traditional options, which have value before the expiration date, binary options trades are final (you can not sell them before expiration).  A trader can not sell a position, and once a trade is taken it is considered a final decision.  A trader must hold the trade until the option expires without exception.  The time until expiration is different for each trade, and is determined by the brokerage.  Always consider the time to expiration before entering into a trade, because a trade must be in the money at the precise time of expiration for it to be of value.  If the trade is below the strike price at the time of expiration, the trade will expire worthless.

Most Binary Option Traders Prefer Short Trades

The binary option industry has carved out a niche based upon the human need for instant gratification.  Most brokers dangle trades in front of traders as short as 30 seconds.  This gives a trader the opportunity to make up to 80% profit in less than a minute!  This sounds fantastic, and it can be, but unless you have a system or a read as a trader to make money in 30 second time frames, it is a losing proposition for you.  If you do have a system or read which is capable of some degree of predictability on a trade on a very short basis, make sure that you are sizing your positions appropriately.  If you are taking many positions in a short period of time, you have the ability to lose (or earn) a lot of money very quickly.  While the ability to take short time period positions is useful, a trader must manage this carefully.

Most Trades Are 1 to 5 Minutes Long

The most common time period for binary options trades are between one and five minutes.  The brokerage will display the time period on each trade, and it is up to the trader to monitor these and to ensure that they are entering into a trade for the desired period of time.

Other common time frames may be a half hour, or one hour in time.

Some Trades Are Available For Longer Periods

Some brokerages offer traders for a period of a month or longer.  Before entering into this type of trade, be mindful that your capital is tied up until the expiration date.  A binary option position can not be sold for value once entered into.  This type of trade can be useful for someone who has very high conviction on the direction of a security over a long period of time.  As binary option trading expands, more trades of longer time periods are likely to be made available to traders.

Longer trades are typically offered with foreign currency transactions.  This is largely because foreign exchange traders rarely have a short term read on the direction of a currency, but based upon macro-economic factors traders may have more conviction on longer term trades.  While foreign currency trades are most common for long term trades, they may also be offered in commodities such as oil, gold, and silver prices, or in some stocks.

 

What You Need To Make A Profit In Binary Options

Yes, you can make money trading binary options.  There are two important elements that must be in place for you to make money first.  Without these, you will certainly lose all of your money given enough time (and it probably won’t take very long).  You need the right brokerage, and you need a system in place that allows you to make money consistently over time.  You also need to take the appropriate steps to track your results systematically so that you can identify when you need to adapt.

The Importance of A Good Brokerage

When trading Binary Options, using a good reputable broker is probably the most important element to your success.  While there are a lot of good brokers out there, a few dishonest brokers have really hurt the binary option reputation.  Some brokers have failed to allow clients to withdraw their money in a timely manner, while others have manipulated prices to make what should be winning trades losing traders.  These type of tactics are not only annoying and harmful to the industry, but illegal.  A broker engaging in these practices will not be registered with any regulatory agency.

A reputable broker will be registered with a regulatory agency such as CYSEC, the Cypress securities and exchange commission.  Make sure that your brokerage allows withdrawals easily and timely, and that they do not engage in any re-pricing schemes.  Our brokerage does not engage in any of these illicit practices.

Make Sure They Use Modern Trading Software

You also want a brokerage that uses a modern platform.  Quotes need to stream seamlessly and instantly.  You don’t want any pricing disparities.  You want to know that your broker is providing the exact correct price to you each and every moment.  You want a website that loads quickly, and is easy to use.

Charting Tools are Useful

Most traders also want trade indicators and tools, and they want the ability to research.  If you use a technical strategy, you will want advanced charting tools that provide the ability to look at indicators such as moving averages.  You may also use more advanced indicators such as stochastic indicators, MACD, or Elliot Wave.  Whatever strategy you use, you want a broker who gives you the option to apply a number of strategies to charts.

So is Mobile Trading

Mobile trading is becoming more and more popular as well.  While we generally don’t encourage traders to trade from their phones, modern technology is reaching a level where this is becoming more feasible to do without sacrificing a trader’s ability to use his tools.  If the ability to trade with a mobile platform is important to you, make sure that your broker has this functionality, and that it works well.

At How We Trade we use Tradorax.  Tradorax has a top flight reputation in the industry.  The allow clients to deposit and withdraw money easily, their pricing is true, and they have a modern platform that traders demand.  We use them because we feel like they are the best.

You Need A Strategy To Make Money

Without a strategy it won’t matter how good your software or brokerage is.   Binary options trades are mostly very short, often times 60 seconds to 5 minutes.  Longer trades are allowed, but most people do not hold binary option positions for over a month.  You need a “scalping strategy” to be effective in short term trades, and you need to stick to it when it works.  You will have to adapt your strategy over time, but the important thing is to do it systematically.

Developing A Strategy

Some people develop a strategy based on trade indicators or charting tools, and other people base their trades on a market “read“.  At the end of the day you need to be consistent.  If you don’t have a consistent strategy, you will never be profitable over the long term.

To develop a trading strategy it is usually easiest to start with an existing strategy, and adapt it to fit your needs and observations.  An example of a good existing tool available is a relative strength indicator.  This indicator is easy to understand, most every chart includes it in its charting tools, and it works a relatively high percentage of the time.  In order to be profitable consistently, you will need to develop additional triggers to open a trade, but an RSI is an excellent starting point for a new trader.

Stick With Your Strategy

Whatever strategy you choose you need to apply is consistently and stick with it.  If you have a way to make money, advance yourself by taking progressively bigger trades.  Discipline is the number one quality that day traders need to stay profitable.  Never switch aimlessly between strategies.  If your isn’t working you can make adjustments, but you should always practice any changes with a demo account before you implement them with real money.

Track Your Effectiveness

If you are not tracking the effectiveness of your trading style and strategy, you will not make money.  Your bottom line is what counts, but if you are changing position sizes often you will not have a very good read on just how effective your strategy really is.

The best way to track your trading style’s effectiveness is to keep track of key pieces of information from every trade.  The important points to track are: the asset that your trading, the time of the day the trade took place, the size of the position that you took, and the money that you made or lost.

With this information you can figure out the best time of the day to trade, the most profitable symbols to trade, the time of the day that works for each symbol, and how everything relates to your bottom line.  You may find the highest efficiency happens in the morning on a particular stock with an 80% payout, and you may choose to take larger positions when these elements are met, rather than trading in the afternoon.

Only by analyzing your trades will you be able to maximize your profits.

Use Small Positions When You Trade Binary Options

Binary options are inherently very risky.  The contracts have no intrinsic value per say.  When you lose, you lose 100% of your position, and when you win, you can win big.  To a new trader, binary options can feel a lot like gambling.  Trading binary options is not the same as gambling, but if you don’t know what you are doing it is as least as risky.  Remember, the advantage of using binary options is that you do not need to trade with a lot of capital to earn a high return.  Respect how quickly you can both earn and lose a lot of money trading this instrument.

Think about binary options trades from a broker’s perspective.  Binary options trades are not matched between buyers and sellers on the open market, the broker always takes the opposite side of the position from the trader.  Why is the broker willing to do this?  They know that if a particular trade pays 80% to a winner, and a losing trade loses 100% of its value, with nonprofessional traders about  50% of the trades will pay out and about 50% will not.  This means that the broker earns a spread of 20% on the trade, on average across all traders.

If you start trading with no system, you will probably win on about 50% of your trades and lose on about 50% of your trades.  If every trade is the same size, you will certainly lose your money over time.  Always keep in mind when you trade binary options that you need to win more than you lose to make money.

Controlling Position Size

A common mistake with new traders is taking too large of a position size too quickly.  As any trader will tell you, things change fast in the marketplace.  Even if you have a good system with a perfect trade setup, and you have very high conviction about taking your trade, the news can change the market quickly and turn your trade from a winner to a loser.

Keep in mind that a loss is not the same as a loss when you are trading in the stock market.  If you lose money on an equity position, your position still has value when you exit it.  This is not true of binary options.  If your trade is a loser, you lose the entire amount of your trade.  This is why you need to take positions which are a very small percentage of your total account balance.  The only way to consistently make money is to systematically control your risk, and take enough good trades to win over time.

What is A Small Enough Position?

If the idea is to make money with binary options consistently over time, you need an average position size which equals a very small percentage of your account.  If by chance you have 5 losses in a row, and you are using a position size that is equal to 20% of your initial account balance, you will empty your account in only 5 trades.  As any professional trader can attest to, losing streaks of 5 trades can happen to anyone.

At How We Trade, we recommend using a position size of about 5% of your initial account balance (you can review this if you are profitable and your account has grown).  At this size, you could take 20 consecutive losing trades before your account balance was 0 (its safe to say that if you have 20 losing trades in a row you need a new system).

This position size allows for small losing streaks to occur without serious disruption to your working capital.  By nature the balance in your binary options account will be volatile.  It is the traders job to smooth out the volatility by taking many small sized positioned trades.

When Is a Big Position Justifiable?

Depending on who you are, how much of your money is in your trading account, and how much experience that you have trading, the answer may be never.  There is a particular case when it may be ok to take a large position though.

If you have a lot of experience trading, and if you were to lose the entire amount in your trading account your personal finances would not be seriously impacted, a large position from time to time is ok.  A large position might be a once a year or less type trade for many people.

To take a very large position you must have extremely high conviction that the trade will work.  This does not mean that the trade definitely will work, because no trades are a sure thing, but the trade setup must be almost perfect.  If you study international monetary policy for instance, and you do not think that current exchange rates have fully priced in a central banks stated goal, you may take a longer term foreign currency exchange trade with your binary options account with a large position.

The key is to exercise discretion here, and understand that the market is a very difficult place to extract profits consistently.  Most traders are very well served to put strict limits on their position size for the safety of their account.

 

How to Choose the Best Binary Options Brokerage For You

There are many binary options brokers from which a trader can choose.  So many brokerages are small, and there is not a lot of trustworthy information about them or their business practices.  Different brokerages have different payouts, software packages, account funding requirements, and withdrawal practices.  We at How We Trade are here to help you navigate the sea of brokers, and to help you identify the reputable from the untrustworthy.  We do prefer using large brokerages, especially those regulated by relevant securities regulatory agencies, over newer and smaller brokerages.  Ultimately the brokerage that you choose may come down to what is legally available for you, but ideally you will be able to pick the brokerage with the best blend of reputation, payouts, software and convenience.  At How We Trade we feel like Tradorax provides the best blend of all these factors for our needs.

Below is a detailed summary of every factor that most traders will consider when they choose their brokerage.

We realize that what every trader really wants is to make the most money.  With that in mind, at How We Trade we feel that Tradorax is the best brokerage.  We feel they are top notch because they have excellent trading software, their servers and execution speeds are extremely fast, and they give traders the tools they need at their disposal to consistently make money.  In the binary options trading world, Tradorax is one of the most professional brokerages on the market.  We always recommend the most professional outfit to our clients.

Regulation

This is a hot topic with binary options, and for good reasons.  Many binary option brokerage are operating in countries where they are not registered.  For instance, if you are a US trader based in the United States, there is only one legal brokerage for you to use.  This brokerage is NADEX.  This is the only brokerage that is registered with the SEC, and can legally accept US traders.  If you trade with NADEX you know that they will adhere to legal requirements regarding accurate price quoting and the withdrawal of money.  The downside of NADEX is that they charge a premium because they are the only brokerage which can legally accept US traders.

There are other international brokerages which do accept US traders, however these brokerages are not operating within US regulations.  Usually the trader will not be punished by trading with a brokerage that can not operate legally within the US, but they do risk the brokerage being punished.  They also have no guarantees from US law for the protection of any cash balances within the brokerage.

This is not to say that there are not other reputable brokerages.  Tradorax for instance is a very reputable brokerage, and they are registered with CYSEC, which is a securities and exchange regulatory body for Cyprus, where many brokerages are based.  They adhere to strict price quoting principals, allow for speedy withdrawals, and have a reputation for integrity.  They also accept traders from anywhere in the world.

Also of interest, many brokerages are simply white labels for the brokerage Spot Option, which is a very large brokerage re-branded by many smaller companies.  Spot Option is also registered with CYSEC.

Payouts

Payouts are set by each individual brokerage, for each individual available trade.  A good payout for most short term binary option contracts is 85%, while some brokerage may pay as low as 60%.  The payout is everything in terms of profitability.  Look at the profitability table half way down the article.  The higher the payout, the lower your threshold is for probability of wins/losses where you are still profitable.  Use a brokerage that routinely offers contracts paying 75% or higher.  Tradorax often offers 85% payouts and higher for winning trades, which gives you a much higher chance of making money in the long run.  This is one of the best payouts in the industry.

Keep in mind that if you plan on trading binary options successfully, the payout is a major factor in how much money you will ultimately make or lose over time.  The payout is second only the the accuracy of price quoting of the brokerage.

Price Quoting

Speaking of price quoting, this is another extremely important factor to consider.  Some brokerages have been in trouble in the past regarding manipulation of price to lower the winning percentage of their traders, essentially they were committing fraud.  While much of this has been put in the past, luckily, the possibility always exists that an unscrupulous brokerage will manipulate your closing prices or account to their advantage.  Always be sure that you are working with a reputable and straightforward brokerage, who will always quote you an accurate price.  NADEX is of course the most reliable as they are regulated by the SEC, but we use Tradorax because they also have an impeccable reputation for accuracy and honesty in the industry.  The key is for you as a trader to be completely confident that the price displayed at all times matches the real market price.  Make sure you work with an honest broker.

Speed of Withdrawals

Some brokerages are famous for being extremely slow returning money to clients, or getting profits to clients.  You want to avoid any brokerage which has multiple complaints against them regarding the speed of their withdrawals.  We have never seen or heard of a problem with Tradorax, which is another reason why we recommend them.  The last thing any trader wants is to have profits sitting with a broker which are inaccessible.

Software

You want software to be modern, easy to use, easy to understand, and to effectively convey a lot of information regarding the trading.  You can see our previous article regarding the best trading software for binary options for a more in depth discussion, but we favor Tradorax for their slick, accurate, and easy to use trading platform.  Their software is extremely fast, which is what every trader wants, and their price quoting is extremely accurate.  They allow both one touch trading for extremely fast order entry, or if you prefer to double check your orders you can confirm each before it is placed. We believe that they has one of the best software platforms in the industry for new and experience traders alike, which is another reason why re recommend them.

Asset Classes

You want to choose a brokerage that offers a diverse set of asset classes and trades.  Tradorax offers a wide range of equities, commodities such as gold, silver and oil, stock indexes, foreign currency exchange, and they offer trades in a variety of formats.  You can take bets that the the option will close with the price within a certain boundary, that it will close above or below a certain price, and there are many various lengths of contracts available from minutes to weeks in length.  Always make sure that any brokerage which you decide to trade with offers a diverse set of assets and option contract structures because good brokerages always will have many options.

Be Comfortable With Your Broker

The most important aspect of choosing a brokerage is to choose one that you will be comfortable with for a long time.  You want the software to be easy and intuitive with minimal lag, you want the price quoting to be spot on accurate, and you want to be able to add and withdraw money to your account quickly and easily.  The last thing any trader wants to worry about is any factors outside of their goals of taking the correct trades and making money.