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.