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.