How To Make Money With Binary Options?

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Note:

We advise you to avoid unverified binary options brokers for the risk of losing your deposit. We recommend choosing brokers with extensive experience in this area and leaders in the ratings of binary options brokers on the Traders Union website.

Start trading binary options with Pocket Option Pocket Option

Your capital is at risk.

How to make money with binary options. Specify the bet amount, select the option expiration time, open the Call or Put option. If by the time of expiration the price of the Call option is higher, the Put option is lower than the opening price, you get up to 95% of the reward from the bet amount

Making profits through binary options trading can seem complex at first glance. However, this popular type of derivatives trading breaks down the process into simple steps that are easy for newcomers to follow.

In this comprehensive guide, our expert traders cut through the jargon and explain the fundamentals of binary options in clear language. From selecting a reputable broker and choosing assets to researching strategies and implementing risk management, the major aspects of getting started are broken down step-by-step. Readers will learn how predicting the direction of assets within a set timeframe can yield lucrative payouts when done correctly. While binary options do entail risk, following the best practices outlined here will help even novice traders enter the market confidently.

  • Are binary options considered gambling?

    While the risks and reward structure resemble gambling, binary options are legally classified as financial instruments rather than games of chance if proper analysis is applied.

  • Is technical or fundamental analysis better in binary options?

    Both have their place. Fundamentals analyze broader forces affecting assets, while technicals spot patterns/trends in asset behavior. Combining them tailors strategies to individual needs.

  • Do I need prior trading experience to trade binaries?

    No, binaries are very simple to understand even for complete beginners. However, study and practice through a demo account before going live is still highly recommended.

  • How do I minimize risks in binary options trading?

    Use proper money management with no more than 2% of your account on any single trade. Trade with brokers from our recommended list.

Start binary options trading right now with Pocket Option!
Your capital is at risk.

Step 1. Learn Binary Trading Basics

Let’s break down how binary options trading works.

First, you’ll need to find a broker. There are many brokers online that offer binary options trading, but we recommend QUOTEX, Binary.com, PocketOption, and IQ Options for their low fees and account minimums. Once you’ve made an account with that broker, don’t start trading just yet. Instead, launch a demo account. We’ll explore demo accounts more later on in this guide, but they are essentially fake accounts that allow you to get a feel for the market and conduct trades that don’t actually risk your money.

Once you’ve done a lot of market research, it’s time to choose your asset. Assets that can be used in binary options trading vary quite a bit and can include things like commodities, currency pairs, stocks, etc. We recommend doing a lot of research on your chosen asset and checking whether or not it has been in the news recently. Make sure to take some time and learn some of the market terminologies to get accustomed to binary options trading and asset lingo.

From here, you’re almost ready to start trading. Before you place your first option, look into the strategies you want to use. Implement them one at a time so you can identify how well they work and can settle with a single strategy for the long term.

With binary options trading, you simply need to choose an asset and a timeframe. You will predict whether the price of that asset will go up or down in price in that timeframe. The exact price doesn’t matter-- it only matters if it goes up or down.

If you accurately predict that the price goes up or down, you’ll receive your risked capital back with a 70-85% bonus. If you do not predict the price change correctly, you lose everything you risk. It’s as simple as that.

We recommend starting very, very small as a beginner. Once you’re past the beginner stage, remember to only trade 1-2% of your total capital to avoid falling into the pitfalls of extreme riskiness.

Step 2. Consider Binary Trading Opportunities and Risks

Since binary trading is an “all or nothing” form of trading, there is substantial risk involved. The only real way to favorably predict the expiration value of an asset is if you research the markets, the news, and strategies for binary options trading. And even then, a trader is not guaranteed to win their trade, even with the best background. When a trader loses on a trade, they lose the entirety of what they “bet” on the trade itself.

However, with great risk comes plenty of opportunities for profit. Even newbie traders can make a significant amount of money by trading binary options, especially because the returns can reach 70% to 85% or even more, depending on the asset and state of the market.

Step 3. Choose a Good Broker

Finding a good broker isn’t difficult. Our top picks are QUOTEX, PocketOption, Binary.com, and IQ Option. All of these brokers have a low minimum deposit and excellent reviews online. However, it’s worth noting that Binary.com is not available to users in the United States.

Broker Min. deposit Trust Rating

QUOTEX

10

100 of 100
All reviews

Open an account

Your capital is at risk.

PocketOption

50

100 of 100
All reviews

Open an account

Your capital is at risk.

Binary.com

10

97 of 100
All reviews

Open an account

Your capital is at risk.
62% of retail investor accounts lose money when trading CFDs with this provider.

IQ Option

10

95 of 100
All reviews

Open an account

Your capital is at risk.
You should never invest money that you cannot afford to lose.

Step 4. Research Binary Trading Strategies

Any options trader that has been in the market for a minute knows very well that a handful of good binary options trading strategies can make significant profits and help traders get out of uncomfortable trading scenarios.

However, if you have not learned any trading strategies yet, don’t waste your time on expensive workshops. You also shouldn’t jump into the market without any knowledge of trading strategies. Instead, take the time to do your own research. Research is key when it comes to binary options trading, and you have a lot of time to start trading. In fact, we would recommend opening a demo account (more on that later) to implement some of the trading strategies we’re going to cover in this guide.

The Pinocchio Strategy

This strategy involves betting against any current trends on purpose. If a particular asset is seeing a much more upward trend than usually, then someone using this strategy would then place an option under the notion that the price will fall. With this in mind, you will use a specific option fully expecting the asset price to go up when the asset is seeing a downward trend.

This is a great strategy for beginners, but only if you take the time to understand the asset itself. Do your research and study the news to really get a good idea of the trajectory of the asset. This is the only way you’ll be able to make the right decisions and predictions and thus, the most money. Implement this strategy by examining your chart to identify if the market is bearing or bullish. When the candles a pointed down, place your call option. If it points up, order a put option.

The Candlestick Pattern Strategy

Implement this strategy only after you get a good grasp on how to read asset charts in the market. Candlesticks are quite useful and really show how assets move over time. The underside of the candlestick is its lowest price, and its top is its highest hit price. By examining the opening and closing costs between these ends, you can start seeing different patterns over time. This will reveal potential movements in the future, which you can then predict and place a call or put option. Basically, you’re studying history to establish future choices.

Fundamental Analysis Strategy

This strategy is well known among professional traders. This strategy is designed to help you get a better grasp of the nature of an asset. You will simply perform a very in-depth review of everything related to the asset. From there, you will need to place a very low-risk trade to see what will happen. Once the trade hits its expiration date, you’ll be able to see if the asset is profitable or if you should look into something else. If your prediction is wrong, that asset might just be a bit too volatile.

Step 5. Test Your Strategy on Demo

A vast majority of binary trading platforms and brokers will offer demo accounts. Think of demo accounts like a videogame. You’re given money that isn’t real to trade in the market. The platform will mimic the ebb and flow of the real binary options market, so you can experiment with trading without putting any real capital at risk. Using a demo account is a fantastic opportunity to implement new trading strategies and get the hang of actually trading. Just as well, most trading platforms offer demo account for free, so there is not risk involved. We highly recommend starting with a demo account.

Step 6. Follow the Rules of Risk Management

Binary options are extremely high-risk as instruments. You’ll need to stick to the rules, stay away from leveraged funds, start with a small amount of money, and take advantage of margin.

There are other risk management rules you can implement to ensure that you don’t trade too much money. To start, never risk more than 5% of your total capital. In fact, most professional binary options traders will only risk 1% to 2% of their capital. This rule is very important because binary options trading can have massive returns unlike other investments – which can make traders greedy and way too risky. The possibility for gains is just as high as the possibility for loss, so don’t put your livelihood at stake.

Can Binary Trading Make Me Rich?

Technically, yes. Binary options trading could potentially make you a ton of money. However, this is only possible if you put all of your capital at stake – which is, as we mentioned earlier, something you absolutely should not do. This is extremely risky and could result in total loss of your assets and capital. Binary options trading is absolutely not a wise choice for those who want to get rich quick.

Just as well, a lot of successful binary options trading relies on having a solid trading strategy and knowledge of the nature of the market. There are not many people who pursue binary options trading as a full-time day job simply because the risk is just too high. In general, we would recommend using binary options as a way to make a little extra side money. Just make sure that you don’t use over 5% of your wealth to get started.

Summary

Binary options trading is the methodology of trading very simple options contracts that have a fixed risk and a fixed reward. Through this form of trading, traders will predict which potential results could come from a specific asset’s marketplace movement in a fixed timeframe. If the trader is correct about whether or not the asset went up in price, they will be given back their risked capital, plus a hefty 70-85% profit. If the trader is incorrect in their assessment, they will lose all of the capital that they risked. Even though binary options trading is very simplistic and easy to understand as a beginner, it can be very risky. Nobody should bet a large amount of their wealth on binary options.

With that risk in mind, traders can build long-term wealth with binary options trading if they properly assess their risk tolerance and only trade what they are alright with losing. In order to properly enter into binary options trading, do the following: Learn the basics of binary options, get a good grasp on the terminology, consider the opportunities you are looking for and risks you want to avoid, choose a top-notch broker that has good reviews, learn how to trade with free demo accounts, play with a few good trading strategies, and don't expect to get rich off of binary options.

Binary trading can make you some money, but it's important for traders to understand how risky putting a lot of money into trades can be. If you use a good strategy and understand how to research and analyze the market situation, you’ll be on the right path.

Team that worked on the article

Mikhail Vnuchkov
Author at Traders Union

Mikhail Vnuchkov joined Traders Union as an author in 2020. He began his professional career as a journalist-observer at a small online financial publication, where he covered global economic events and discussed their impact on the segment of financial investment, including investor income. With five years of experience in finance, Mikhail joined Traders Union team, where he is in charge of forming the pool of latest news for traders, who trade stocks, cryptocurrencies, Forex instruments and fixed income.

The area of responsibility of Mikhail includes covering the news of currency and stock markets, fact checking, updating and editing the content published on the Traders Union website. He successfully analyzes complex financial issues and explains their meaning in simple and understandable language for ordinary people. Mikhail generates content that provides full contact with the readers.

Mikhail’s motto: Learn something new and share your experience – never stop!

Dr. BJ Johnson
Dr. BJ Johnson
Developmental English Editor

Dr. BJ Johnson is a PhD in English Language and an editor with over 15 years of experience. He earned his degree in English Language in the U.S and the UK. In 2020, Dr. Johnson joined the Traders Union team. Since then, he has created over 100 exclusive articles and edited over 300 articles of other authors.

The topics he covers include trading signals, cryptocurrencies, Forex brokers, stock brokers, expert advisors, binary options. He has also worked on the ratings of brokers and many other materials.

Dr. BJ Johnson’s motto: It always seems impossible until it’s done. You can do it.

Mirjan Hipolito
Cryptocurrency and stock expert

Mirjan Hipolito is a journalist and news editor at Traders Union. She is an expert crypto writer with five years of experience in the financial markets. Her specialties are daily market news, price predictions, and Initial Coin Offerings (ICO). Mirjan is a cryptocurrency and stock trader. This deep understanding of the finance sector allows her to create informative and engaging content that helps readers easily navigate the complexities of the crypto world.