Unlike Forex or CFD trading, where there are many different trading options, trading with binary options is relatively easy to learn. It only needs to be predicted here whether the price of the underlying rose or fell after the predetermined time. The basics are quickly acquired, which is why many beginners opt for binary options. Unfortunately, the risk that binary options entail is often forgotten. We have dealt with the dangers of binary options and would like to show our readers in the following article what they have to pay attention to when trading binary options in order not to risk too much financially.
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High potential profits attract many newcomers
When trading binary options, high profits can be achieved. Up to over 90% of the stake can be earned as a profit on a single trade. But even if the binary options are high chances of winning, on the other hand there is also a high loss: If the price does not develop in the direction predicted by the trader, the is usually the entire stake lost, because binary options are a "all or nothing bet". Newcomers should therefore be aware that they can actually make high profits with the necessary knowledge and a little luck, but that they can also lose everything, Even professional traders cannot eliminate the binary options risk, but they are generally aware of this and only trade with appropriate risk management binary options and other risky financial products. Nevertheless, you should also have a Plan B in hand if the prices turn out to be unfavorable for a long time.
There is no safe binary options profit strategy
Numerous Internet forums discuss the correct strategies when trading with binary options and some traders boast that they have found a safe trading strategy for long-term winning with binary options. However, due to the special nature of the binary options, this cannot exist. Good traders can minimize the binary options risk, but it cannot be completely switched off. Anyone who claims otherwise has either not yet fully understood how binary options work, or is deliberately lying. Especially with offers that promise a "secure profit" when the trader buys a certain program or teaching material, extreme caution should apply. As a rule, these are untrustworthy advertising promises. Serious providers know about the high profit that is possible with the binary options, but also sufficiently point out the risk.
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The right setting when trading binary options
For successful trading, it is not only the right binary options profit strategy that is important, but also the so-called "Mindset". The trader should have a healthy attitude to trading with binary options and should also have a high degree of psychological stability.
Because trading naturally has a high variance there are always phases with high profits, but also times when nothing seems to work and losses have to be accepted. These fluctuations can be very stressful for traders, because after all it is about a lot of money. In addition, in the case of losses , a rational analysis must be carried out to determine whether these are due to the natural variance or whether there is a error in the trader's decisions. Many traders trade too emotionally at least in phases. Professional trading behavior is characterized by a high degree of rationality. Emotional decisions should be avoided in any case.
Binary options are nothing more than betting
With the binary options, a financial product was created that beginners makes entry into online trading particularly easy. In contrast to Forex and CFDs, the time for the exit does not have to be chosen carefully, because binary options have a defined term, after which the position is automatically closed. Also complex calculations about profits and losses are not necessary, because it is an "all or nothing business": the trader only has to predict whether the price will expire rose or fell. If it is correct, it receives the previously determined profit. If he is wrong, he loses his stake. The amount of the course change does not matter. This is the same principle as with other bets, which is why some bookmakers now offer binary options.
In principle, there is nothing to be said against such a betting character of this type of investment, the traders but should be aware of this at all times. As with almost all bets, the chances of winning can be increased by a good analysis of the starting position, but so many unforeseen events can occur that it is impossible to make a reliable statement about the outcome of the bet, It is therefore not a matter of winning every trade, but the trader simply has to have a high profit rate that he wins the majority of his trades and is still positive after deducting the costs.
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Binary options trade safer with good risk management
Losses have to be accepted again and again, but with good risk management binary options can still be accepted Options act significantly safer than if trading is simply "by feel". In this case, "risk management" does not mean that the risk can be completely eliminated, but it is about controlling the risk, determining the maximum amount of the loss and, if possible to avoid a total loss of total capital.
Good risk management includes, among other things, dividing the available capital into many small trades. This is necessary because even with very good traders a not insignificant part of the trades ends with loss of stake. Anyone who always makes the right decisions after a good analysis of the price trends will lose many trades. It is also not a question of winning every single time, but in total more won than lost trades and thus to be able to show a profit. In order to minimize the binary options risk, only a relatively small portion of the total capital may be invested in a single trade. If the capital falls after a few losses, the trader should also choose a smaller stake. If, on the other hand, he has made a profit recently and thus has more capital available, the stake can be chosen accordingly.
Usually there are no binary options to make additional contributions
A major advantage over forex trading is that the binary options risk is high, but is also relatively manageable for beginners, because there is usually no binary margin requirement . When trading CFDs or Forex products with high volatility, the position cannot be closed in time despite a margin call and the trader loses more money than is actually in his trading account. As a rule, he then has to pay this out of his private assets. With binary options there is normally no obligation to make additional contributions, because just like the profits, the losses are limited. The customer chooses a stake for his financial bet and can either win a fixed amount or completely lose the stake, depending on whether the price is higher or lower than the starting value after the time
Only invest free capital
Since there are no binary options to make additional contributions, the possible losses can be planned relatively well. You can only lose as much money as was actually used for the individual trade. Therefore, traders cannot get into serious financial difficulties if they only deposit as much money into their trading account as can easily do without.
In general, for high-risk trade with binary options no money is used, which is already planned for other purposes. The credit on the trading account is to be regarded as risk capital, the loss of which can be accepted in the worst case. Under no circumstances should traders be tempted to deposit money which they actually need to live or which, for example, is planned as retirement provision. Binary options are not suitable for the investment of money that is otherwise required. There are significantly better investment opportunities with lower risk.
By consistently adhering to the above rules, traders can relax and worry about financial ruin and focus on making the right decisions.
Binary options improve chances of winning with the right broker
The binary options risk is at high for every provider, nevertheless there are significant differences among the individual brokers as far as the profit margins of the traders are concerned. If a trade is lost, the entire amount wasted is gone. However, if the trade is won, customers will be credited with a predetermined amount of money as profit. The amount depends on the provider. While some providers only offer winnings of just over 80 % of the stake, the winnings of others are around 90%. So here it is important to choose a provider where the profit is as high as possible. In total, fewer trades have to be won in order to achieve a positive result. With a profit of 90% of the stake, for example, almost 53% of all trades must be won in order to be able to book a profit overall. With a profit of 80% it is after all almost 56% of all trades.
In addition to the other important selection criteria when looking for a suitable broker, the Expectations of profit play an important role.
Only trade with reputable brokers
Not only the Amount of the payout for a won trade should influence the choice of broker, First and foremost, it is important that it is a reputable provider, with whom no manipulation of the courses takes place and who also pays out the account balance to customers. As binary options trading has become increasingly popular in recent years, the number of providers has also increased significantly. Among many reputable brokers there are always fraudsters.
When choosing a broker, customers should make sure that they have a valid license, Brokers with EU license are preferred by experienced traders, because here the provisions are stricter and the brokers do not avoid their responsibility in dubious ways in the event of a legal dispute
Conclusion: Not suitable for every investor
Binary options offer an easy entry into online trading in financial products. However, trading is subject to a high risk, since there is always the risk of a total loss. Therefore only free capital should be invested in trading and under no circumstances should money be used that is actually needed for other purposes. Good traders also factor in the worst case and do not plan their trading capital in any other way. For investors looking for a good way to invest their retirement savings, there are other options.
Traders who consciously choose to trade binary options and take full advantage of it Aware of risks, here is a good opportunity to make high profits. The provisions of the respective broker or betting provider should always be read carefully, because different rules apply to each provider. It makes sense to set a clear limit for trading binary options. After the loss of a predetermined amount, should not be paid again. The amount depends on the individual financial situation of the trader.
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