Binary options is an instrument which helps you to earn money on financial markets with very low investment as compared to major stock exchanges or even Forex. You can start from as low as £10, and from each bet you can earn up to 91%, taking that into account binary options traders on average earn £1200 with minimum risks.
As you can see it’s simple, many even call this instrument financial betting, because you predict the movement of the asset price as you would predict the outcome of the football match in sports betting. Either way your prediction has to be right in order to earn money. For example, you have chosen Facebook stocks, predicting the growth of the shares in the next 30 minutes. In order to earn money on your prediction, you need to open a brokerage site, select Facebook shares and invest into CALL option with expiration time of 30 minutes. If the price of selected asset will actually rise after 30 minutes, even for a 0.00001 point then you will get up to 91% profit. Percentage profit depends from the broker you trade with and the selected asset. Binary options beginners just need to know that there are only two button on every brokerage website — CALL — prediction of price to grow and PUT — prediction of price to fall. It doesn’t matter how much the price will change, it matters where the price moves, up or down.
Binary Options for Beginners – Choosing the Broker
It is very important to choose the right broker at the start of your trading career, it’s like with any other industry, you have to carefully select the partner you want to work with. Binary options industry has around 1000 brokers, but most of them don’t offer the best service on the market, so for that reason we have selected only best brokers. In our opinion the best broker for beginners is IQ Option, because of their reputation, website functionality and low minimum deposit (only £10). IQ Option site’s interface is beautiful and comfortable to use, considering they have received an award for “The Most Innovative Binary Options Broker” in 2014, we are not just praising them for nothing.
To start earning money you need to register with a brokers website and make a deposit. The process is done in three steps:
- Filling out your personal details
- Making a deposit
- You can start investing
Note! Most of the brokers have a verification procedure which is a legal procedure requested by regulatory bodies in the financial industry. Don’t be scared, your personal details will be 100% secure, all you need is to send your latest bill and ID/Passport/Driving Licence scan.
Binary Options for Beginners – Choosing the Asset
To start investing you need to choose an asset from a pretty big variety (up to 200). You can invest into big company shares, commodities, indices and currencies. No need to run after the majority, choose the asset which you like and which will be easy or interesting to analyse for you as a beginner. Stocks and indices are the basic assets on such stock exchanges like NASDAQ, NYSE and London Stock Exchange. We have chosen currencies and stocks as our main assets for trading binary options, because these two are the most popular discussion topic in the next and in everyday life. For example, today TATA MOTORS LTD releases information about their 1Q earnings, as I am pretty sure that their stock price will rise I am going to invest around £200 in CALL option just before the release with expiration time in 24 hours.
Binary Options for Beginners – Analysis
So, we have chosen the broker, completed the registration process and have picked our asset. What to do next? We need to do a preliminary analysis to understand which way the asset price will move. In most cases fundamental analysis is the most important part which determines the price movement, but if you have chosen currencies, then you have to perform the technical analysis using a small timeframe. Sometimes to make a correct prediction you just need to read the latest news or compare your analysis to some professionals from the investment companies. Technical analysis can be done directly from the brokers trading platform, where you can add indicators and change the graph representation for easier understand of a price movement. You can use third-party software like MetaTrader4 for your analysis, but that is usually used at later stages of trading, after basic principles are understood.
Binary Options for Beginners – Advice
Make sure you always control the ratio between the bet amount and your capital, for example it is not recommended to invest more than 5-10% of your initial deposit into a single bet. Usually beginners start with £100 initial deposit, if a minimum bet is £1, or deposit around £500 when dealing with bigger brokers (min. bet £25). In addition, try to focus on the quality of your trading, not quantity. It is better to have 3-4 profitable trades a day rather than 5 profitable ones out of 10 daily. Try to avoid turbo-options (expiration time of 5min and less), because they involve much higher risks. Short-term options are much less predictable than long-term and professional traders never invest in turbo-options, so please do take that into account when you start trading.
Binary Options for Beginners – Instructions
Let’s take the same example, TATA MOTORS LTD, which have risen after the earnings report. If you follow the news and understand even a little bit about how some companies focus in the current economic situation, then it will be pretty obvious what kind of news to expect. TATA has a separate page for investors, where the latest results and performance can be found: http://www.tatamotors.com/investor/. Most of the big companies whose shares you can buy or sell via binary options have a separate webpage for investors with a wide variety of important information. Tesco is constantly growing in the last couple of years, and latest interim results have confirmed the success of the company.
We have chosen a reliable binary options broker for beginners – 24option, which has more than 100 assets, high quality trading platform without any delays as well as friendly customer support. 24option is regulated by Financial Conduct Authority (regulatory finance body in the United Kingdom) and has won several awards at prestigious financial conferences around the world. The minimum deposit is £250, and the minimum bet is £25, whereas profit could be up to 82% with a standard account. Using the 24option trading platform as an example we will demonstrate how we earned money on TATA MOTORS LTD shares:
- We choose the asset from the list
- We choose the expiration time, the bet amount and our prediction of the price movement
- Wait for the option to reach the expiration time and get the profit
At the moment of expiration, the TATA MOTORS price has significantly gone up just because of their financial report which was positive. Simply by trading their stocks we have earned £70. Coming back to the topic, binary options for beginners is a pretty realistic opportunity to earn some extra money. We hope that after our explanations you understand the concept of this financial instrument, now it’s time to try it! Don’t forget that practice makes perfect.