Learn how to start trading binary options with expert tips and tutorials for beginners. We will also show you how to avoid common mistakes of binary options traders.
Binary Options Trading for Beginners
There are always times, you ask yourself these following questions: How to make money rather than just waiting for the monthly paycheck? What to do with the savings? How do the rich get richer? Then the common answer for all of your wondering is to invest. There are different investment channels and Financial Markets are popular options. Their participants are diverse, varying from banks, companies, institutions to individuals like you. The main activity in the financial markets is called trading.
What is Trading and Where to Trade?
To make money from trading, the task for all market participants is to determine the right direction of instruments’ prices whatever the form of the market is. The tradable instruments are also various including bonds, stocks, indexes, commodities, currencies, and cryptocurrencies.
There are the sellers and buyers who own and want to own the instruments, and the next thing they need is a place to meet each other and start trading. That’s where exchanges and brokers are built. While the trading activities at exchanges are based on the direct agreements between the buyers and the sellers, these activities at brokers are quite more indirect. For instance, brokers play the intermediate role, they facilitate the trading of their clients by establishing the trading network between participants. In other words, they can be considered a liquidity provider, guaranteeing the supply, protecting the market from volatility, ensuring the buyer/seller can match with the counter one.
As a result, capability and reliability are the 2 most important requirements a broker must meet. For the former qualification, capability can be quantified by the number of financial instruments the broker provides. For example, Finmax offers over 70 financial instruments spreading in various categories including Forex currency pairs, shares, commodity futures, indexes, cryptocurrencies, metals, and bonds.
Apart from the capability, reliability is proven by certification and customer policies. Finmax is proud to be fully licensed by the International Financial Market Relations Regulation Center (iFMRRC), one of the top administrative bodies in the world. Under its regulations, the clients are covered by up to 50,000 USD in case the broker faces financial issues.
What Is The Common Mistakes Of Traders And How To Avoid?
You have known how to choose a broker to start your trading journey. Next, about trading, how to do it? As been aforementioned, trading revolves around just one task – to determine the right direction of assets’ prices. But is the task that simple? The price can either rise or fall, meaning the probability of your prediction is 50% but in fact, most traders end up losing money.
Let’s take a closer look at the market, trading is a real-time activity. A daily trading period can be broken down into shorter time frames, namely 4 hours (H4), 1 hour (H1), 15 minutes (15m), 1 minute (1m). In the inverse direction, a 5-day period can form a weekly candle then weekly candles can further combine to become a monthly candle.
For instance, a rise on the weekly chart can be the summary of 4 rises and 1 falls, 3 rises and 2 falls; 2 rises and 3 falls or even just 1 rise and 4 falls on the daily time frame as long as the rising waves are strong enough to overwhelm the rest falls. The shorter the time frame, the more volatile the price movement. As a result, your 50% prediction is no longer that much since the price keeps changing on the shorter time frames.
The decisions of traders are heavily affected by emotions. The most dangerous two of them are fear and greed.
- Fear of losing the opportunities: Mob psychology is a very human nature. Seeing others making profits is not a convenient feeling but hasty following them without consideration can be a disaster. The faster ones might already enjoy the food and leave the party, leaving the leftovers for the slower ones.
- Fear of losing profit: Again, basically, the price can either rise or fall but the point is which time frame that movement is assessed on. The market moves as you expected, but when the price suddenly turns back a little bit, you immediately close your order to protect your earning. You don’t know you just arrived at the down of the mountain, the peak is still far above.
- Greed: Winning a trade delights everyone, but it can also hype the confidence too much to make trader act thoughtlessly. A subjective decision without analysis can win you a trade but induces a big loss eventually.
Winning and losing are parts of this game and you must learn to accept them. If you achieved your daily profit target, just leave your desk and take a rest. If you make a wrong prediction, just accept the loss. The time-based approaches can be short term, medium term, long term but keep in mind that the whole game is still long term. You make profit as long as your winnings prevail over your losings. So, don’t expect to win all trades.
The very first thing every beginner needs is knowledge. You must understand how the market runs, how to analyze and evaluate the value of the instrument, when to enter the market and when to exit. In the education category of Finmax, you can look for glossaries, books, tutorial videos, and even strategies. At the same time, opening a demo account to practice what you have learned. When you are confident in your tactics and make regular profits, it’s time to go real.