Binary options trading is a fun way of investing and making money. You have the potential of making a lot of money on your investments or losing it all in the blink of an eye. With all the risks involved, it’s natural to wonder if binary options are the right investment to make. In this guide, we will go over whether binary options are good for someone starting out or not.
How It Works
Binary options trading is based on a Yes or No proposition. You have to select whether the value of an asset will increase or decrease after a small period. If you guess it right, you get a fixed profit of 60%-85% on your investment. If you’re wrong, you’ll lose the entire portion of money you put on that bet.
There’s an element of luck involved in binary options trading, however, it is perfect for a beginner looking to get into trading due to how simple it is. The types of assets you can bet on can range from currency bonds, stocks, and indices to commodities like oil, silver, and gold.
Is It Good for Beginners?
The short answer is yes! Binary options trading is good for beginners due to the fact that it’s so easy to learn. There’s a very small learning curve with binary options trading. So, check out this page to understand how it works and what some terms mean then you’re good to go.
The nature of binary options trading is such that there’s a big scope for making decent money but there’s also an element of risk involved. The odds of winning a bet are close to 50/50. This means you’re most likely going to lose some of your bets. You can reduce this ratio considerably if you put a lot of time and effort into research but even then you’re not guaranteed to win every time. On the other hand, you can learn some good binary options trading strategies to improve your chances of winning.
Effective Binary Options Trading Strategies for Beginners
You can improve your chances of making winning predictions using binary options trading strategies. We have compiled a list of some of the most effective strategies that we could find for beginners on the internet.
Follow the Trend
The first on our list of easy and effective strategies is to follow the trend. One of the most basic yet widely used trading strategies is following the market trend. If the market trend is positive for a particular asset, it is assumed under this strategy that this trend will continue and that the value will increase further. This strategy is very effective for options with a longer expiration, shorter expiration options tend to not follow the general market trend.
Another basic yet effective strategy is following the news. Usually, when there’s positive news surrounding a particular asset, the market responds with an upwards trend. So, if you follow the news surrounding a particular company and see that they’re about to make a huge announcement, you can buy its binary options and bet that the value of that stock will increase raking in a ton of money.
The straddle strategy is when you expect the price of a specified asset to change following an announcement but you’re unsure whether the change is going to be positive or negative. The straddle strategy works well with the news strategy since both require keeping a lookout for announcements. Essentially what you do is bet for and against the market thereby minimizing your risk. This strategy is very useful in volatile markets.
Can You Make Money With Binary Options Trading As a Beginner?
Yes. You can potentially make a decent amount of money from binary options trading. Many people do end up making a lot of money from binary options trading. But those cases are rare. In most instances, people usually end up making a little income on the side but not enough to quit their day job and earn solely from trading binary options.
In short, binary options trading can be great for someone who’s new to investing and who can afford to take risks. The odds of winning are usually around 50/50 but can be increased if you implement the strategies mentioned in this article. But even implementing these strategies won’t always ensure you will end up on the winning side of bets.