Many people have heard about binary options, but only have a vague idea of how to trade binary options for money. In this piece, we describe the steps that an intending trader must take in order to be able to trade binary options and make money doing so.
Binary options is primarily a trade type in which the trader bets on one out of two possible scenarios or outcomes. To trade binary options means to answer the question: out of option a or option b, which of the two options best describes the outcome or behaviour for the price of the asset? Will it be higher or lower for the asset, or will it be the asset touching or not touching a price barrier? These are some of the scenarios involved when the decision to trade binary options has been made by the trader.
What You Need to Trade Binary Options
The following items are what the trader needs to be equipped with to trade binary options:
a) A binary options trading account: This is obtained from a binary options broker. Traders must take great care in selecting a binary options broker. This is because brokers differ in the types of trade contracts offered, trading conditions as well as other conditions regarding funding and withdrawal of monies from the binary options account.
b) Trading Capital: This is obvious. You need to put money into the account in order to buy contracts to make money on. The issue usually is: how much capital should a trader start with? The best bet is to start with a low sum if you are a beginner; usually $300 is ok. This way you wouldn’t risk too much money in the market as you start the journey of feeling your way around the world of real money trading. But once the ropes have been learnt, the trader should start with at least $1000, and in addition, should use as little bonus money as possible.
c) An acceptable payment method: Generally speaking, the binary options market is one in which brokers offer a wide range of payment options. These range from credit/debit cards (which have the quickest transaction times) to the various e-wallets and finally the good old bank wires. Use a method that is accessible from your country of residence and which provides the quickest transaction times you can get.
d) ID documents: You need a proof of identity (international passport, drivers license or national ID card where applicable), and you also need a proof of residence (utility bill or bank statement). These will be used for identification and monitoring of the financial transactions on your account to ensure that the funds used for transactions are from genuine and identifiable sources. If you live in the Third World, this is very important.
e) A knowledge of how to trade: This is obtained from attending seminars or poring through various resource materials. Many binary options brokers also provide free ebooks. I ghost-wrote two that are available on 2 broker sites. When you have made a choice of which brokerage you will be using for your trading activity, try to visit their binary options library section. This is where you will get access not just to these resource materials, but get access to materials that will educate you on the trading process as specifically adapted to the broker you will be using. If you want to make money when you trade binary options, you must follow this step as missing it and just rushing off to the market will only lead to losses.
As a beginner, these are the things you need to get in order to trade binary options. In subsequent blog posts, we will get down to the business of binary options trading proper and give you strategies that will put money in your bank account.