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Binary options are very interesting securities that allow you to speculate on the price of another asset: they are considered incredibly profitable yet extremely risky, too. That is why you need training before you can actually start trading them on the real market. You should improve your analytical skills, make sure your psychology is stable enough, and learn to manage all risks. In this Traders Union article, we explain how binary trading works and give you several professional tips.
How binary options work
Binary options are derivative financial products that basically allow you to bet on the price movements of an underlying asset. You can choose pretty much any asset you like: stocks, currency pairs, bonds, and so on. The logic behind this security stays the same: you make a guess about where the price will move in the near future. For example, you could bet on whether the price of certain shares will be less than a certain amount in one month. If you’re right, you earn significant profits: some options can bring you about 80% in profits or even more. If you’re wrong, you lose all your money.
That means you always get fixed yields with binary options, but that also makes them very risky. What do you need to know to avoid unnecessary risks and become a successful binary options trader?
What you should know
Binary trading requires serious training since inexperienced traders risk losing all their money right on the first several traders. A novice binary trader must be proficient in technical analysis: you must have enough analytical skills to read charts quickly and make rational decisions. However, you also need a course in fundamental analysis: after all, you must know the asset you’re speculating on to stay really successful.
But analytical skills are not everything: you must also have a stable psyche to avoid making irrational decisions that quickly lead to devastating losses. Learn to control your emotions and have patience to stay profitable in the long term. You also need the ability to learn from your mistakes and set goals: it’s unwise to start trading without clearly understanding what you want to achieve and how.
Where you should start
First of all, you need a reliable broker that supports binary options. Open a demo account – Forex funded account to learn and practice your skills. When you’re ready, enter the real market and try to make actual money with what you’ve learned.