Things to avoid in binary options trading
1. Registering at a no-name binary options broker
Binary options are becoming very popular as days pass and for this reason many new brokers open shop on a continual basis. However, there are several brokers that are in operation for multiple years and have a proven track record.
At this point it makes no sense whatsoever to register at these new brokers considering that there are a large number of old and reputable brokers. No matter what exciting deal or bonus offer a new broker offers I’d always stick to the old and proven brokers.
Let others try out the new brokers. If it turns out that they are good then you can sing up but never be among the first to try out a new broker.
2. Accepting a bonus without understanding how bonuses work
Bonuses are great to increase your starting budget – provided you are already fairly experienced. Each time you accept a bonus you agree to relinquish your rights to withdraw your money until you meet certain minimum trading volume requirements.
These trading requirements exist to prevent people from registering, making a deposit, receiving the bonus and then cashing all the money out. If you are an experienced trader and know that you are in for the long game, then a bonus is perfect for you. If you are a beginner and a minimum deposit trader then a bonus can lock all your money in without the chance of getting a withdrawal.
So, in short, if you are a beginner, then do not accept a bonus.
3. Allowing your account manager to trade in your place
Never, under any circumstance, allow your account manager to trade in your place. Some shady brokers will get their account managers to convince traders to allow them to trade in their place claiming that this way they will help them to win. This is always a scam. First, you need to understand how brokers make money. Brokers make money when traders lose. So, why would a broker account manager want to help you to win?
Usually how this works is that the account manager will use the trader’s minimum deposit to execute winning trades, which then will encourage the trader to make a very large deposit afterwards. Once the large deposit is made, the account manager will intentionally invest the deposit into a losing trade.
If you are being approached by an account manager who wants to take control of your account and trade in your place, you should politely refuse. After this, you should immediately attempt to withdraw all your money, as the broker in question is most likely shady.
In this case however don’t accuse the broker of being shady, as that way they can become aggressive and try to revenge you. Tell them politely that something came up and you cannot trade and want your money back and then maybe sometimes later you will return. Don’t make them realize that you figured out that they are shady.
4. Don’t use any strategy at all and just randomly invest
Binary options trading is not gambling however it can become like gambling if you invest randomly without any strategy behind it. There are various binary options strategies both for short-term positions as well as long-term positions.
Always use one of these strategies otherwise you will lose no matter what.
5. Invest large amounts per trade if you are a beginner
If you are a beginner you should never invest very large amounts of money per trade, especially if you have made a minimum deposit only. I often see traders invest sums such as $50 to $100 per trade, which is completely wrong and very dangerous.
Winning in binary options is a long-term game. If you achieve a winning ratio of 80 out of 100 nothing will guarantee that those 20 lost positions won’t be one after the other (though unlikely). What this means is that if you made a minimum deposit of like $200 and then invested $50 per trade then you can lose all your deposit in just 4 trades.
If you are a beginner and a minimum deposit trader then you should register at brokers that allow very low investments per trade such as $5 and $10 and stick to those trades until you become more experienced.
Things you should always do before trading:
1. Reading the brokers’ terms and conditions
This is extremely important, yet almost no one does it. Brokers’ terms and conditions include all the information you need to know about deposits and withdrawals as well as bonus cleaning requirements.
Imagine you win $5,000 and want to withdraw but then find out your withdrawal is being cancelled because the broker’s T&C states that you can only withdraw after you made $10,000. This would suck, right? Would you have read the T&C’s in advance you could have chosen a broker that does not have such limitations.
You can read more about this subject here.
2. See if the broker is reputable and regulated
Before signing up and depositing money you should check out popular binary options websites and forums to see what people have to say about the respective broker. If there are many negative reviews and comments then you should stay away.
Another aspect to check is if the broker has a valid license or not. Binary options regulation is already a reality in many countries so there are many brokers that have valid licenses and have proper regulation. You should definitely choose only these brokers and avoid the unregulated brokers.
3. Research binary options trading and learn about strategies
Before you actually start trading you should conduct a serious research about binary options trading in order to understand all the terms and concepts and to learn various strategies that you can use.
Do you understand concepts such as “ITM”, “OTM”, “60 seconds options”, “strike price”, “boundary options” and “payout percentage”? If you don’t, then definitely don’t sign up yet, as there are many things that you still need to learn.
You need to understand that it’s definitely possible to make money in binary options but you really do need to conduct proper research in order to learn about all the concepts and strategies used in this business. Without these you will not make money.
And this is all for this guide and for this guide series as well. If you have read all the chapters of this guide then you should already have a solid foundation in binary options trading. However, this is still not enough for becoming a pro.
If you want to become a pro, then you are advised to read all the linked and related articles that were presented throughout this guide series. If you do that, then you will have all the information needed to consistently make money in binary trading.