How To Buy Binary Options

If you have already read through the first couple of articles in our beginner’s guide to binary options, you should be familiar with the basic concept of what a binary option is, and which different types of options are available.  Your next logical question is probably how you can get started participating in the market by purchasing your first binary option.  This is actually probably one of the simplest aspects of trading.  Here I will break it down for you so you understand every step of the process.

1. Find a broker

2. Get a trading method

3. Sign up for an account

4. Deposit your funds

5. Calculate your risk

6. Make your first trade

7. Log your results

1. Find a broker

Steps 1 or 2 might go in either order; you will probably be working on them both simultaneously.  You cannot place a binary options trade if you have nowhere to place it, which means that you need a broker.  Brokers allow you to buy and sell assets and make binary option transactions by handling all the technical details for you.  There are no fees for trading at most websites, but you will notice that there is a gap between the payout percentages and the out-of-money refunds, and the gap is in favor of the broker, which is how the broker makes money.

You have come to the right website if you are currently searching for a broker; we have compiled a lot of information here on different brokers and listed our top ten picks in various categories.  The brokers which we recommend have proved themselves trustworthy.  It is essential for you to understand that not all binary options brokers are reliable or honest.  Why?  Poor regulation makes it easy for a lot of scammers to pretty on unsuspecting traders at this time.  You can avoid these scams by doing some research—starting right here at this website.

2. Get a trading method

This may be optional, depending on what is motivating you to trade binary options.  In it for entertainment only?  Then you may not concern yourself with a trading method if you do not care to stack your odds in your favor.  If you do want to make it more likely you will be profitable, however, a trading method can help, and if you are trying to trade for a living or profit reliably from binary options, it is 100% essential.  You are basically guaranteed to lose money over time without one.

Where do you get a trading method?  You can create one on your own, or you can borrow one from somebody else. Find out how to come up with a basic binary options strategy  You also can borrow one and modify it so it fits with your trading style and personality better.  Check out systems on binary options and Forex communities (FX systems can be adapted to binary options trading with a few simple changes in many cases, and you will find a wider selection to start with if you look in the FX community).  Your trading system may require that you trade particular types of binary options (Boundary, One Touch, etc.), so this may ultimately impact your selection of a broker.

3. Sign up for an account

This step usually takes only a few minutes.  You need to be 18 or older to trade on the vast majority of websites.  You usually do not need to provide personally identifying information until you deposit funds.  Registration is almost always going to be a free process.

4. Deposit your funds

This also should take only a few minutes, though some brokers may ask you to confirm your identity by faxing over relevant paperwork before they actually allow you to trade (others save this for the withdrawal process instead).  All brokers will accept a credit or debit card and wire transfer at a minimum, and many will also agree to take payment through an electronic system like Moneybookers or CashU.  Check whether there are fees for depositing via a given method before you do (wire transfers are usually the only deposits which incur fees).

There is usually a deposit minimum between $100-$250.  This is a good time to be thinking about money management.  How much of your trading account do you plan to invest on each of your trades?  Think about it for a moment; it would not make sense for you to deposit $200 and then invest $100 on each of your trades.  All it would take is two losses for you to be completely broke.  Withdrawals usually have minimum limits too, and you may not be able to withdraw your funds unless you are taking out $100 or more.  So all it would take is one large loss and one small one and you would be unable to take out your money again.  A good rule of thumb is to plan to invest 2.5-5% of your account on each trade, and deposit more than the minimum so that you can actually do this.  Check your broker’s lower limit for trading transactions.  If $10 is the smallest trade you can make, you should aim to have $200 minimum in your account.  $400-500 would be better.

5. Calculate your risk

Before you place a trade in your trading platform, you need to make sure you are not risking more than you can afford to lose.  Always calculate risk based on potential losses, rather than choosing how much to invest based on what you hope to win.  Minimize your losses and your profits will gradually take care of themselves.  Always invest a consistent portion of your account in terms of percentages.  Do not arbitrarily wager 2.5% on one trade and 10% on another, and only take trades you feel truly confident in.

You might say, “Wait, but I am not in this to trade for a living; I just want to have some fun.”  Even if that is the case, think about times you have visited a casino.  Did you wager arbitrary amounts, or did you carefully play out your bankroll so that you could get the most for your money?  If you blow your account too fast, you will not be able to have a lot of fun before you are out of the game.  If you manage your bankroll carefully, you not only will maximize your chances of becoming profitable, but you will also be able to participate longer in the game.

Ever wondered what would happen if your “fun” trading turned into “living” trading? Find out here if its possible

6. Make your first trade

Once you have calculated your risk, you are ready to actually place your first trade according to your trading rules.  You will find that most brokers use the same several trading platforms, with SpotOption being the most common (this is the name of the software that powers the trading interface).  These systems are designed to be very easy to use, and you will most likely understand what you are doing at a glance.  I discuss how to place a trade in detail in the Newbie Trading Guide.

7. Log your results

If becoming profitable over the long term is one of your primary trading goals, a trading journal is an essential tool.  Log the results of each of your binary options trades, and make the information detailed.  Do not just record “win” or “loss,” but also write down why you entered the trade according to your criteria and how you felt during the trade, and also whether you took any action during the trade such as closing out early or doubling up or rolling over.  If your emotions got involved in the trading and impacted your performance, log that as well.  Over time you will be able to look back on your past trades and distinguish patterns.  Using the information the journals reveal, you can make changes and improvements to your trading method or your psychology which will ultimately result in higher profits.

This may seem like a lot of steps, but this guide was written with a serious trader in mind, or at least a gambler who wants to get the most out of his or her money.  In reality, if you are a very casual trader, you can probably get up and running and place your first binary options trade within minutes.  Check out reviews of our brokers and top ten lists, find a broker which interests you, and look over the features and trading platform.  You will likely find the whole process very intuitive.  Good luck with your journey into binary options trading!

Want a little more information before jumping in? Check out: http://forextradingstrategysystem.com/binary-trading/trading-school/beginner/five-binary-trading-essentials/

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