Day Trading with Binary Options can be extremely profitable, but you will need some special skills. Learn more about Binary Option Day Trading right here.
The modern financial landscape has given birth to many new and advanced investments, such as Foreign Exchange (FOREX), stocks, precious metals, or even cryptocurrencies. In that context, Day Trading with Binary Options has come to be seen as a way that people can profit over short time periods.
So, what is Day Trading, and what are Binary Options?
Let’s discover how you can make money with Binary Options!
Day Trading is a common thing to do in speculative trading. When a person gains profits by buying and selling their financial assets within the same day, they are Day Trading. By the end of the trading day, all of their potions are closed.
This kind of trading can apply to any market and product, including FOREX, securities, and commodities. Day Traders are thought of as speculators.
Through observing and forecasting the potential direction of prices, speculators will place and close orders to earn from price movements. Day Trading can be a way to create very quick payouts. At the same time, Day Trading carries risks even to market professionals.
As mentioned above, Day Trading is not restricted to any specific market. You can go through a list of financial instruments and pick some most attractive categories that fit your interests.
Currently, popular markets vary from FOREX to securities, indices, commodities, and metals. Cryptocurrencies can also be traded on a short term basis.
Normal speculators may want to focus on assets with higher liquidity, which are more easily sold/purchased. A large number of beginners select FOREX for Day Trading because the required deposit in their account is not too big (~250 GBP, around 300 USD).
Another inexpensive type is Binary Options Day Trading, which generally has a very low opening deposit and all trades have no margin.
Conversely, Day Trading in futures contracts and securities are most costly. In short, Binary Options seem to be a reasonable start for novice Day Traders. While it isn't possible to utilize leverage and multiply your profits, the ability to totally control risk is very attractive.
Traders can use internet-based platforms to do just about anything. Therefore, you will need to get yourself a good computer with high-speed internet in order to keep up-to-date with global day trades. You don’t want your charts and trading platform to be a hindrance to your best performance.
Next thing, you will need to find a trading platform and open an account. If you are new to trading, it is worth trying a demo account and getting acquainted with the tools. Once you have enough confidence to use your own money, it’s time to move to the real markets.
Day Traders can invest as an individual, directly with the market, or place trades through brokers.
Either way, it would be better and safer to establish a firm foundation of practical knowledge, so that you can quickly adapt and deal with any market situation while avoiding as much risk as possible.
Whether you are a professional speculator or an amateur, it’s important to be aware of the times that are the most efficient for day trading. Every day trader should try to follow this basic principle: To carry out trades at the same hours and turn them into daily routines.
That’s how you can implement and keep track of your strategy. Normally, day traders usually concentrate on 2-3 hours at the open or before the close of a trading day.
You should also pay attention to the unique characteristics of each instrument.
As an example, while the best trading time for stock market falls around 9:30 am – 11:30 am (EST) and 3:00 pm – 4:00 pm (EST), future contracts would bring in more opportunities a bit earlier than the stock exchange's opening hours (8:30 am – 11:00 am).
Foreign exchange is unique as the FOREX market is open 24/5, and it gives more chances to investors all around the world to place orders with no time constraints whatsoever.
Obviously, risk management is essential unless you want all your capital to vanish in a blink of an eye. It’s not rare to see swings of a few hundred points on the Dow Jones Industrials, which can wipe out a small account if it is highly leveraged.
In day trading, risks can be controlled and minimized in two ways.
The first technique is to put a limit on the acceptable loss per each trade. Perhaps the best idea is to cut your losses at no more than 2% of your overall portfolio. Specifically, Binary Day trading provides an option to automatically “cut loss” if the price reached a fixed level, which will help to prevent further damage.
The other method involves daily risk control, to put it simply, you apply trade loss management for every single day. This strategy is more involved than just looking at a single trade. For example, you can accept a couple of days losing at a higher rate (ex: 2-3% worth of losses per day), if you have a lot of winning trades that can be used to offset the losses.
Binary Options are a popular way for investors and speculators to speculate and hedge popular markets. With Binary Options, like all options, the right to buy the underlying security is conferred with a “Call option”, while “Put option” indicates the right to sell.
Binary Day Trading is a combination of Day Trading and Binary Options, which allows traders to combine to the profitability of day trading with the safety of Binary Options.
Here are some advantages of Binary Options Day Trading:
Day trading makes it simple to keep your overhead low. No big account balances are needed. Also, Binary Options don't require a large deposit to keep trading, so day trading with Binary options is a great way to stay in the markets.
As stated before, there’s no leverage in Binary Options. However, due to a smaller invested amount, you can increase the number of trades you can do in a day, and keep the payouts coming.
Binary Options are great for people who don't want to use complex risk management strategies. With Binary Options, you can't lose more than the purchase price.
While Binary Day Trading seems quite advantageous, it needs to be approached with caution. Here are some things to keep in mind when you are trading Binary Options.
Do not rely completely on any other broker. You should have a good idea of how to trade the market, and how to profit from different market conditions. You are responsible for manage your position, and you must be ready to change with the market.
Make sure you have a trading strategy, and you know when to stop using a given strategy. There is no single trading strategy that will work all the time, and you need to be ready to shift your strategy when the market shifts.
Cultivating huge expectations about how much money you will make is a very dangerous practice. Binary Options can create massive returns, but it is likely that some trades will not go your way. When you look at your overall trading performance, make sure that you understand that a 20-30% annual return is huge.
Binary Options Day Trading can be very profitable, and now you know a lot more about it. It is very important to understand the trading platform you are using, and also to work with a great broker. Once you understand more about how to operate in the Binary Options Day Trading space, you should be able to show a regular profit!