What is binary options and tips for those who are new to the industry?

This topic is completely for those who are very new to binary options. However, in this post I will try to cover some of basics of it and my personal tips for you to be successful in it in the shortest time possible. Let's talk about my personal story into binary options. I started to know about binary options after I was invited to listen to some MLM recruiters. They tried to persuade me to join their business but I didn't. At the end of it, I was introduced to a PTC site. Then I soon realized that there are ways to make money online. My journey of searching around made me find out about binary options.

1. History of Binary Options

Binary options shares most of characteristics from traditional options, which was created by options consultants in the US (CBOE) in 1971. Nowadays, options were still traded especially by bankers or professional investors in the purpose of hedging stocks they are holding. In 1973 CBOE established a company to clear options contracts called Options Clearing Corporation (OCC). In 2007, OCC approved the binary options to have operation in various security exchange markets and then in 2008, Security Exchange Committee of the US approved to list binary options in global financial markets. While traditional options need to be learnt much for trading, binary options was designed in the most simple concept so that anyone in the world can understand and participate easily.

2. Get started

To get started, you first need to learn a little of its concepts and how to play the game. First thing is to know what a successful trader does. After you have some confidence, you can find a legitimate and regulated broker to start trading. You should start trading with demo account first. During that time, you have to accept particular strategy to test it. Usually each system can be tested in 21 trades in a row and then see the result. Any system that can give 70% or higher, you are confident to use it on live money.

3. How to trade

Trading binary options is very simple; it is only about predicting the direction of an asset whether it is going to go up or down in a predetermined time. Let's say you speculate that EUR/USD is going to close at higher price than that at the time you enter your contract. If you win, you will get 70-90 per cent profit on your trade amount. If you are wrong, you lose 100% of your bet. Some common terms used: Strike price: the price at the time you enter a trade. Expiration time: the time when your contracts expire. Call/Long/Rise/Up: to enter a trade to predict that one asset is going to close at higher price. Put/Short/Fall/Down: to enter a trade to predict that one asset is going to close at lower price.

4. Risks involved

One necessary thing to consider is the risk of trading. Most professional traders tell you to control your risk but you don't have a clue what that means. There are several risks involved in trading binary options. Price of an asset is constantly moved by traders buying or selling in Forex markets. Only one trader can make your trade become a loss. So the best thing to do is to follow the crowd, meaning following the trend. In Forex trading, you are allowed to hold your position as long as you want but binary options doesn't allow this to happen. This fact is the reason why binary options brokers gain large profits in very short time and guarantee their probability edge to win over the long run. If you come to trade the whole day, you will lose. If you come to use all your money in one trade, you will sure lose. If you just trade based on your random luck or feeling, you will lose. If you use martingale strategy without proper strategy, you will lose. So every trader must be very cautious in protecting their account.

5. Tips for starters

Most traders come to market to meet some frustration so I would like to give some tips for you. First, you need to learn how the market price works in the market. Study how systems can give you edge. Then you can seek professional advice from pro traders. If you have come across some system, you should test it carefully and make sure you practice your money management with every trading system. Don't put too much trust in your system. Set up your trading plan clearly and follow it as strictly as possible. Check out my other posts about various aspects. Remember trading is not for people who want to get rich overnight. It is a gradual business of building up accounts in months or years. As you have learnt much about binary options, you may have known that binary options is one of the risky businesses to undertake. To quickly shortcut your success in it, you need to have the right education from the right mentor. Before you trade yourself, you need to learn as much as possible and be careful at protecting your money from losses. Often times, new traders are prone to losses and to avoid that, you have to value account balance protection more than profit making.
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