Trading binary options can be a fun and enjoyable hobby for anyone who watches the markets or likes to bet. It only takes a bit of insight, preparation and discipline to win some of the money the more casual traders are losing.
- What to trade
- Have strategies and do research
- Set yourself rules and be disciplined
- Bankroll management
- Full business continuity
What to trade
Most profitable binary option traders specialize in 1 or 2 asset types on 1 or 2 types of binary options. At first you will probably try trading on many different assets and a few types of options. That’s good when you are starting out and getting the feel for things but after a while look over your records and you will find you are more profitable on certain types of trades than others.
When you have developed some binary option strategies they will suit certain assets and option types more than others because of their characteristics.
Have strategies and do research
A system or strategy is a method for selecting when to call or put on what asset and a method for deciding how much to invest per trade. You need to have enough faith in you systems to stick to it and keep investing in it even when you are nervous about losing. With minimum trades of only 1 m฿ on Whaleclub (review) it is a great platform for testing your trading systems.
Always study the news and relevant market figures before you trade. All the information is available at your fingertips online. When you are trading within your system you will know what information you need and where to find it, meaning research will only take a few moments.
If you want to make quick and easy trades when you’re in the mood, that’s good fun but you won’t make long term profits. We have a separate page dedicated to binary options strategies.
Set yourself rules and be disciplined
You will need some trading rules or a code you can stick by to avoid making common mistakes and to trade in a consistent and controlled way.
I am a long term successful trader and shares my rules here to serve as an example. These rules work well for my trading systems and counteract mistakes I am prone to make. Because you will be using your own system and you have your own tendencies your rules will have to be specially tailored to suit you.
- Only trade when undistracted and able to concentrate.
- Never take an option because you want it to happen.
- Only trade within a system, never for the sake of it or for fun.
- Only invest amounts that you can afford to lose.
- Always research before trading.
- Place trades at least 15 seconds before the deadline.
I do not stick to these rules 100% of the time but when I does I am profitable and when I don’t I am not profitable, which proves the value of the rules.
Your bankroll is the total amount of money you have available for trading. Even as a winning binary option trader trading will probably not be your only source of revenue and it will definitely not be the only demand on your money. Therefore working out how much you can invest and how much you need to take out in winnings is important.
How much you invest per trade is almost as important as your option selections themselves. You need to be able to survive a bad run. If you’re staking 10% of your bankroll per trade you can only go on a losing streak 10 trades long before you go bust. My stakes start at 2% of my bankroll but can go higher when appropriate.
A martingale staking plan has you increase your investments during a losing streak enough that when you eventually win you recover the losses. You should have a stop loss or be willing to lose your whole bankroll if you want to run a martingale.
You can also try a positive progression staking plan which can be seen as an inverse martingale. In this case you increase you stake during a winning streak to risk say 50% of the streaks profit. When you eventually lose a trade you keep the other 50%
One technique for building a bankroll without the risk of losing it all back is to withdraw half of your winnings and leave the other half in the trading account to grow the bankroll. So you could work out your winnings at the end of the month and withdraw 50% of them. Adjust that up and down depending on if you want to grow the bankroll or if there are other demands for your crypto.
Part of bankroll management and being a long term winner is working out your break even point and required win rate.
Full business continuity
You need every component of your preferred way to trade to be as reliable as possible and you need a backup option for every component. The components are
- Funded trading account.
- Internet enabled device.
- Internet connection.
- Power supply.
For example your preferred way to trade might be
|Funded trading account||Whaleclub (review)|
|Internet enabled device||Laptop|
|Internet connection||Home broadband connection|
|Power supply||Household electricity|
And your backup could be
|Funded trading account||1xBit (review)|
|Internet enabled device||Smartphone|
|Internet connection||Smartphone’s data connection|
|Power supply||Smartphone’s battery|
Job done… this was a lot more difficult before smartphones 🙂