7 IT Tips for Beginner Traders When Trading Binary Options

Featured article by Katie Johnson, Independent Technology Author

Welcome to the world of binary option trading. This market has become one of the hottest in the financial industry. It seems everybody is talking about options. One reason for this popularity is that almost anybody can get involved. The cost of entry is relatively low in most cases. Plus, the underlying principle behind trades is easy to follow. After all, binary options are seemingly simple “yes” or “no” propositions.

With binaries, you are either for or against something. You have a 50 percent chance at success, right? Well, not exactly. New traders need to be cautious. As is true in any form of investing, there are sharks in the waters. You can get beaten for everything.

To help you better survive in the infested waters of binary options trading, here are the top seven tips for beginners. Best of luck!

1. Know the Payout System

Every broker has a different payout system. It is imperative that you read the terms carefully before investing your money. Binary option brokers generally make it easy to set up and deposit funds into an account. However, when you need to withdraw funds, things get a little more difficult.

In many cases, you can only withdraw and send funds to certain credit cards or your principal bank account. Some brokers have a waiting period, between three to five days, in which they hold onto your money. Also, you may not be able to withdraw anything if your balance has gone below a certain minimum.

2. Find Out if the Broker is Registered

The binary trading industry is largely unregulated. Consequently, there are quite a few unscrupulous firms. Tales of money disappearing are rampant on the internet.

Always ask about accreditation and registration before investing. You should especially do so if dealing with a foreign firm. After making loads of money, you may find out that unfortunately, banking laws in the host county do not allow funds to be sent to your nation.

3. Broker vs. Exchange

You will also want to know if you are investing with a broker or an exchange. A broker is an intermediary who performs the trades you place with them. An exchange is a market where you trade against other investors.

Some traders want a broker because they receive lots of trading tips. Others would rather deal with an exchange because they fear that a broker will always push them into unfavourable trades.

Check the top binary options trading review sites for up to date information on brokers and to help you better understand what binary options are.

4. Bet on Some Sure Things

One positive about binary contracts is that you can always find some “sure” things. For example, if the premise is “Gold will be higher than 1,300 pounds at half past one,” and you notice the price is only around 1,250, close to expiration, by all means sell the contract. The price of gold will rarely jump that high in so short a time. Yes, the reward will not be all that much. You might get an extra 20 pounds out of a 100 pound investment, for example. However, the risk is minimal. Do a few safe bets in the beginning to get your feet wet.

5. Stop When Winning

Options trading is a fast-paced game. Winning can prove exhilarating.

Nevertheless, do not get so overly excited that you rush into another trade without doing your homework. Wait until the next day when emotions have tempered.

6. Do Not Track the News

Yes, you should watch financial news. On the other hand, you cannot let news events dictate your trades.

Why? Because the sharks are waiting for you to do just that. They are better informed. They have faster computers. They will set you up.

Let financial news guide your overall trading strategy. But, never make rash decisions based on some recent event.

7. Learn the Meaning of Candlesticks

Candlesticks are the colourful bars you see on financial charts. They tell you whether a market is going up or down.

You need to learn how to interpret these bars. Just because the price is going down (red) does not mean things will stay that way. Look for a long black line protruding from the bar. This is an indication that there is heavy investing that could push the price back up! Many new traders miss this indicator and wonder why they are always coming up short.