Best options trading course
When a trader gains more experience, he moves into the category of experienced binary options traders. Do you want to be successful in trading binary options? You cannot do without option trading training. Basic knowledge of techniques and fundamentals will allow you to start studying indicators and strategies in the future. You simply will not understand a lot, or you will make a lot of mistakes and waste valuable time without knowing the basics. To learn how to make money on binary options, you will have to learn the basics of technical, graphing, candlestick and fundamental analysis.
Why is option trading so attractive?
You only need to guess the correct movement (up or down), as well as the expiration date (duration of the transaction) to make money on binary trading.
The average profitability in trading is 80%, which is a very large indicator. It is not surprising that many people began to stubbornly master the nuances of financial markets and candle patterns, build support and resistance lines.
However, most enthusiastic people forget about the risks that binary trading comes with. According to statistics, only 10% are successful.
The remaining 90% are disappointed after a series of failures, and begin to blame the brokers for everything, although in reality they simply did not have enough patience and perseverance.
How to learn to trade binary options? You need to do a lot of work on yourself and take into account the psychology of trading.
What is an option?
It is a contract that gives its owner the right to buy or sell an underlying asset at a price fixed in it. This is a contract with a fixed profit, transactions with which bring either a certain amount of income or a loss in the amount of the value of the contract. The peculiarity of an option is that its owner decides for himself whether to exercise or not to exercise the contract. There is no such choice, for example, for the owner of the futures.
The option has its own circulation period, which is set by the exchange. There are two so-called options styles. In the first case, the option buyer can exercise it (buy or sell the underlying asset at a fixed price) any day before the expiration of the contract – this is the American style. In the second case, the option can only be exercised on a specific date (the expiration date of the option) – this is the European style. The option style is determined by the exchange when the security is put into circulation.
- Options are of two types – Call and Put.
- Option strike is the price at which you can perform an operation by exercising the condition embedded in the option.
- The life of an option is determined by its expiration date.
- The price of an option at which it is sold in the market is called a premium and is determined during exchange trading. The premium is always paid by the buyer to the seller of the option as payment for the right to exercise that option in the future.
If you have decided that you are already theoretically and practically prepared enough to work with options, you can start trading. To do this, you need to choose a broker through which transactions will be carried out.
What does a newbie need from a binary options broker?
- 1) Ability to trade with a minimum deposit.
- 2) The minimum bet size, let’s say, is $ 1, which is not very stressful psychologically at the initial stage of acquaintance with the world of binary options.
- 3) Availability of a demo account. Some traders have a negative attitude towards demo accounts, but this tool helps in learning and researching strategies.
- 4) Profitability.
- 5) Variety of assets. Some brokers offer different types of assets to trade, such as market indices, currency pairs, commodities, and stocks. When deciding which broker to choose, you must have access to trade as many assets as possible in order to be able to trade in different markets.
- 6) System flexibility. Choose a broker that offers flexible trading facilities. Flexibility should be offered for asset expiration times, which can be anywhere from a few minutes to one week.
- 7) Customer support. The broker you intend to use should answer all your questions. Also, make sure the support is available at the correct hours when you trade. Please note that you must be able to contact the support center through various channels such as telephone, email, web chat, and others.
- 8) Information resources. The best brokers open up access to a wide range of resources such as options trading magazine articles, books, guides, asset quotes, and more. This data is of great importance as it helps in analyzing the movement of selected assets.
- 9) Technical support. After registration, you must be contacted by a company representative in the person of an account manager.
- 10) An extensive list of methods for depositing and withdrawing funds, namely a large number of electronic payment systems. You should definitely clarify the issues related to the withdrawal of money. Specify the information for the payment method you are interested in.
How to trade?
After a trader has analyzed the market, he makes a decision to buy a particular option. After that, he sets the period after which, in his opinion, the price will rise or fall. Options trading is medium to long term trading.
Best options trading course can give a comprehensive answer to the question: how to trade binary options. It will speed up the process of mastering the trade and shorten the time to make a profit.
Step 1: buy an option
Experienced traders argue that it is better for a newcomer in the options market to buy rather than sell. Economically speaking, buying a call is no different from selling a put. However, in the first case, you only have the right to buy the underlying asset, which you can use at your discretion, and in the second, you have the obligation to buy the instrument if the option buyer wants to sell it.
In addition, when you buy an option, you get limited risks and potentially unlimited profits. One of the main advantages of buying options is that the investor has unlimited profit potential. If an investor buys a call option, then he can make a profit as long as the price of the underlying asset continues to rise. The second advantage is that the investor’s risk is limited and predetermined. All he can lose when he buys the option is the amount of the premium plus the broker’s commission. Unlimited potential is not a guarantee of profit.
Options trading does not use leverage, so in order to buy this security, you will need to pay its entire value (premium).
Step 2: watch the quotes change
As with other securities, the option price is determined during exchange trading. Accordingly, if your option becomes more expensive, you can sell it and make a profit by increasing the premium. However, you should remember a few features inherent in an option.
First, it is natural that the option price depends on the price of the underlying asset. Forecast alone is not enough. It may happen that when the underlying asset appreciates, the price of your option remains unchanged. The point is that the option price also depends on time. The less time remains before the option expiration date, the lower the premium on it.
In addition, the option price depends not only on the size, but also on the price fluctuations of the underlying asset.
Step 3: sell the option
If the price of your option has risen to a sufficient level, according to your estimates, or if you expect the price to decline in the near future, you can sell the contract and take profit.
Things to Remember
Experts say that an option is a much more complex instrument compared to a futures. If you still do not have sufficient experience in the derivatives market, then first you should read the special literature and try your hand at training auctions. Working with options requires an understanding of the essence of the instrument, just like in any other example, not only from the field of investment. Can a beginner be able to learn how to work with tools? It depends on the investor himself.
If you seriously decided to start trading an option, then do not forget that the more opportunities this or that instrument provides, the more dangers it conceals in case of inept handling. All the disadvantages of using an option to implement investment and trading strategies are a mirror of the merits. In other words, mishandling an option can turn every virtue into a disadvantage.
Have any questions? Need advice from a manager or trader? Just call or write. We are always in touch.