The most common questions among beginners interested in trading tend to revolve around how to get started, such as how to choose a broker (which company you trade with), what trading chart software to use, how to form an effective strategy in order to actually make a profit, and potential reference guides one should need.
I consider these to be the basic four key pieces of information that every binary options trader should learn when first starting out.
The nice thing about trading is that it doesn’t require formalized education to get started trading and investing on your own. There is an education involved, although it may not necessarily be something you learn in school.
How to Choose a Broker
When choosing a broker there is absolutely nothing wrong with “following the herd.” If many people are using the same broker, then chances are that the company has the following going in its favor:
A fair platform
Everybody enjoys small spreads and low commissions (not typically applicable to binary options trading), and the ability to get in at the price that they request.
For binary options trading, in particular, trading assets with high payout percentages is a great way to make sure you’re benefitting monetarily to the greatest extent possible based on the trades you’re making.
Processes withdrawals in a timely manner
Some platforms can take a long time to process withdrawals, which can be a very frustrating process. Nobody likes to have the money held hostage for long periods, so brokers that payout rapidly tend to be some of the most popular.
This tends to be true even if they offer a limited amount of assets to choose from or their payouts or interface tools aren’t up to the level of quality at other brokers.
Perks and benefits
This isn’t that important to most people.
But a broker that has some perks or cost-saving benefits is one additional thing that can put it above the competition.
Whether they accept traders from your country
This is a big one, especially among traders from the United States. Due to the trading laws in the US, many binary options brokers simply can’t accept US-based traders.
Some brokers do accept US traders, of course, by fulfilling certain legal stipulations, but many have stopped accepting US clients.
Overall, any broker that keeps customers loyal and steadily builds their clientele is one you should consider.
Many brokers gain in popularity simply based on word of mouth.
There are three main trading software programs that I’ve used: AmeriTrade’s ThinkOrSwim, MetaTrader 4, and Free Stock Charts.
ThinkOrSwim is a proprietary platform made by AmeriTrade and can be accessed by simply signing up for a demo account. It has a clean, attractive interface and has a large community of developers who help code indicators for the software.
MetaTrader 4 and MetaTrader 5 (aka MT4 and MT5) often comes with signing up for a free demo account with a forex broker. It is the most popular forex and binary options trading software available, given its team of developers and the thousands of technical indicators archived on its MQL5.com website.
Free Stock Charts is personally my favorite, given it can be accessed by simply typing in its URL (freestockcharts.com – now part of TC2000) and saves every drawing and indicator you’ve put on your charts from session to session.
It also uses New York close daily pivot points, which can be an important consideration when trading binary options for those who use them. And as the name might imply, it’s totally free, although a premium version can also be accessed.
And of course, every trader needs an effective strategy in order to trade well.
Some trade on fundamentals. Some trade on watching how price acts around support and resistance levels and take into account trend and momentum as well.
Some build a balanced portfolio and take a long-term view.
Others only look for the best opportunities, such as buying stocks after a big drop in the market or in cases where their risk/reward and expected value is very favorable.
Reference Guides and Trading Books
Every trader starting out needs the right type of educational material. The internet is a vast resource, but sometimes it’s so immense that you just don’t know where to start.
There are countless websites, countless forums, and countless YouTube videos out there that it can be all a bit overwhelming determining where to start and what material to reference to make the most efficient use of your time.
While there are quality websites and sources of information out there that can show you the ropes, some of the best resources still come in the form of the old-fashioned book.
Since binary options are a relatively new field for individual traders (for institutional, they’re often called digital options), all these books are fairly new as well.
The following are my five most recommended sources:
- Binary Options: A Comprehensive Beginner Guide To Get Going (Ken McLinton)
- How to Make Serious Money With Binary Options (Todd Williams)
- Binary Options: Just Set and Forget! (Online Business Buddy)
- Beat Binary Options: Winning Financial Betting Strategies for Today’s Markets (Drew Kasch)
- Trading Binary Options for Fun and Profit: A Guide for Speculators (Jose Manuel Moreira Batista)