Binary options are a lucrative and fun way of investing and making money. Everyone has the potential to earn money through this stream. However, there is a risk involved. One could easily lose all the investment in the blink of an eye and earn nothing. Having said that, it is interesting to delve into whether binary trading is an easy option for beginners or not.
Binary options trading is based on yes or no. One has to determine whether the value of an asset will increase or decrease in a short period of time. If the guess is right, one gets a fixed profit of around 75-80% on the investment. On the contrary, if the guess is wrong, one loses all the investment. The minimum investment is very low.
Several trading bots and brokers exist online that simplify the process of trading binary options for traders. One such platform iqcent – newly introduced binary options broker that allows trading even in cents.
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Is It Easy for Beginners?
Yes, binary trading is easily understandable for beginners. The reason is that the learning curve is very small. In this type of trading, one can easily make a decent amount of money. However, there is an element of risk involved too.
So, the probability of winning or losing both is 50% for each. This indicates that one might lose some of his/her bets. This risk can be reduced by doing a considerable amount of research. There are some strategies that one can adapt to minimize the risk of losing the bet.
Strategies to Minimize the Risk
Following the Trend
The most effective strategy for binary trading is to follow the trend. Following the market’s trend is one of the most basic and effective strategies. Let’s understand this with an example. Imagine an asset whose market trend is positive. Under this strategy, we can safely assume that the trend will continue and the value of the asset will increase further.
However, there is also a note of caution for this strategy. This strategy is effective for long-term options, but not for short-term ones. This is because in the short run, market trends are not easier to predict.
Following the News
Following the financial news is another basic and effective strategy. To understand it clearly, let’s assume that there is positive news about a particular asset. In this case, the market will also respond with an upward trend.
The question arises: What should be the way forward in this case for beginners? The answer is that if a beginner hears this news for a specific company, he/she should buy its binary options. The beginner should bet the value of that stock and thus make a huge amount of money.
The Straddle Strategy
In binary options, there would be an uncertainty situation. For example, you, as a beginner, expect that the price of a specific asset will change. But you are concerned about the direction of the change: whether it is going to be positive or negative. This is when you use the straddle strategy.
According to this, as a beginner, you should bet in both ways: for and against the market. This minimizes your risk. The straddle strategy works best with news, as both require keeping a close eye on the announcements.
Why Is Binary Trading Easy for Beginners?
We have established that binary options are easy to understand for beginners. We’ve also talked about some ways to make this kind of trading less risky. Let’s substantiate our proposition with a few more arguments:
- Low barriers to entry: One of the major reasons why binary trading is easier to understand and adaptable for beginners is that entry into this arena is quite easy. One can easily start binary trading by depositing a minimum deposit, which is $5.
Some binary trading platforms even accept $1. The process is very simple; a beginner has to only create a binary trading account, deposit a minimum deposit amount, and then start trading.
- Simplicity: Binary trading is straightforward. As the word “binary” indicates, there are either two possibilities: profit or loss. There are no other complexities or technicalities involved. Similarly, there is no prior experience required. Literally, anyone can start binary trading.
- Knowledge of risk: It is true that there is a risk involved in binary trading. However, the risk can be mitigated by the strategies mentioned above. Whenever a beginner wants to delve into the world of binary trading, he/she can easily find out the risks involved in it. He can thus make decisions accordingly. He might not enter the trade or take the risk.
So, knowledge of the risk can help the beginners make their decisions accordingly and minimize the loss.
- Availability of short-term trading: A beginner might not be comfortable with binary trading at the start. He might be entering into this trading to understand its feasibility in the long run. In this regard, binary trading can give him a reality check. Binary trading involves several short-term trades.
The lasting time of these trades may be seconds to minutes. Therefore, the beginner binary trader can make several trades a day. This will allow him to make more profit and also understand the market better.
Conclusion
In conclusion, binary trading can be a lucrative option for someone interested in earning money. The chances of winning or losing are 50/50. But your chances of success can increase if you implement the strategies mentioned in the article.
However, risk will still be there, and beginners should do a thorough market analysis and grasp the above-mentioned strategies before entering into binary trading.
