Table of contents:
- 1 Betting with a high profit or total loss
- 1.1 Is there an easy binary options winning strategy?
- 1.2 In addition to the trading risk, there is the risk of fraud
- 1.3 Possibilities and limits of price analysis
- 1.4 Without proper risk management, it is pure gambling
- 1.5 Professional trading with binary options
- 1.6 With a demo account, trading can be tested without risk
- 1.7 Binary options Obligation to make additional contributions is very rare
- 1.8 Bonus payments are designed to encourage high deposits
- 1.9 Result of our analysis: The risk can be controlled with the right methods
Binary Options are considered one of the most speculative forms of investment. This is due to the fact that the price trend is difficult to predict and, especially with short maturities, unforeseeable fluctuations can always occur. Although it is therefore possible to analyze the prices precisely and make statements about the most probable course, the luck factor also plays a decisive role here.
Therefore, only money should be invested in trading, the loss of which would not result in major financial restrictions for the trader. In case of doubt, only small amounts should be invested initially. Even with small deposits, newcomers can trade binary options with many providers without risking too much. Money that is needed for other purposes should never be used for binary options trading. If there are not sufficient funds available, trading should be avoided.
Binary Options are very risky because of:
- High profit or total loss
- Risk of fraud or scam
- Limits of price analysis
- If the trader uses no money management
- Bonus payments are designed to encourage high deposits
Betting with a high profit or total loss
Binary Options were developed to help beginners get started in derivatives trading. While “classic” financial derivatives such as Forex or CFDs offer many possibilities for opening and closing positions and thus many sources of error, trading with binary options is deliberately kept simple.
The term of an option is already fixed at the beginning so that the trader does not have to close it himself. The exact amount of the price change is also irrelevant for binary options. It only needs to be predicted whether the price will be higher or lower after the expiration of time than at the start. If the trader is right with his tip, he wins, if he is wrong, he loses his bet. Thus binary options have a similar structure to sports or other bets and are easy to understand even for beginners.
There are only a few decision possibilities, which means that beginners can concentrate on the essential parts of the analysis and do not have to deal with too many factors. Professional traders, on the other hand, often switch to more complex forms of derivatives trading such as CFDs, as the greater number of decision options available means that the luck factor is significantly reduced compared to binary options.
Is there an easy binary options winning strategy?
There is no safe profit strategy when trading Binary Options. There is always a high risk of losses because even experienced and professional traders are at the mercy of high variance. They try to cushion this by trading Binary Options with sophisticated risk management.
In order to be able to make profits with Binary Options in the long term, very good background knowledge is required. Traders need to know how to analyze prices in order to best assess their development. However, even the best traders will always have periods when they can’t make a profit, but lose money when trading. This has been taken into account and should, if possible, be compensated by well-thought-out risk management.
Successful traders constantly educate themselves and recognize when it is worthwhile to place a trade. They increase their binary options profit chances by investing exclusively in trades with the positive expected value.
Read through our recommended strategies:
In addition to the trading risk, there is the risk of fraud
Binary Options risk is already very high, but there is another danger: Not all brokers offering binary options trading are reputable companies.
Since trading with Binary Options has become increasingly popular in recent years and the simple structure of trading also attracts many inexperienced beginners, some fraudsters unfortunately also try to make a profit at the expense of customers with dubious offers. There are several possibilities for this. For example, trading prices can be manipulated in favor of the provider. The trader thus loses more bets than normal and the broker, who in this case acts as a market maker, i.e. as the customer’s direct trading partner, makes a profit. Another danger with dubious brokers is that they do not reliably pay out customers’ money. Since such brokers are usually based outside the European Union, legal recourse is difficult and the chances of success in a lawsuit are low.
Customers of binary options brokers should therefore urgently ensure that the chosen provider is reputable and, if possible, has an EU license. In our numerous test reports, we also draw a conclusion from the experiences of the customers of the various brokers.
Choose one of our recommended and reliable Binary Options Brokers:
Possibilities and limits of price analysis
In order to be successful as a trader, in the long run, beginners should intensively deal with technical analysis. Only with the necessary knowledge do binary options offer winning chances that are not only based on short-term luck but can also be held for a longer period of time. However, it must be clearly stated that even the best analysts cannot predict the course of prices with certainty.
See the example of a sucessful chart analysis:
Too many factors play a role here, and precisely because of the short terms of Binary Options, prices cannot be calculated precisely within this short period of time. Therefore, the aim of technical analysis is not to make a 100% sure decision but to predict the most likely price development. Not all times are profitable for an entry. Good traders therefore carefully weigh up whether the probability of the price development can be predicted so well that it is worth placing a trade. In case of doubt, it is better to forego an investment once again, because the high supply will give you a better chance within a very short time.
Without proper risk management, it is pure gambling
In order not to suffer a total loss when trading, the professionals usually apply quite a conservative risk management. This means that they never use more than a relatively small part of their entire balance, even for promising trades. After all, every trade threatens the loss of the entire investment and this should not have too great an impact on the total balance.
The maximum amount of investment is therefore always considered in relation to the available capital: The trader sets a certain percentage for himself, which must not be exceeded. The lower this percentage is, the more the binary options risk of losing all trading capital can be minimized if consistently good trading decisions are made.
Professional traders use 1 – 5% of the account balance per trade
Professional trading with binary options
Even though the Binary Options risk is very high, there are still some professional traders who specialize in this form of currency trading and make a living from it. While many professionals often switch to Forex or CFDs sooner or later due to the more diverse decision-making options, the Binary Options professionals just appreciate the simplicity of this form of investment. However, good professionals also know that there is no such thing as a 100% Binary Options profit strategy and are therefore cautious about using their capital.
In order to be able to trade binary options professionally and successfully in the long term, very good risk management is essential. With social trading, successful traders have recently also had the opportunity to earn additional income by allowing other traders to copy their investment strategy in real-time and apply it themselves.
With a demo account, trading can be tested without risk
To get the first insight into binary options trading and to try it yourself, it is not necessary to take any financial risk. Meanwhile, many brokers offer a free demo account. This can be opened quickly, as only a few details are required. Afterward, the customers can trade binary options free of charge and without obligation to play money.
The free demo accounts are not only suitable for getting to know the brokers and the market. They are also a good opportunity for already active traders to train their own skills without risk and to constantly develop them further. New strategies do not have to be tested with real money but can be tried out and refined free of charge until the user is sure that he can use them profitably with real money.
(Risk warning: Your capital is at risk)
Binary options Obligation to make additional contributions is very rare
Although the risk is high with Binary Options, as the numerous warnings show, an obligation to make additional contributions, as is often the case with brokers for other financial derivatives, is not common with them. This is because Binary Options are financial bets where only the amount actually available in the account can be used. In contrast to leveraged products, the trader cannot lose more than the amount actually available in the trading account.
This has a great advantage that the Binary Options risk can be well planned. In any case, traders should never deposit more money into their trading account than they can easily lose without any financial restrictions. If you can maintain a high level of discipline and consider the money deposited into your trading account as a risky investment, the loss of which is consciously calculated, you can trade binary options with peace of mind, without having to fear losing more money than you can afford.
Bonus payments are designed to encourage high deposits
Many online Binary Options brokers offer their customers a deposit bonus on their first deposit, or possibly even on subsequent deposits. This serves to make the customer enthusiastic about their own offer and to set themselves apart from the competition. After all, the trader gets additional credit for free. Many traders are tempted by such bonus payments to deposit more money into the trading account than they had actually planned, because usually with higher deposits there is also more money “for free”.
Before you are using a bonus, read the conditions of it.
Of course, the brokers don’t really have any money to give away either. As a rule, they do not make a loss on the bonus offers, because the payment of the bonus credit is subject to strict conditions. For example, clients usually have to wager the bonus amount several times in trades before they are actually allowed to withdraw it. The brokers have designed the conditions for turnover in such a way that the additional costs are recouped solely through the broker’s profit on the conversion of the bonus credit. Bonus payments are therefore not really a gift. A deposit with a broker should always only be so high that the trader does not suffer any financial problems, even if the entire deposit is lost. If there is an additional bonus, it is of course welcome and can actually increase profits under these circumstances.
Result of our analysis: The risk can be controlled with the right methods
Binary options do indeed have a very speculative character and luck plays a not inconsiderable role in trading. Therefore this form of investment is not suitable for every trader and the total loss is possible at any time despite good risk management. Therefore only money should be used which is not urgently needed for other purposes and whose possible loss is planned for from the outset. Since most brokers do not have a binary options margin requirement, traders risk at most the amount they have deposited into the trading account. This should be kept low enough so that the loss is not a major problem for the client.
Before you start trading with a broker, please make sure that you are fully aware of the broker’s terms and conditions and that there is no margin requirement. Despite good price analysis and professional risk management, trading in binary options remains risky and can lead to the loss of the entire deposit.
(Risk warning: Your capital is at risk)
Read my other posts about Binary Options:
- 15 Rules for Binay Options – Tips & Tricks
- 5 best Binary Options Broker 2020 – Review & Comparison
- Are Binary Options a gamble?
- Are Binary Options a scam?
- Are Binary Options Robots a Scam? – Honest review
- Best Binary Options App – Comparison & Review
- Binary Option Markets
- Binary Options – Call and Put
- Binary Options – Range Options – Boundary Options
- Binary Options – Touch Options
- Binary Options 60 seconds Trading Strategy & Tips
- Binary Options Bollinger Bands Strategy
- Binary Options commodities trading
- Binary Options demo account – Recommended For Beginners
- Binary Options Money Management Strategy
- Binary Options News Trading
- Binary Options regulation – Why is it important?
- Binary Options review – Critic and warning
- Binary Options RSI Strategy
- Binary Options trend following strategy
- Binary Options volatility strategy
- Binary Options vs. CFD Trading – Which one is better?
- Binary Options vs. classic options
- Binary Options vs. Forex Trading – Which one is better?
- Chart analysis for Binary Options
- Forex Trading with Binary Options
- Hedging Binary Options: Can You Hedge Against Losses?
- How risky are binary options?
- How to avoid Binary Options Scam Brokers
- How to trade Binary Options – Trading Tutorial
- How to Trade Stocks with Binary Options – Tutorial
- Is Binary Options Trading safe? – Consumer protection
- Learn to read Binary Options Candle Sticks
- Trade Binary Options with MetaTrader
- Trade Pivot Points with Binary Options
- Warning about Binary Options – A form of betting
- What are Binary Options?
- Why Binary Options Signals are a scam