Anyone who informs himself about binary options on the Internet usually warns of the risks. Among other things, it is pointed out that the risk of loss is very high and possibly even the entire deposit can be lost. But how dangerous is trading in binary options, which is very popular even among beginners? Should it be better avoided, or is this form of business better than your reputation? We have weighed the pros and cons against each other in detail and want to objectively inform our readers in this article about the risks but also the opportunities of trading with binary options.
binary options are highly speculative
Binary options are considered one of the most speculative forms of investment. This is because price development is difficult to predict and there can always be unpredictable volatility especially with shorter maturities. Thus it is possible to accurately analyze prices and make statements about the most likely course, but here also the luck factor plays an important role. Therefore, only money should be invested in trading, the loss of which will not cause any major financial restrictions for the trader. If in doubt, only small amounts should be paid initially. Beginners can trade binary options on many providers without much risk. Money needed for other purposes should never be used to trade binary options. If there are insufficient financial resources, the business should be avoided.
betting with high profit or total loss
Binary Options is designed to help beginners get started in derivatives trading. Whereas “classical” financial derivatives such as forex or CFDs have many options for opening and closing positions and therefore many sources of error, binary options trading is intentionally kept simple. The term of an option is already set at the outset, so that the trader does not have to close himself out. The exact amount of price changes doesn’t even matter for binary options. It is simply to predict whether the course will be higher or lower after the passage of time as compared to the time it started. If the trader is correct 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 a few options that allow beginners to focus on the essential parts of the analysis and 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 options makes it possible to significantly reduce the luck factor compared to binary options.
best binary options winning strategy
A safe profit strategy does not exist when trading binary options. There is always a high risk of loss, as even experienced and professional traders are at high variance. They try to cushion them by acting with a sophisticated risk management strategy.
To be able to profit over the long term with binary options, a very good background knowledge is required. Traders need to know how to analyze prices in order to best predict their course. Nevertheless, even the best traders will always have phases in which they may not make a profit, but lose money in trading. It is calculated and, if possible, should be compensated for by well thought out risk management.
Successful traders continue to educate themselves and recognize when it pays to trade. They increase their binary options odds by investing exclusively in trades with positive expectation.
In addition to trading risk, there is a risk of fraud
The binary options risk is already very high anyway, but there is another danger added to it: not all brokers offering binary options trading are reputable companies. Since trading with binary options has become more and more popular in recent years and are attracted by the simple structure of trading, there are also many inexperienced beginners who, unfortunately, try to make profit with dubious offers at the expense of some deceiving customers. We do. There are many possibilities. For example, trading prices may be manipulated in favor of the provider. Thus the trader loses more bets than usual and the broker, who in this case acts as a market maker, i.e. as a direct trading partner of the client, makes a profit. Another danger with dubious brokers is that they do not reliably pay out clients’ funds. Since such brokers are usually based outside the EU, the legal process is difficult and the chances of success in a lawsuit are slim.
Clients of binary options brokers should therefore immediately make sure that the chosen provider works seriously and, if possible, has an EU license. In our numerous test reports, we also draw a conclusion from the customer experience of different brokers.
Possibilities and Limitations of Value Analysis
To be successful as a long term trader, the beginner must delve deeply into technical analysis. Only with the necessary knowledge do binary options offer winning chances that are not only based on short-term luck, but can be sustained over a long period of time. However, it must be clearly stated that even the best analysts cannot predict the course of a course with certainty. Lots of factors play a role here and just because of the short maturity of the binary options, the prices are absolutely not calculable within this short time period. Therefore, technical analysis is not about making 100% safe decisions, but the goal is simply to predict the most likely price. It is not profitable to enter all the time. Therefore, good traders weigh carefully whether it is possible to predict the likelihood of price development so well that it is worth placing a trade. In case of doubt it is better to stop investing, as the higher supply will give you better chances within a very short period of time.
Without sound risk management, it’s pure gambling
In order not to take a total loss in trading, professionals usually use conservative risk management. This means that they spend no more than a relatively small portion of their entire balance, even for promising trades. With every trade, there is a risk of loss of the entire investment and this should not affect the total loan amount too much. The maximum investment amount is therefore always considered in relation to the available capital: the trader sets for himself a certain percentage that must not be exceeded. If this percentage is low, then the risk of binary options losing all trading capital can be minimized if the wrong trading decision is made.
professional binary options trading
Even though the risk involved in binary options is very high, there are still some professional traders who specialize and make a living in this form of forex trading. While many professionals often switch to Forex or CFDs sooner or later because of the more diversified options available, binary options professionals appreciate the simplicity of this investment. However, even good professionals know that there is no 100 percent binary options profit strategy and are accordingly careful with the use of their capital.
To be able to trade binary options professionally and over the long term, very good risk management is indispensable. In social trading, successful traders have recently had the opportunity to earn additional income by allowing other traders to copy and implement their investment strategy in real time.
With a demo account trading can be tested without risk
To get the first insight into binary options trading and try it for yourself, there is no need to take any financial risk. Meanwhile, many brokers offer free demo accounts. It can be opened quickly as it requires only a few details. Thereafter, clients can trade for binary money options for free and without obligation.
Free demo accounts, not only to know brokers and the market. They are a good way for already active traders to continue to train and expand their own skills without risk. New strategies do not need to be tested with real money, but can be refined and refined for free until the user is sure of being able to use them profitably even with real money.
A binary options margin is very rare
Although the risk with binary options is high, as the numerous warnings show, there is an obligation to make additional contributions, as is often the case with brokers for other financial derivatives, but this is not a common practice for them. This is because binary options are financial bets that only use the amount actually in the account. Unlike leveraged products, the trader cannot lose more than his actual usage on the trading account. The great advantage of this is that the risk of binary options can be well planned. In any case, traders should never deposit more money in their trading account than they can easily lose without being financially constrained. Anyone who can maintain a high level of discipline here and treats the money paid into the trading account as a risky investment knowingly losing as much as he can afford can calmly trade in binary options. Without the fear of losing more money than that.
Bonus payouts should animate higher deposits
Many online binary options brokers offer their clients a deposit bonus on their first deposit, or possibly even additional deposits. This is to inspire the customer to offer their own and stand out from the competition, after all, extra credit is given to the merchant. Many traders are tempted to deposit more money on the trading account with such bonus payments than they had planned, as higher deposits usually mean more money is “given”.
Of course, the brokers don’t really have any money to give. As a rule, they do not make losses on bonus offers because the payment of the bonus balance is subject to strict conditions. As a rule, customers will have to convert the bonus amount into trades several times before they can actually pay them out. The trading positions are designed by the brokers so that the additional cost is recovered from the broker’s profit only when the bonus assets are converted. Therefore, the bonus is not really a gift. The deposit with a broker should always be high enough so that the trader does not have any financial problems even if the entire deposit amount is lost. Of course, if there is an added bonus, it is welcome and can really increase your profits in these circumstances.
Result of our analysis: Risk can be controlled with the right methods
Binary options actually have a very speculative character and luck plays an important role in trading. Therefore, this form of investment is not suitable for every trader and total loss is possible at any time despite good risk management. Therefore, only money should be used, which is not immediately required for other purposes and its possible loss is planned at the outset. Since there are no binary options options for most brokers, traders risk the maximum amount that they have deposited in the trading account. It should be kept low enough that its loss does not become a major problem for the customer.
Before starting trading with the broker, please inform about its terms in detail and ensure that there is no extra money. Despite good price analysis and professional risk management, trading in binary options remains risky and can result in the loss of the entire deposit.