The Truth About Binary Options: #11 Facts
- #1 Avoid Unlicensed Binary Options Brokers
- #2 More Than 50% of Traders Lose Their Deposit on the First Day of Trading
- #3 Shady Brokers Will Try To Convince You To Keep The Money (Until You Lose Them)
- #4 What Are The Three Worst Mistakes Of A Beginning Trader?
- #5 What Is The Main Quality Of A Successful Trader?
- #6 How To Double The Amount Of Successful Deals?
- #7 Why 99% Of Trading Systems Don’t Work?
- #8 What Are The Three Common Delusions About Binary Options?
- #9 Is It Possible To Become A Millionaire By Trading Binary Options?
- #10 Why You Shouldn’t Trust Your Binary Options Broker?
- #11 Do You Read Terms And Conditions?
#1 Avoid Unlicensed Binary Options Brokers
Why are unlicensed binary options brokers dangerous? Although officially outside EU/USA it’s not required for a binary options broker to be licensed, it is very much recommended to trade with a licensed broker. Some traders and many governments doesn’t care if a broker is licensed or not and they treat all them the same way, as if license doesn’t provide any advantage or goodwill. Actually, it does.
There are a few advantages for a trader. First, you have a chance to complain if you face any kind of fraud, like delay of payments, blocked account or manipulation of market data. CySEC has fined many brokers and the fines were not nominal. Second, a licensed broker cares of his reputation, because when a fine happens, this is a huge news in the industry and competitors will be happy to make such case as loud as possible. So in many conflicts you will be able actually to negotiate effectively, just telling the broker, you can go all the way to the regulator.
CySEC, based in Cyprus, is the most widely used regulator and it is also very reachable and active, but there are others, who work with binary options brokers, like UK’s FSA, BaFin from Germany, Spanish CNMV, Indian SEBI, – all good.
Only make sure, that the broker’s license is currently valid, as in some cases brokers were deprived of licenses due to various wrongdoings, or have abandoned regulators voluntarily.
#2 More Than 50% of Traders Lose Their Deposit on the First Day of Trading
How not to lose your deposit on the first day of trading? Unfortunately, it’s a common situation. A person comes to binary options or to forex trading or to any market all and loses all the money he has got to trade during the very first day. So how to avoid this? The strategy is very easy – don’t use the whole of your deposit during the first day.
The first day of trade is your first test. Can you stay cool, can you keep your head cold, can you limit yourself and keep your trading within firm borders of 10 – 20% of the deposit. If you can, you can be a successful trader.
Control your emotions, control your behavior, stick to your strategy,- those are the main qualities of good traders. Knowing how to use the charts and trading tools is secondary.
You will master the market if you can master yourself.
#3 Shady Brokers Will Try To Convince You To Keep The Money (Until You Lose Them)
How to withdraw large earnings from binary options brokers? So, you made it and you have earned thousands, or even tens of thousands dollars on binary options! Congratulations, but it will not be a complete feeling, until you don’t have a significant sum in your pocket. And here are a few moments you should know about withdrawing lots of money form binary options broker.
- First, a broker will try to convince you to keep the money. Of course, brokers are not really used to deal with winners, only as little as 1-10% of traders win and withdraw significant money. But they have strategies to make the numbers of withdrawals less. They will offer you huge bonuses, a personal manager, risk free trade, secret strategies,- everything to keep you trading, trading big, risking and eventually making a mistake. Don’t succumb. If you have in mind a certain amount of money you want to withdraw, stay cool and stand firm. Get your hard earn profit, celebrate, and then risk with the remaining bank.
- Second, there are limits. In all the advertising brokers promise 1 hour withdrawal and usually it works with small sums. But deep inside terms and conditions you will find, that a broker actually can be very slow in sending your money, they can start a very slow so-called “confirmation” process, and sometimes it will take months to get your winnings in full, particularly with small brokers.
#4 What Are The Three Worst Mistakes Of A Beginning Trader?
First of the worst mistakes is trading on a very short timeframe, when you can’t predict anything and rely on fortuity, not on calculation.
Second, lack of risk management. You must know and control your risks. Don’t do too many deals in a short period, or don’t bet on vey “costly” deals when you use too much of your deposit. Those are the ways to lose everything, in case of mistakes it will be pointless even to analyze them, because you will have no money to strike back and use the experience you always gain from your losses.
Third, choosing the wrong broker. You can be a genius or you can learn to be a very good trader and make lots of profits, but if you choose the wrong broker, you will be cheated and the broker simply will not pay you. So always choose a licensed broker with good reputation.
#5 What Is The Main Quality Of A Successful Trader?
Self-control is the main quality of any successful trader, you will not find a really successful trader who makes rush decisions and keeps braking the borders of his strategy.
You need to set the limits, how much you can afford to lose, how much you are ready to spend on one deal, how much risk you are ready to afford in your strategy,- and stay within those limits.
Before each deal you need a clear idea, why are you doing this and why it will work, if you are mistaken – recognize this, take time to analyze, make new strategy and keep going.
Remember, you need to limit yourself both in situations of losses and high wins, so that you will not lose too much in one case, and leave the game as planned, taking the profits in another case.
#6 How To Double The Amount Of Successful Deals?
The answer is – make less mistakes in your trading. How to do it? Trade on longer timeframes.
Why longer timeframes are better? You will have more time to analyze the situation and make a decision on whether to make a deal or not. The more time you have to decide, the less mistakes you make.
By the way, if you choose not the first class broker, shorter timeframes are even more dangerous, because lots of frauds and cheating on the broker side are carried out with traders, who choose shortest timeframes.
Reduce the amount of your deals, increase the time between your deals – and you will lower your risks and raise your profits.
#7 Why 99% Of Trading Systems Don’t Work?
Lots of brokers offer trading systems to their clients nowadays, as well as other parties on the market, like financial consultants and various market gurus.
There are two reason why most of those systems don’t work.
First, those ideas may have been brilliant at first. But any successful strategy, when it is promoted and offered for copying by many traders, eventually simply stops working.
Second, some strategies are actually designed to work against you, those are the strategies offered by brokers. Yes, you may benefit from them for some time, but in the end the broker wants you to lose and you will lose if keeps working within the inflicted strategy.
The only strategy that works is your own strategy, when you choose the required risk tolerance, trading instruments that you understand, and timeframes that are not too short.
#8 What Are The Three Common Delusions About Binary Options?
- People see the high profits of binary options trading and lose sight of high risks. Risks and profits are interrelated, if there’s a chance to win a lot, there’s a high chance to lose everything.
- People want instant success. With binary options you can earn quick money, yes, but this will not last. If you are a beginning trader, who instantly wins, you will probably experience losses very soon. Be ready for a long game and, lots of high and lows and keep control of your emotions in good times and in bad times.
- Easy money – people think binary options trading is a very easy thing, but it’s not. You will have to learn to be a successful trader, and you will have to pay for that education – with your nerves and with your money.
#9 Is It Possible To Become A Millionaire By Trading Binary Options?
Many people ask the same question: How to make millions by trading binary options? First, there are no credibly cases of millionaire traders, who made fortune on binary options. A more realistic strategy to earn millions, is start with binary options and forex, build small fortune and move on to other markets, where you can earn millions.
There are two things to consider, if you want to make millions with your trading.
First, you can’t just come to the market and become a millionaire immediately, the secret of millionaire traders – they all have vast experience, that helped them to create a unique trading strategy, backed by some brilliant ideas. To have a brilliant idea, that will be a base for a winning strategy, you’ll need to have lot’s of ideas. And that means test lots of ideas and lots of strategy, losing and winning on the way.
So as a beginner you should be ready for a long game.
Second, how much money you make depends on how much you can put in to start with, and to earn millions you’ll have to put in hundreds of thousands. But for hundreds of thousands binary options market is simply not safe enough.
#10 Why You Shouldn’t Trust Your Binary Options Broker?
Whatever your binary options brokers tells in his advertising, he makes profits only when the traders lose, so he is not interested in your success.
Of course, it doesn’t mean that you can only lose. On the one hand, there’s regulation, and good binary options brokers are accountable, on the other hand, there’s competition, and brokers value their reputation and don’t want scandals.
But you should be ready, that even the best brokers will want to cheat you.
First, some brokers offer you managers, that give trading advice, to some extend that advice could be helpful at the beginning, but the broker will not want you to end up with huge winnings, so on later stages advice will be misleading.
Second, the brokers will try to convince you to trade more and to take more and more risks. They will offer exclusive conditions, only to keep you trading. Don’t listen, have your own limits and take out money when you win.
#11 Do You Read Terms And Conditions?
In any industry terms and conditions will contain surprises, that will go against what you see in advertising or what sales people tell you.
In binary options there are several things to consider, so make sure you read terms and conditions before you choose the right broker.
First, some brokers will charge you with 2-5% of the money you want to withdraw, sometimes there’s even a minimum limit of this charge, 10-30 USD (but no maximum limit), so if you withdraw 50 dollars of winning, your broker will want to keep 30 of them. This is not because a broker wants that 30 dollars badly, this is because a broker wants you to keep going, keep trading. So in such case just understand, that your broker charges this money and withdraw your winnings anyway, if such was your strategy.
Second, your broker may have the right to keep your money if they are not satisfied with your documents, officially it is said to be targeted against money laundering. But in fact it is often used to keep the money of hugely successful traders. Your broker doesn’t reject your withdrawal, it just puts it on hold and keeps asking for more and more documents, that may last forever. So trade with a licensed broker, in this case you will have an option to complain.
Finally, there are commissions, and with commissions you can do nothing. Some brokers charge commission if your trading account was inactive for 60 days, some – charge several dollars every month from every trader, others charge commissions on your winning. For this you just need to be aware of.