Financial markets are platforms where interested participants get to buy and sell financial assets such as stocks, bonds, foreign exchange, and commodities for profit purposes. As such, to participate in this market, you essentially have to buy and sell these assets. But this can be prohibitive to retail investors. For one the entry requirement across board is usually high. As such, participation largely belongs large financial institutions and multinational corporations. The individuals who get to participate are high net-worth personalities.
However, with more advances in technology, there are now many options as to how to go about profiting from the financial markets; these methods break these barriers enabling everyone – especially retail investors – equal access to the markets.
Binary options is a form of derivative trading that allows you to speculate on the future movements of the prices of financial assets.
When trading binary options, you are speculating on what you believe will be the direction or movement of a financial asset after a pre-set period of time has elapsed.
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We should note that binary options is not a separate financial market instrument or asset in itself; it is actually a way to get to trade the markets.
As such, with binary options you can bet on the price movements of assets including stocks, cryptocurrencies, commodities, currencies, bonds, ETFs, indices, amongst others. For instance, it means you can bet on the price movements of Amazon, Apple, Facebook, Alphabet (Google), Netflix, Alibaba and more. You can trade binary options on Bitcoin, Ethereum, Litecoin and other crypto coins made available by your trading platform. Similarly, you can speculate on movements made by crude oil, gold, silver, amongst other commodities.
Almost any asset that is tradeable in the financial markets and as a global price can be traded with binary options.
When trading binary options, you are not really interested in the underlying assets nor are you purchasing them to own; you are only interested in the directions their prices will most likely move after a fixed period of time. If after careful analysis, you believe that the price will go up after say five minutes, you enter a BUY (or CALL) trade; on the other hand, if your analysis tells you your price will go downwards, then you go for a SELL or PUT trade; all these are done online using any internet-enabled device. If your “prediction” or “bet” turns out right, you get paid a fixed percentage of the amount you put up; otherwise, you lose that same amount.
Trading the financial markets is increasingly becoming one of the most popular ways to make money on the internet in Namibia. However, you can trade the markets through different methods, one of which is binary options. Binary options is a method of trading that involves speculating on the future movements of the prices of financial assets.
In practice, with binary options, you can place bets on what you believe will be the direction or movement of a financial asset after a specific period of time.
Instruments that you can speculate on their movements include liquid assets such as stocks, cryptocurrencies, commodities and currencies. Others include bonds, ETFs, indices, amongst others.
When trading binary options, you are not really interested in the underlying assets nor are you purchasing them to own; you are only interested in the directions their prices will most likely move after a fixed period of time. If after careful analysis, you believe that the price will go up after say five minutes, you enter a BUY (or CALL) trade; on the other hand, if your analysis tells you your price will go downwards, then you go for a SELL or PUT trade; all these are done online using any internet-enabled device. If your “prediction” or “bet” turns out right, you get paid a fixed percentage of the amount you put up; otherwise, you lose that same amount.
Trading binary options can be very profitable, as you can earn as much as between 75% to 90% of whatever you put up as risk capital per trade. In the same vein, however, it is highly risky, and you can lose substantial sums of your capital. To avoid this, you have to approach trading binary options as a skill, and to master every skill, you need to be taught and be able to dedicate considerable amounts of time and effort to learning and practice.
It is recommended that every trading decision be based on careful analysis – such analysis should take into account the news and happenings that are moving the prices of underlying assets as they can be a pointer to the future directions of the market. In trading lingo, this is known as fundamental analysis. Your analysis should also involve checking the charts and indicators for tradable patterns; this is called technical analysis.
Nevertheless, to be able to trade binary options, you need to be signed up with a binary options broker.
Investing in the financial markets is one of the ways to make good income on the side; in fact, some persons and institutions like hedge funds, mutual funds, pension fund managers, amongst others, make a lifetime career out of it. And they make quite a killing out of it. However, investing in the markets is quite difficult for retail traders; one reason for this is regulation. Another factor responsible is that the entry requirement is usually high, preventing retail investors from participating directly in most markets. For instance, to invest in the Gold market, you might need nothing less than $2,000 to purchase just one ounce. Similarly to purchase just a share in Amazon Inc requires you to put up at least $3,000.
However, technological advancement has made it possible for retail investors to speculate in the movements of prices of financial assets. In this case, you are not invested directly in the market; that is you don’t own the underlying assets – stocks, currencies, ETFs, commodities, indices, amongst others. You are only interested in the movements in the price of the assets. This system is known as derivative trading. There are numerous types of derivatives through which you can speculate on the markets; however one of the most popular is binary options.
Binary options are financial instruments that allow a trader to speculate on the direction of prices of assets in the financial markets. Here, you will decide whether you expect the market to go up or move down, and then you place a bet corresponding with that decision. If you believe the market will move up after a fixed time period, you go for a ‘BUY’ trade; but if you believe the market will go the other way, you choose a ‘SELL’. If your prediction is correct, you are paid a fixed percentage of the capital you risked, say between 75% to 90%, or even more. If however, your prediction turns out incorrect, you lose a specified portion of your capital.
There are significant risks attached with trading binary options, and a good number of traders do lose some or all of their trading capital. To however become a consistently profitable binary options trader in Namibia is quite simple, although not easy. You have to adhere to some rules including quality risk management, developing and sticking to a trading strategy as well as getting quality trading education before venturing to trade the markets.
There are several benefits attached to trading binary options, some of which are outlined below:
Binary options online can be traded using minimal amounts of money. This means that you can risk as much or as little as you can afford to. Furthermore, you are empowered to properly develop a risk management system. The way binary options works is that you are well aware of how much you stand to gain as well as the amount you may lose when entering a trade. Such risk management capability can really not be found with other forms of trading the financial markets.
The ability for binary option traders to trade small amounts at a time makes it a greatly affordable way to trade online. Many brokers allow you to make small minimum trades from as little as $10 (or even less), which means you can trade as little or as much as you want.
Expiry periods for binary options trades are much shorter compared to other channels to trading the financial markets. Expiry periods can range from as short as 1 or 5 minutes up to a week; with most other methods of trading, you don’t have such fixed expiry periods. Even where they are fixed, they are usually long. It is commonplace to see expiry periods of as high as 2 months.
This ability to quickly trade in markets for a short period coupled with the potentially high return rates of between 75% and 90% means that with a few quick successful trades you can make substantial profits.
Binary Options gives you the ability to trade several financial markets cut across different geographies. This helps you beat the limitations of timezones, as you can trade one market when the other is closed. With this, you can easily tailor trading to your lifestyle.
Binary options brokers have taken the initiative to make the process of trading binary options as simple as possible. All you really have to do is upon conducting your research, you select the market you want to trade, the amount you wish to risk for the trade and the direction in which you think the price of the asset will move.
You then go on to choose the expiry time, and wait. With this simple process, you can be on your way to making substantial profits if your trade turns out correct.
Before you think of signing up or undergoing any registration process with any broker, you must be assured of the credibility of the broker and the quality of its brokerage platform. The trading platform you choose to register with must possess some cogent features; otherwise, you should not go for it. This is because there are as many binary options platforms out there as there are brokers. However, not all of them are worth getting registered with. If you go for the wrong binary options platform, you might be setting yourself up for real losses.
How to choose the right binary options trading platform to register with:
There are a number of features and qualities which almost all good binary options platforms share. Some of them are summarised below:
On the other hand, to conduct fundamental analysis, you need access to live news, events and expert analysis.
Your trading platform must provide you with all these and more.
Red flags to watch out for when selecting a binary options platform
While you look at the upsides in selecting a binary options platform of choice, you should also look at potential red flags that help you avoid the wrong brokers. They include:
You have to research properly to ensure that your binary options trading platform of choice meets the above criteria. Once you have decided that, you can then proceed to the registration and login stage.
After deciding the broker to trade with, you can then carry out with the registration and login process. Some traders might not necessarily be that tech savvy and might not always know what steps will have to be taken in order to register at such a broker
Other traders might not necessarily know if it’s actually a good idea or not to register at a binary broker and give them their personal information such as name, address, payment card details, amongst other personal details.
Binary options brokers have seemingly some of the most complicated sign up processes you will find around. This is because legitimate binary options brokers who are regulated, are usually instructed by the regulatory authority to have some knowledge of who their clients are; as such they are required gather a few personal information so as to confirm the identity of the traders. We should however note that this is actually in the best interest of the binary options trader.
For instance, if a binary options broker commits any breach against a trader, it becomes quite easy for the trader to report to the authorities. But the authorities will only be able to verify the claim submitted by the trader if they can identify the traders’ account based on the personal information submitted. Similarly in case of bankruptcy or insolvency of the broker, the regulator can easily identify the trader for compensation.
There are usually chiefly two types of trading accounts offered by binary options brokers. One is a Real account which will require traders to deposit their capital. Here, you are putting your real money on the line.
Then, there is the Demo account that allow traders to trade with virtual, “demo money” without actually depositing real money. This serves different purposes including helping you test out a broker’s platform to determine if it is worth using.
When you create your account, the broker will ask you to submit your personal details such as your full name, address, email, amongst others. It’s extremely important to only submit real personal information; there are benefits attached to this as seen above.
After the initial registration, you will most likely receive an email from the broker confirming that your account has been set up. That email will contain a special link that you will have to follow in order to confirm your account from your own end. Clicking on that link will activate your account and from then you can make deposits and start trading.
Binary options represents a very profitable way for you to profit from the movements in global financial assets and instruments. In fact, it is one of the most profitable.
Can you become a millionaire trading binary options? Yes, it is very possible. At the same time it is very difficult. There have been quite a number of persons who have achieved that feat all over the world, and also in Namibia. But it takes long periods of efforts, commitment and diligence.
We can go on to list binary options millionaire success stories in Namibia. However we believe that their stories are not as important as the principles and mindset that created such success stories.
Listed below are some of those beliefs, mindsets and principles that most binary options millionaires both in Namibia and across the globe, imbibed:
Never Depend on Luck
We have to state it; there are a number of persons who have had streaks of profits from the market, even if they were not knowledgeable enough. Some of these persons record good profits for a while, but more often this doesn’t last. You can witness profits for a considerable amount of time after which everything goes bust.
To stay profitable in the market for a very long time, and to put yourself on the path to becoming a binary options millionaire in Namibia, you have to subject yourself to proper trading education.
Binary Options trading is no talent; it is a transferable skill; and to get better at a skill, you have to dedicate quality time, attention and practice.
Reasonable Expectations from the Market
One surprising mindset of millionaire binary options traders is that they don’t go into the market looking for big breaks. Of course you can make serious money, in fact running into millions from binary options trading. However, you shouldn’t expect to make all that money at once.
Having high expectations from trading will lead you to overtrade, thereby exposing you to major risks.
Successful traders go into trading with realistic and reasonably achievable goals, and once they clinch them, they leave the market.
Cutting Losses and Proper Risk Management
Just like everyone else in the market, binary options millionaires also record losses; however what separates them from the pack is that they do well to cut those losses and not get emotionally attached to them.
Similarly, they use proper risk management for all the trades they enter, and as such minimise those losses.
This is quite a complex question. Generally, binary options trading functions just the same way as other methods of trading derivatives.
Beyond these however, there are serious downsides to trading binary options. They are summarised below:
Relatively Poorer Risk Management Capabilities
Ideally, it is always said that binary options is a better form of derivative trading because it allows you know before hand what you are earning and what you are set to lose. This allows for proper risk management.
However, comparatively we can say this is not true, and that binary options does not allow for proper risk management. This is because there are no stop loss orders. Stop Loss is a price point at which you will like to exit the market when on a losing trade. As such, if your trade is at a loss, the Stop Loss order takes you out of trade.
This is available on most other markets and forms of trading – forex, stocks, even cryptocurrencies – but not yet in binary options. This can lead you to make a whole lot of losses.
No flexibility as to style of trading
The binary options style of trading is actually “binary”. There are only 2 forms of executing a trade – CALL (Buy) or PUT (Sell). There are no other options or flexibility that you have with other forms of trading like CFDs. Here you can set pending orders such as Sell/Buy Limit and Sell/Buy stop. This way, you can take advantage of potential profitable trades even before they form.
Losses
You must have heard that binary options is a very profitable way of trading the markets. That is true, and there is no doubting that fact.
But you start to question that assertion when you consider what you are giving up. For a successful binary options trade, you are paid an average of 85% return on investment capital. However, if the trade turns out to be a loss, you are losing 100% of the capital risked. In essence, you are giving up everything to gain only a fraction.
As such, if you enter a number of trades with the same risk capital and you win 50% and lose 50%, you invariably will end up with a net loss. This will deplete your account.
Scams and Lack of Regulation
This actually is responsible for the bad reputation that binary options trading has. Due to the fact that a lot of brokers are unregulated, there is ample space for scams to be committed.
As we stated above, the binary options space is full of scams. However, these scams come in different forms. Below we identified the types of scams that are rampant in binary options, so as to enable you identify them better.
One of the most popular forms is that of trading education. Here, these scammers promise to teach you how to trade; with claims that you will become an expert trader in no time, and that you will make exponential amounts of money (with minimal capital investment) with the strategies they will teach you.
Binary trading signal scams exist in the form of phonies promising to send you daily winning signals to trade the markets. They tell you that with their signals you can make extraordinary amounts on a daily basis, in the region of 200% or more returns daily. They pose as expert traders with several years put into the craft, claiming that they have discovered “secret” methods that can give you maximum winning everyday. You should never fall for this because it is quite difficult to do signals in binary options.
A growing method of scamming people under the guise of binary options trading are investment scams. Here, persons pose as professional and experienced traders; they ask you to invest your .money with the promise that they will help you make exponential returns. They are getting quite popular and more aggressive on social media of recent. Usually what comes out of this is that they take your money and you don’t get to hear from them anymore.
This is by far the most popular form of scams you will find in the binary options space. Fake binary options brokers entice you to open binary options trading accounts with them, with promises of benefits that cannot be found anywhere else such as risk-free trading and high payouts, amongst others.
What happens is that they take your money and then that will be all. Alternatively, they set up their brokerage platform in a way to make you incur losses consistently, so that they can gain.
To avoid this, thoroughly research any broker you choose; and then getting recommendations from persons who have used that broker in the past is important.
A trading bot is a software that enters and exits trades without you being physically involved. Many scammers pose to sell “profitable” bots, of which many don’t work.
