Binary Options Basics: 3 Tips to Get Started

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The following post was written and/or published as a collaboration between Benzinga’s in-house sponsored content team and a financial partner of Benzinga.

Simplicity is the key to brilliance for many things in life, and that includes trading in financial markets. This is a particularly useful insight for beginners seeking out the best ways to get started with trading. 

People new to the market are usually interested in finding a way to trade that is easy to understand and has low barriers to entry. That’s why binary options trading is such a compelling way to get started — they provide a simple way for people of all ages and demographics to gain exposure to the markets.

Binary options are financial instruments that allow market participants to speculate on the price movements of an underlying asset. Because there are only two outcomes with each trade,  binary options allow new traders to make a straightforward decision and comprehend the possible risk and return of each transaction.

Binary options trading is also attractive for beginners since you don’t need a lot of money to get started. It’s super easy to open an account with an exchange like North American Derivatives Exchange (Nadex) and begin placing trades.

If you’re a beginner who is interested in trading binary options, here are three tips to get started:

• Do your research.

While you don’t necessarily need to have a lot of experience in financial markets in order to trade binary options, it still pays off to do a bit of research before getting started. Beginners should have a basic understanding of call and put options, which markets are available for trading, and what basic strategy they will use to start with. They also should have a basic understanding of the differences between in-the-money, at-the-money, and out-of-the-money options.

Some of the most successful binary options traders tend to rely on specific signals and methods to make their decisions. It takes some time to figure out which approach might work best for you, but doing your homework will help you learn about some of the most common techniques. Finally, make sure you look into the basics of technical analysis and how it can be used to trade these financial instruments.

• Trade a demo account.

So, you’ve done your research and are excited to test out your binary options trading strategies? Placing that first trade can be an exciting and rewarding experience but it’s usually a smart idea to start out trading in a demo account. That way, you can get familiar with the process of trading, learn how to navigate your broker’s platform, and check out how your strategy works without risking any of your hard-earned capital.

Demo accounts essentially allow you to test-drive your strategy with virtual money so that you can gain more confidence. Keep in mind that experience is the best teacher in trading, which is why trading in a demo account to start off is so valuable. Nadex has a free demo trading account that you can sign up for if you are interested. 

• Learn from your mistakes.

We are all human, which means that we will make mistakes during our trading journey. What separates great traders from mediocre ones is their resilience and ability to learn from past errors.

As a beginner, understand that it’s okay to make mistakes and that they are an inevitable part of trading. The only way to get better is to analyze what went wrong and use that knowledge to create future profits.

We hope this article has helped you get a better idea about how to get started with binary options trading. Make sure to check out Nadex if you’re looking for a reliable exchange that allows you to open an account for as little as $250. 

Disclaimer: Trading on Nadex involves risk and may not be appropriate for all. Members risk losing their cost to enter any transaction, including fees. You should carefully consider whether trading on Nadex is appropriate for you in light of your investment experience and financial resources.  Any trading decisions you make are solely your responsibility and at your own risk.  Past performance is not necessarily indicative of future results. Nadex is subject to U.S. regulatory oversight by the CFTC.

The preceding post was written and/or published as a collaboration between Benzinga’s in-house sponsored content team and a financial partner of Benzinga. Although the piece is not and should not be construed as editorial content, the sponsored content team works to ensure that any and all information contained within is true and accurate to the best of their knowledge and research. This content is for informational purposes only and not intended to be investing advice.