Executing Your First Trade – Binary Options Trading Checklist

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Executing Your First Trade – Binary Options Trading Checklist

The first binary trade in every trader’s life is very important and memorable. Binary Options Trading is no different.

It may or may not be profitable but at least you need to ensure certain tasks from your end to give your best .

Irrespective of how many training courses you attended and how long you tested the demo account; When it comes to your first trade, traders naturally tend to get anxious.

You should be proud of your first trade result irrespective of the result.

To prep you for your binary options trading journey, we have prepared a checklist that you can go through before you place your trade.

But first, let’s take a quick glance at why you should give binary options trading a try.

Why is Binary Options Trading Attractive?

Irrespective of what your trading capital is, you can still invest in binary option and can expect 60%-90% return on the same.

If you are looking for a way to trade without any complications, at present apart from binary option there is no other better option available.

Here predicting correctly is equal to earning money.

However it is essential to keep in mind, if you don’t stay smart, money can be lost equally well.

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That being said, binary options are easier for beginners to get a grasp of compared to other forms of trading.

Learn more about the advantages and disadvantages that binary options offer.

The strategies are easy to understand and implement and we have a couple of beginner strategies that will help out.

Let’s go through some basic information on binary options before you jump into trading.

Basic Information on Binary Options Trading

We have summarized some key points of binary options to make it easier for you to understand.

Executing Your First Trade

You will learn about the following concepts

  • Choosing an asset
  • Determining the direction of the price
  • Potential trade outcomes

The first trade is probably the most important one a trader will ever make. It is so, because you need to do it on your own, while ensuring that everything has been done correctly.

What you should note is that there are three main points you need to consider in order to make you first entry in the market. First, choosing your asset; second, determining the price direction; and third, calculating the potential outcomes of the trade.

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Choosing an asset

The first step in trading binary options is deciding what kinds of assets you want to trade. Once you make up your mind, it is time to log in the platform you have chosen and select the exact type of asset you feel comfortable with. We recommend you to try an asset, which you are interested in. For example, if you are interested in sports manufacturing industry, then why don’t you try trading the Nike stock? Once you make this important decision, it is time to begin the analysis. Many people underestimate the power of research and analysis, but eventually everyone will draw the conclusion that it is probably the most important part of every successful trade. It will help you determine the future movement of the assets price and eventually generate a profit.

Determining the price direction

If you have been examining Nike’s price chart you will probably get an idea if there is a trend or not. Then you may begin doing some research and go through the financial news concerning Nike. There are thousands of different sources that can help you analyze Nike or whatever asset you have chosen. Those sources will also help you find reliable weekly market reviews or even advanced trading techniques.

You should use such tools because they will help you develop your trading skills and become a successful trader in the binary options market. So, if you believe the price is going to surge before the expiration, then you should execute a call option and vice versa – if you suppose that it will drop, then you need to execute a put option.

Potential trade outcomes

Right after you have initiated your trade, you should wait for the expiry time and the outcome. As we have already discussed in some of the previous topics of this tutorial, there are two possible outcomes that can occur – “in-the-money” or “out-of-the-money”. In order to make everything clear, here is a brief example. If you have placed a trade in Nike stock at trigger price of 60$ and the current price rises above this trigger level before expiration, you will be in-the-money. Alternatively, if the price falls below 60$, then you will be “out-of-the-money”.

Planning Your First Binary Options Trade

The most important consideration is to be prepared. Never trade without a plan. This is rule number one. A trading plan can only be developed after learning, study and practice has taken place.

Trade Checklist

The aspiring trader should have a checklist prepared in advance of making his / her first trade. Here are some helpful questions that you should be asking yourself before placing a trade.

  • Did I have a well-thought-out trading plan?
  • Will this trade I am contemplating be in harmony with my trading plan?
  • Have I made simulated trades like this already?
  • Did they result in a profit after a significant number of trials?
  • Have I predefined my potential loss on the trade I am contemplating?
  • Am I willing to accept this loss?
  • Am I aware that any given trade can be a loser?

Should also ask yourself if you have a signal source. If you aren’t a talented trader, you should be using a binary options software or signal service to help you with your trade opportunities.

Checklist Analysis

Consideration of the following points may prove useful before embarking on any trading endeavor involving binary options: This type of trading is best suited to people that like taking and can afford exposure to risk. Always remember that the buyer of a binary option can lose the total amount at risk (minus the “out-of-the-money refund offered by some brokers).

Risk Tolerance

If risk-taking is not in part of your nature, or if particular adverse circumstances have recently affecting you, consider taking a break from binary options trading. The market will be there when and if you are ready and prepared.

Trading Strategy

Run away from any binary options trading strategies that promise guaranteed profits. They don’t exist. Surprises happen even for the best trading systems and for the best traders. Avoid tips and gossip about the instruments you are thinking of trading. The Internet provides many sites offering tips on binary options. It can become very easy to get emotionally involved with these sources of opinion. It is always better to rely on your own, well-proven methods.
Always be aware that losses occur. These losses can occur in a matter of minutes and can cause adverse emotional responses in some traders.

Understanding Risk Reward

Remain aware of the balance between risk and reward. Yes, it is true that a bigger bet size can result in a bigger reward. But the opposite is also true: a bigger bet size can result in a bigger loss. Carefully plan out all trades. This includes but is not limited to the amount of capital at risk and the frequency of entering into trades.

Financial markets are bigger than any one individual. Surprises can and often do occur. These surprises can propel you to profit or contribute to losses, despite all the planning and knowledge any trader employs. Successful traders think long term. They realize that experience is something that is accumulated with time.

For further reading, see our most recent binary options income report, to see what’s currently working in 2020. New traders, feel free to see our binary options 101 trading plan.

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