With time, trading has become accessible to common people. Today, every individual can create an account on a trade-supporting platform and put their skills into action. One of the popular modes of trading is binary options.
As the title implies, binary options are a style of trading that gives its users two basic options to choose from. The two given options are Call and Put. The “Call” predicts an increase in the market, whereas the “Put” predicts a decrease. Binary trading is a yes or a no proposition, where either the user wins it all or receives nothing.
Traders choose between stocks, indices, commodities, or Forex, deposit the amount they want to spend on them, and place their bid, predicting whether the market is going to be above the current price or below it within a specific period of time. The period can be set to as low as a minute and as high as two days. If the trader is in profit by the time the set limit is achieved, then they win all. However, if the trader is at a loss, they lose all.
One popular question people ask before getting started is how much money can you make trading binary options? This article aims to resolve this query once and for all.
How Much Money Can You Earn Through Binary Options Trading?
Binary options trading introduces individuals with new doors for earning mass money with ease. However, the amount of money each trader can make is purely subjective, and there’s no single, definite answer. If all of this sounds pretty complicated, binary options brokers exist to make life easier for you. Traders can use these brokers to trade in their choice of assets.
While trading in binary options, one can usually expect to make around 80-95% of your trading volume if your trade proves to be successful. Binary options offer high rewards at equally high risks, i.e., the more you invest, the more money you make!
An individual can either take a small risk with a minimal amount and win a small amount back or take a higher risk and win a larger amount. However, the latter does hold a chance of a higher loss if there’s a lack of experience.
The amount you make is also dependent on your consistency. For instance, if you trade $10 a day, and it ends up being successful, then you have $8 as profit. But, if you trade $100 a day, then you’ll have $80 as your profit. Similarly, if you trade 100 dollars 10 times a day, and all 10 are successful would land you with an $800 profit.
However, this is where your expertise plays a crucial role because if you win just 2 out of 10 trades, you have just $160 and a huge loss! So, to become profitable as a trader, you need to win at least 75% of your trades per day.
Hence, if you have more successful trades for a year, you can make millions of dollars, whereas you can also end up losing your account entirely due to massive losses.
There are also multiple underlying factors responsible for how much you can make with binary options trading, including the following:
- Investment Size
The most important factor affecting the amount you generate is the amount you invest. The higher the capital, the more you generate. If you conduct a successful $1,000 trade, then your profit can go from $800 – $950. However, being a beginner, you might resist investing a larger amount. In such a scenario, you can go for multiple trades involving a smaller amount.
- Market Conditions at the Time of Your Trade
Another thing to look out for is the market condition surrounding your chosen asset at the time of your trade. Before investing any amount, you need to first deeply study the market trends and history of the asset. You need to go through its current progress thoroughly to predict whether its price in your fixed period would increase or face a decrease.
- Your Luck!
It may sound unprofessional, but luck plays a very significant role in winning a trade. Binary options trading is often referred to as gambling, which is true to a certain extent. And just like any good gamble, with a strategy, you still need fate at your disposal!
Tips to Make Consistent Profits With Binary Trading
If you’re a beginner, you might need a few tips as to how you can make consistent profits while trading. You can make use of the following:
- Choosing the Right Asset
Binary options trading offers a diverse range of 150+ financial assets to invest in. Binary options deal with constant price fluctuation in the market. Hence, traders should choose assets with sufficient liquidity and volatility.
Examples of such assets are EURUSD, oil, USDJPY, gold, etc. Selected appropriate assets need to be traded at appropriate times, as each asset has an individual optimal period where its value reaches its peak.
- Use a News Trading Method
To reduce trading risks and increase profits, traders add a news trading method to their trading plans. Binary options offer its users a variety of tradable assets, which leads to at least one high-impact economic data release per day that substantially impacts market price movement.
Traders who keep track of both ongoing and upcoming market trends make profits by predicting these changes. For this purpose, you may use widely available Economic Calenders, which are used for the publication of economic data.
- Protecting Gains
One of the initial rules of trading is to never invest more than 5% of your money in one trade. This will keep your money safe even if a few of your trades go down in loss. Next, you should keep an eye on in-trade management facilities provided by your selected platforms to reduce loss and increase profits on your trade.
For example, one of the widely available options is Early Close. This function allows traders to exit their trades before reaching their expiry. This helps them to both leave trades if they’re going in a loss or protect already acquired gains if they’re predicting a loss.
To become a successful binary options trader, one needs to be constantly updated and have a good understanding of the ongoing market trends and the factors that affect the prices of their desired assets. Further, they need to be patient and disciplined to conduct numerous trades over an extended period.
Conclusion
Binary options trading is one of the upcoming trading modes gaining rapid popularity. It is accessible, easy to navigate, and holds a good chance of mostly successful trades. One can make a fortune out of trading with binary options if they have good knowledge of market trends and trading strategies.