Trading Binary Options is one of the most lucrative and most popular trading methods out there, but what if you want to create a full-time business out of it? Yes, it is possible to start Day Trading with Binary Options! This article will cover what Day Trading is, what kind of strategies you could use, and what tips will help you to start your Binary Options journey!
What is Day Trading?
The term “Day Trading” is self-explanatory because the idea behind this trading method is to start and finish all your trades on the same day. In most cases, the goal is to buy assets at the beginning of the day at a lower price and sell them higher, but many more options are available. Day Trading is a very versatile trading method that can be used globally in any market. Most of the time, Day Traders choose assets like Forex (Foreign Exchange), Binary Options, and Stocks.
Back in the day, Day Trading wasn’t an open trading method because it was limited to traders who worked in financial firms – but now everyone can become a Day Trader. Thanks to a wide variety of brokerages and the internet, all you need to start your Day Trading journey is a broker, some money for your first trades, and a smartphone/laptop.
Since it is so easily accessible, this trading method has become one of the most popular ones. BUT: looking at the market and the brokerages, it seems overwhelming for beginners, especially when Day Trading with Binary Options, but it doesn’t have to be. In this article, we want to introduce you to this topic, so you can start Day Trading with Binary Options as a beginner and know precisely what you are doing. We want to bring you closer to the high potential that comes from this trading method!
How to start Day Trading with Binary Options:
Are you ready to start your Day Trading with Binary Options journey? If so, we want to show you how you can begin Day Trading with Binary Options in only six easy steps. From choosing the right market to everything related to taxes – in this article, you will get the information you need to begin this journey!
Step 1: Choose the right market
When it comes to Day Trading with Binary Options, the first step is to decide on an asset you want to trade. We recommend choosing an investment you are interested in and maybe even bringing some knowledge to the table. You have plenty of assets to choose from, and within these assets, you have even more options. Let it be stocks like Apple or Tesla or Forexes like USD or EUR.
The perk of Day Trading with Binary Options is that you can start with a low deposit, starting from just 10 Dollars. But you have to keep in mind the lack of leverage that comes with Day Trading with Binary Options. If this is a problem for you, it is your decision. For some traders, this is a big issue; for others, it’s not. Since having a lack of leverage when it comes to Day Trading with Binary Options can help you limit your potential risks and minimize profits. In the end, it is up to you!
Step 2: Find the right broker
One of the most critical aspects of Day Trading with Binary Options is the broker! Especially as a beginner, you want an option that is easy to navigate and fast to understand. Luckily most brokers offer a trial that you can use to see if this brokerage is the right one for you. Also, be sure that your broker offers this type of trading since that’s not the case with every option.
Besides being easy to navigate, we also recommend choosing a broker with low fees since transaction fees can add up, especially for Day Trading with Binary Options. Besides a good broker, you also need a good computer. The computer will be your most important tool, so be sure it’s fast and reliable. Besides having a fast computer you also need good internet, having internet issues can cause significant trading problems.
Step 3: Get familiar with the market hours
Many people don’t even think about the market hours being an essential aspect of Day Trading with Binary Options, but it’s true! We advise you to trade the same hours, day in and day out because it will be easier to get a feeling for the market during those hours, and it will also help you create a strategy.
Even though it is hard to predict the best and worst times for trading, traders generally assume that the best times are when the market opens and closes. These market hours also depend on what assets you want to trade since, for example, the Forex market (foreign exchange) never closes.
Step 4: Be aware of the risk
Be sure to understand that Day Trading with Binary Options is a high-risk trading method, but you can lower the risk substantially with proper risk management. Risk management consists of two aspects: trade risk and daily risk. As trade risk, we consider the risk of how much money you are willing to lose.
If you look at your overall capital, we recommend not going over 1% for investments for each trade. With this amount, you will earn money if you predict right but also won’t fall into serious financial problems if you predict wrong. Having this number in mind will help you get a good feeling about what risk management is all about.
Rather than being greedy, you will play it safe! Some brokers offer the so-called “stop-loss” option; this is a feature that will prevent you from losing too much money. You can decide at what loss you automatically stop trading. The daily risk is the amount of money you are willing to lose in a day. Bad days happen – even to the best traders, but rather than forcing a positive outcome; you should have a set number that prevents you from losing even more money.
Step 5: Figure out your tax situation
Of course, earning money through trading also requires you to pay taxes. BUT: There is currently no universal law that fits everyone; that’s why you have to do your research on how your country charges taxes on Day Trading with Binary Options. For example, if you live in the UK, the government sees trading Binary Options as a “speculative” method, and therefore you don’t have to pay income tax.
This is different in countries like the US; that’s why it is necessary to do your research. Another critical aspect of Day Trading with Binary Options is if trading is your full-time job or just a hobby. Of course, it is more likely that you will be appropriately taxed in your country if you consider yourself a full-time Day Trader. If you are unsure about your tax situation, we highly recommend you seek professional help!
Step 6: Create your strategy
Since Day Trading with Binary Options is a high-risk method, it is all about having the right strategy! There are many different ways you could approach Day Trading, which mainly depends on your goals. One helpful piece of advice is, even though knowledge and analysis are essential parts of Day Trading with Binary Options, keep in mind that you don’t have to know everything!
Sometimes we analyze and analyze and analyze without ever starting to invest. Yes, it is essential to be prepared, but at the same time, it is necessary to make your own experiences. Some things you only learn by trial and error! To get a feeling for trading and to create your own strategy without having the risk of losing all your money, one way to go is to create a demo account and start trading without investing. This way, you get a feeling for Day Trading with Binary Options without having to invest money.
Top 3 Day Trading with Binary Options tips:
You decided you want to start Day Trading with Binary Options, but are you looking for some good tips to help you be successful at it? If so, we have three essential tips and tricks for you!
Analyze, analyze, analyze
It is an essential part of a successful Day Trader to always look for good opportunities and always overview the market. But also analyze the economy and especially the assets you are interested in trading. The goal is to see a trend before it arises but to do that; you need to have a lot of knowledge about the economy and the companies.
Not only that, but you also need to see the moment when your asset’s price is about to drop. This will prevent you from losing money in the case of Day Trading with Binary Options; you can predict this drop and earn a high return.
If you decide on a strategy, but it is not instantly paying off, we recommend you to be patient! Your developed strategy doesn’t need to pay off 100% of the time to be successful; even “only” 60% of the time will already allow you to earn good money. Don’t be greedy, but rather be patient and intelligent!
You lost money today, and it seems like the market was against you? Having bad days as a Day Trader is entirely normal. You won’t have good days every day, but the goal is not to give up. Day Trading with Binary Options isn’t a quick fix; some days, you will lose money, and that is okay. We can only recommend this to you: Stay consistent and don’t give up!
Traditional Day Trading vs. Day Trading with Binary Options
Traditional Day Trading and Day Trading with Binary Options are not the same! They have similarities, but in a few cases, the differences are pretty significant. What is better or worse always depends on the trader and the kind of trading you want to follow every day.
For example, if you look at the risk management of Day Trading with Binary Options, there is a significant advantage. You know how much money you potentially lose and therefore have more control over it, while when it comes to traditional Day Trading, you might lose more money than you planned and therefore have a higher risk.
When it comes to traditional Day Trading, the goal is to buy an asset at a lower price and sell it higher later. You don’t know how much money you will get out of it because the profits vary depending on the day and the asset. When it comes to Day Trading with Binary Options, you already know how much your return will be if you predict it right. Compared to other trading methods, the return of trading Binary Options is on the higher side.
Depending on where you are from, you might be lucky because, for example, in the UK trading Binary Options isn’t seen as eligible for income tax. Compared to traditional Day Trading, where the government considers this type of trading as a full-time job.
Not only will you save money on taxes but also on fees. In most cases, the entry fees for trading Binary Options are significantly lower than traditional Day Trading. This depends on the broker, so we recommend using a broker with lower costs.
Conclusion: Is Day Trading with Binary Options recommendable?
It is always your decision if a trading method is suitable for you! There are a lot of advantages and disadvantages that come with Day Trading with Binary Options. If you are willing to put the effort in, be aware of potential mistakes, and have the right equipment, this type of trading might be the right option for you!
If you are still not sure if Day Trading with Binary Options is the right method for you, we recommend using a demo account to get the hang of it. When you are actively trading, and you can see the results without the risk of losing money, you will have an easier time deciding if this is the right method for you.
We hope this article helped you better understand what Day Trading with Binary Options is and how you can start this trading method yourself.