Your first binary options trade is often quite significant. To a large extent, it will determine your overall evaluation of this form of trading and may even decide whether or not you will continue. As such, it should not be taken lightly.
After all, you are trading with your hard earned money and should be aware that there is the possibility that you can lose it all. If you feel like you are primed for your first trade, this article will prove to be quite helpful. Here is what you should know about getting ready for your first binary options trade:
1) There is No Rush
Perhaps the first thing that you should remember is that you are in no rush to place a trade. It is easy to feel as though not taking advantage of a situation could mean that you are losing out on an opportunity. Nonetheless, there are plenty of other similar circumstances that will occur in the future.
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This is why you should never trade before you are absolutely ready. If you feel like your strategy is not up to scratch or that you aren’t sure about the asset or the timing, you should go back to the drawing board. It is much better to play it safe in the beginning than to lose all of your money.
2) Always Have Practiced Trades First
There is a reason that brokers who have demo accounts are favored over ones that do not. Demo accounts will provide you with your first taste of binary options. It will help you get familiar with the platform so that you can feel more at ease in a real trading situation.
Perhaps most importantly, however, is that demo accounts allow you to test your strategies. If your strategy ends with an in the money trade within a specific set of conditions, this success will most likely be replicated with live trading. Practicing in this manner will prepare you for what’s to come.
3) Have a Money Management Plan in Place
There is a good chance that your first trade could result in a loss. It is important, therefore, that you only lose a disposable amount rather than your entire account. Also, it is vital that you don’t follow up the loss by placing an even more outrageous trade.
This is why you will have to create a money management plan that is suited to your total capital as well as your trading style. This means deciding which portion of your money can be considered an accepted loss.
Now, this changes from person to person, depending on the capital that you do have. If you don’t have a lot to lose, however, you should look at about one percent of your overall account. At the same time, you should be aware that you need a certain amount if you want to make a profit that is actually discernible.
4) Beware of Your Emotions
Even the most skilled traders can forget one very important fact – keeping their emotions in check. This includes both before the trade as well as after the expiry time. Before placing the trade, you should make certain that you are calm and level headed.
It is important to carefully go through your trading plan to avoid making any mistakes. Now, there can be a lot of excited emotions regardless of whether the trade ends up in the money or out of the money. A loss could mean anger and hopelessness as well as a desire to trade recklessly until you win your money back.
A win could create false confidence and make you feel as though you can’t lose. You should not let either of these extreme emotions control your decisions for you.
This is your guide to getting ready for you first binary options trade. It is sure to be an experience that you will not be forgetting anytime soon.