TOP-5 Tips about How to Make Money Trading Options - Step-By-Step Instruction for Trading

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Contents:

1.Step 1.Figuring Out "Essence" of Binary Options!
1.1.The Structure of the Financial Machine
1.2.What Is an Option or Why to Buy Opportunities?
1.3.Binary Options – Exotics or Essentials?

2.Step 2.Choosing a Reliable Broker – a Myth or Reality?
2.1.What Factors to Take into Consideration?
2.2.What to Remember Opening a Trading Account?

3.Step 3. Choosing a Trading Strategy – How to Make Money Trading Options?
3.1.Scalping Strategy to Impress You for Sure
3.2.How to Make Money in Long Terms?

4.Step 4. Insure Yourself from Losses!
5.Step 5. Motivation as a Stumbling Block on the Way to Success!

How to avoid mistakes while trading?
6.TOP-5 Mistakes of a Novice Trader
7.Tips for a Novice to Stay Safe at the Exchange
8.The Conclusion

Greetings, friends! It's John Foster and in this article we'll talk about how to make money trading options. But I will start my today' story with a "dreadful secret". This secret holds the hand of your success. And having realized its essence, you will get a chance to really change your life and make it better.

So, do you know what we are best in? Idleness! It' shy far easier to argue about the injustice of fate than make concrete steps toward success. But while you doubt on should you try to improve your life, it just comes by you!

 Step 1. Figuring Out "Essence" of Binary Options!

One of traders I'm acquainted to often compares trading binary options with driving an automobile. As long as you don't have basic knowledge, you just tease your steering wheel and press pedals. But you can never know the structure of the car! So, driving ends with the first disrepair. That's why I recommend you clarify each and every term initially and recognize regularities of price movements.

Learn to understand market psychology and you will find the answer to how to make money trading options! And you can find basic information in the article "Trader's Encyclopedia".

You should allocate special time for studying technical and fundamental analysis. These methods let you understand behavior of the chart better and make market entrances more reasonable.

The Structure of the Financial Machine

 Financial world is getting more complicated year by year. And some time ago, trading basic assets (currency, stocks, raw) was popular. And nowadays, market met derivatives of them - these tools are exactly called this way - "derivatives".

Derivative is the kind of securities, standard civil contract, which obliges both sides to purchase or sell basic asset in future.

Main types of derivatives:

- futures
- swaps
- options

To explain the difference between derivatives, I give you an illustrative example. You open your bakery and you will need much flour in 3 months.

1. Futures: you are sure prices for flour will rise, and provider is afraid that price for their goods will fall. So, on March 1, you make a futures contract with your supplier for delivery of 10 tons of flour with a price of $380 for a ton on June 1. No matter how the price will change by the date of contract expiration – both of you will be bound to fulfill obligations. Otherwise, you will get a fee.
2. Swap: you come to a bank and make a contract obliging you to pay a fixed sum – $1,140 to the bank, every month, starting from June 1 (3 tons * $380/ton = $1,140). According to your calculations, this amount will be covered by profits of bread sales. And bank, it its turn, will transfer the money to you to buy 3 tons of flour with the current market price. Thus, if the price rises, you won’t suffer losses. And if it falls, you won’t just get additional profits.
3. Option: on March 1, you pay $100 to the supplier for the opportunity to buy 10 tons of flour from them with the price of $380/ton within three months. If flour price falls on June 1, you may refuse from fulfilling the obligation. In this case, you will just lose your hundred of bucks paid for purchasing an option. If the price rises, you will use the option are kind of insurance.

What Is an Option or Why to Buy Opportunities?

A classical option is when you purchase opportunities. It lets you buy in advance the right to purchase or sell some asset with the fixed price. It looks quite complicated, doesn’t it? And why do we need to buy chances? Isn’t it better to buy the asset itself – gold, oil, currency or stocks? Yes, it isn’t!

Let’s figure out the term of an option with a simple example. Just imagine for a second that you are an oil tycoon. Sounds great, doesn’t it? As experienced in this business, you realize clearly the extent of risk in this activity. And, for sure, you are eager to cut this risk. But how to do that? Easy enough – just buy an opportunity to sell oil with a price profitable for you for the period of half-year or a year.

You can see the chart of oil price movement for the last 5 years. Let you buy a 1-year Put option every year on December 24 instead of eating Christmas pudding. In this option, you set the price you want to sell oil with in a year (Strike price) and exact expiration date.

Scenarios:

1. We see that in the end of 2013, actual oil price rose slightly above the Strike price. Would you have to sell oil with the price lower than the market? Surely, not! You can just leave the option unfulfilled and, this way, just lose its award, i.e. amount paid to purchase it. But this loss will be covered with the increased profit of oil sales.
2. And for 2014, oil price has fallen catastrophically. Your competitors suffer losses, and you count incomes. How is that possible? Your options lets you sell oil with the old price! It’s called “hedging” in business.

Hedging is the process of opening orders having opposite direction at one financial market (e.g., option exchange) in order to compensate potential losses at another (e.g., goods exchange). Engaged to hedge trading risks. And though profits are not that enormous in real life (nobody will make an unprofitable deal with you), they still give you an opportunity to reduce trading risks significantly.

Now trading options doesn’t seem silly stuff, does it? After all, proper purchase of an opportunity can lead to profits that would be 10 or 100 times more.

Binary Options – Exotics or Essentials?

So, we’ve made the term “option” clear. But here’s the consequent question appears – why to complicate everything, engaging so-called binary options? Isn’t one kind of this financial tool enough? It turns out it isn’t! Trading classic options requires great investments and extremely complex calculations. That’s why the world knows few successful classic option traders. So, if you are not an oil business tycoon yet with your own board of analysts, forget about classic options for a while. But is it possible to simplify this system? Surely! For that, there are binary options, which were called exotic financial tool some time ago.

Trick or treat, all or nothing, up or down… Binary option always contains the struggle of two contradictions. What is the essence of this maximally predictable financial tool?

1.If earning at Forex directly depends on the way the price has come, how to make money trading options? It makes sense with the correct calculation of time. What does it mean? You don’t need to count how much pips there are of rise or fall of an asset price. The main goal is to define price movement direction correctly and for fixed time. For example, according to your strategy, you make a forecast that EUR/USD chart will go down and open a 60-second option. If the price falls for just a pip in a minute, you will be in profits (“Won”), if it doesn’t change – this is “Tie”, and if it rises – you lose (“Lost”).

2. You know the amount of forecasted profit and extent of risk before opening the order. And this is the primary advantage of binary options! You always know for sure how much you can lose and win. Never a one more financial tool gives such a privilege to a trader!

You can find more information about the true essence of binary options in the article “Who Gains from the Statement Binary Options Scam? Professional Opinion of Financiers!”

Step 2. Choosing a Reliable Broker – a Myth or Reality?

So, you’ve drilled literature about trading and figured out each word there. It’s time to open your own trading account! And this is the great seduction for a novice trader. Maybe to fall for persuasion of a broker offering minimal deposit? And use the opportunity to trade for free at the demo-account? It would seem there is nothing bad in this stuff…

Remember: demo-account can’t teach you anything! Moreover, such “trading” gives you excessive self-confidence, which you may pay much for further. Pay much literally. But what could a novice trader do? The answer is simple – one needs to trade at the real account, opening minor positions. But before – choose a reliable broker which may let you make money.

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What Factors to Take into Consideration?

 To break doubts about the broker, analyze the following information:

1. Minimal deposit. Never a one serious company will be engaged in nonsense of minor accounts. Just think – broker gains from the interest of your successful orders and, to be honest, unsuccessful orders. And how can we speak about earning when your account contains humble $10? Nobody will work for nothing, right? And it means such a broker will find other ways of earning. For example, freezing accounts of successful traders or “adjusting” charts. As for me, I don’t know how to make money trading options if a broker uses frauds.
2. License. Any reliable business has special authorization documents, certificates. At this stage, it wouldn’t be excessive to visit a website of a broker’s regulator. As regulating structure warns traders in advance, if there are some signs of frauds in work of a broker.
3. Range of trading tools. The wider is the specter of assets and kinds of options, the more interested is the broker in success of its customers. It’s not a secret that one trader is successful in trading stocks, while another is good in currency pairs. And if there are very few trading tools, chances for gaining of both mentioned abstract traders significantly decrease.

As for me, I was looking meeting all these criteria for long. But for last years, I’ve never regretted about my choice. You can read about the company I trust in the article: “TOP-5 Facts You Didn’t Know about UTRADER: Reviews, Feedbacks and Proven Ways to Make Money”.

If you wish, you can try to find your perfect broker yourself. But get ready it will take much time.

What to Remember Opening a Trading Account?

Each reliable company will request scans of specific documents for verification, when you open a trading account.

Verification is a process of user’s personal data validity confirmation.

The most common list of confirming documents contains:

1.Scans of bank card used by a trader to top up trading account of a broker. Important: only 4 last digits of a bank card’s number and the signature on the opposite side must be clearly seen in the photo. For your own security, conceal first digits on the front side and CVV-code on the opposite!

2.Scan of trader’s ID card with a photo. It may be a passport or driver’s license.

3.Scan of bank extract, check or receipt of payment for public service of not more than 3 months standing.

Verification is the important stage for every trader who is wondered how to make money trading options. I strongly recommend provide your broker with valid personal data from the very beginning! Especially your phone number. Otherwise, there can come a situation when you won’t have access to your own account for a while.

Step 3. Choosing a Trading Strategy – How to Make Money Trading Options?

The primary rule of a successful trader is to trade themselves. That’s why, I advise you to forget about robots and wonder indicators giving fabulous profits. If you wish, you can test this rule with your experience. If you don’t care about your deposit, of course.

Scalping Strategy to Impress You for Sure

I recommend starting with “The Bullet” strategy. Its name says for it. With this very tool, you can scale your deposit and boost it. The algorithm is built on price bounces off resistance and support lines. Rules about how to make money trading options are quite simple, so “The Bullet” suits for novice traders perfectly. For successful trading, you will have to analyze the economical calendar and draw simple figures at the chart.

You can trade with this strategy for at least 2-3 times a day. And accuracy of entrances provides stable and swiftly growing income. As you can see, it’s possible to get $100 of net profit for less than 24 hours, using this algorithm.

How to Make Money in Long Terms?

If you don’t have much time to spend while trading – nothing to worry about. “Secret Ally” strategy will neatly solve this problem. It’s based on the analysis of candlestick patterns and lets you spend just half-hour a week for trading. You will have to enter the market twice a week: on Monday – to open the order, and on Friday – to close it and estimate its result. In case when there are no patterns letting open an order according to a strategy, one may use news scalp as for an additional method. After all, all the pairs with yen are characterized by strong impulse movements when important news are published.

Important! Main news about yen are published in Asian trading session – from 1 AM to 7 AM (GMT).

Profits here are not that great, but the advantage of “Secret Ally” is that it teaches you feel the market. By the way, this strategy can be used as an additional one. Having chosen the trading session, make it a rule to stick to principles told in it. The opportunity to carry out experiments will appear further. And now, any “initiatives” can turn in wasting the deposit.

 Step 4. Insure Yourself from Losses!

 Each trader makes mistakes in the beginning of their way. Just accept it and try to minimize their consequences. How to do that? It’s easy – just pay attention to studying rules of money management, and stick to them. It turns that90% of novices break those rules. And the result won’t be surprising for you: wasting deposit and whining that binary options are the scam. Want to join those novices? Then close this article and follow your path.

But if you still read these lines, then, you have a good chance to insure yourself from serious losses.

Let’s figure out how to do that:

1. Overall amount of all orders opened at the same time mustn’t exceed 15-20% of the deposit. According to that, calculate investment for each option. For example, you can open two options of 7-10%, or 5 orders of 3-4% of the initial investments each.
2. An unprofitable order is not a reason to give up. This is the reason to engage averaging! The price went in the opposite direction from the one you’ve forecasted? Open another option in the same direction, as the chart drawback is inevitable.
3. There are some trading days, when you can’t see the whole situation. It often occurs before publishing important news or global trend change. In such days, you may have several unprofitable deals in a row. Remember – don’t have more than 5 failed orders per day. If you got 5 downs, close the trading terminal and wait for the next day. And meanwhile, analyze your mistakes.

More information about how to make money trading options with minimum risk can be found in the article: “Money Management: Keystones of Successful Trading with Binary Options”.

Step 5. Motivation as a Stumbling Block on the Way to Success!

It may sound banally but until you believe in yourself, success will miss you. Know why? You will push it off! You may wonder whether it’s possible. It’s simple. When you believe in your own helplessness, you are programming yourself to make helpless and hopeless actions. And conversely, a confident person chooses those way which will lead them to success for sure.

But how to develop this indispensable confidence? Let’s make it clear:

1. Give a right to make a mistake to yourself! Yes, this is it. Your fear to fail binds you, blocking the whole way to your dream. Don’t cry out before you’re hurt! Relax, let yourself make mistakes – and you will feel relief right away.
2. Carry out the revision of your own advantages. Find those competences which will help you approach to your dream. Doubting your skills? Take profits from it! Self-criticism is the basement of a trader’s success. Because this is what lets you not get blind of passion, wasting the whole deposit because of it.
3. Develop your missing qualities. Think – what must a successful man have? Which character, manners, voice and even walk does your “ideal” have? Imagined? And now feel yourself an actor and try to get accustomed to this image. It may not be good from the very beginning, but the positive result is guaranteed.

TOP-5 Mistakes of a Novice Trader

According to the well-known statistics, in the very beginning of the way, 95% traders get wasted. What does it mean for us? Only that because of this number, we can specify the main mistakes of traders and finally realize how to make money trading options.

1. Selection of an unreliable broker is the most common mistake of a novice trader, who wants to increase their incomes anyway and swiftly. In fact, they will have the opposite situation – this novice will waste their deposit that fast and their trader’s career will finish.
2. Attempts to develop own “strategy”. Keep in mind: you should think of your own method of trading not earlier than in half-year after the start of a trader’s career! First of all, learn to trade with tested and really efficient strategies. It will help you get priceless experience and fully feel the market.
3. Excessive self-confidence and trading with excitement. I’ve already mentioned what I had to pay for my emotions in the article “Successful Trader: The Story of John Foster!” The best solution for this situation is the habit to stop before opening an order. Make sure you don’t conflict with rules of the strategy and money management. Recheck the signal to enter the market with. Breathe deeply – some reasonable inhales and exhales. If you are still enthusiastic, close the terminal and let your emotions die out! Remember – market is absolutely impartial!
4. Absence of a trading plan. I won’t be surprise of finding out you firstly meet this point! Very little percentage of traders compose their trading plan from the first steps. And now recall the number of those who wasted their deposit in the beginning! They probably didn’t hear about trading plan. But what must it contain? Detailed description of each order and its analysis. Before entering the market, write down the currency pair, time, strategy and signals to enter. In the end – analyze the order, whatever it is.
5. Ignoring money management rules. Trying to increase your deposit swiftly, traders often invest too much in their orders. So, when you need to engage averaging, it turns that nothing can be averaged. The result is clear –wasted deposit.

 Tips for a Novice to Stay Safe at the Exchange

How to make money trading options? Here is my personal list of tips for a successful trading:

1. Don’t believe collective mind! Talking to “colleagues”, remember which percentage of trader waste their deposits in the very beginning. If you need a tip or answer to some actual question – you’d better find an experienced tutor. But remember – your goal is to learn trading yourself! Always keep it in mind!
2. Instead of training at the demo-account, enter the real market, but do this with minimum orders. Demo-account causes addiction! As a result of training at such an account, a trader loses the main thing – the feeling of danger. After all, trading is a very risky business. But it’s also one of the most profitable!
3. Spend your spare time studying fundamental analysis. Yes, it’s quite complicated. But its main advantage is that forecasts based on the fundamental analysis methods, are the most accurate.
4. Set concrete financial goals! Analyze your orders and calculate the objective amount you can earn per month. Split it by weeks and thoroughly watch the fulfillment of the plan.
5. Learn the experience of modern traders. In fact, information about exchange trading becomes outdated too swiftly. And bestsellers of exchange traders of the previous century can’t fully teach a novice trading in the world of modern financial tools. Moreover, most famous traders of that time admit the market has become so chaotic that those rules do not work anymore.

The Conclusion

So, today we’ve figured out how to make money trading options. Now you have a ready-made instruction for doing – your compass in trading thunder! It is the clear plan what will let you not only stay afloat while trading, but also reach any top. Remember: there is nothing simple in this life. And one must work hard to get what is wanted. But you must make your first step, and the way to success will be a bit shorter! Get successful in trading!

Best Regards, John Foster.