A lot of new binary options traders become overwhelmed by the amount of trading opportunities that pop up for them. With these, you have access to stocks, indices, currency pairs, and commodities, so trying out all of them can be very attractive. However, you should not do this. Studies have shown that most short term traders lose money, and this is one of the big reasons why. When you are trading more frequently, it becomes a lot easier and more acceptable to take risks, and you will lose out if you keep doing this. You need to have a focused and disciplined approach to your trading, and just because a broker gives you a lot of freedom does not mean you should take them up on it. Freedom is great for a broker trying to attract a ton of clients; it’s not so great for you when coming up with a workable long term strategy for making money.
Start With What You Know
Everyone has an area of expertise. Maybe you’re new to trading, but you’re probably not new to shopping or being a member of society. You already know a lot about the things that you will be seeing while you trade, so start with those. There’s any number of angles you can work on this, but start with something you’re interested in and willing to commit further to. Maybe you like tech gadgets. Research everything you can about these. Which companies are leaders here? What resources do they use? Where are products manufactured? With what raw materials? There are tons of things to consider, but basic questions like this will get you started out in the right direction. It doesn’t need to be a tech company in this instance, but you could look at manufacturing, or the commodities that are used to create tech products. Find an angle, and pursue it until you can figure out how that relates to a financial asset.
Don’t Dig Too Deep
You will eventually find that there are dozens (or more) of different assets that you could focus on, but this would be counterproductive. Instead, choose three or four that you want to put energy into and stick with those. Picking too many underlying assets spreads you out too much and makes it so you cannot properly research your trades. This will lead only to losses and close calls, so try to avoid this. The more narrowly you refine your trading, the better your chances are of being consistently profitable. That doesn’t mean you shouldn’t do your research, just refine your scope before you begin trading. Sticking with the tech theme, maybe you’ve decided to focus on Apple, copper futures, and Google. This gives you a well rounded diversity of assets. You have two stocks and a commodity. And the stocks are not too closely related, either. One focuses primarily on hardware and the other on software. There is some overlap, but not as much as you would think at first glance.
This is a neverending assignment. There is always more to learn, even after you’ve begun trading. Markets evolve, businesses grow, and trading environments go through remarkable changes, sometimes very quickly. You need to keep up with all of these things. This involves setting aside a portion of your week toward education. This can often be done right with your binary options broker since many now have educational sections on their site. There are also many other independent resources out there. Some are free, some are not. Even if a resource costs a bit, if it keeps earning you even more money with your trading, it is worthwhile. The more you learn, the more you may realize that you need to change your focus. This is fine and normal, just be sure that you have the education to make this transition before you get too far and realize that you are losing money that you shouldn’t be. If trends and markets change, you need to be changing too, or you will find yourself left far behind. Innovations have become the new normal, and if you aren’t innovating too, you will only find yourself losing money.