Both experiences traders and beginners often ask if it is really possible to make money on binary options. Our experience proves that every trader runs into problems and learns on both successful and unsuccessful experiments and thus comes to the conclusion that it’s quite possible to earn on financial markets if you work and study hard enough.
Though binary options are quite young as a financial tool, they are getting more and more popular and overgrown with new myths. Our article will try to elucidate the most widely known of these “financial myths.”
Myth N 1:
Binary options are the easiest way to make money
The major myth is the easiness and simplicity the companies that suggest earning on binary options speak about. You just need to understand, WHAT should do to make money. But you need enough time and knowledge to understand, How to make money on binary options, and you have to spend a lot of time to get this knowledge. The secret of success in financial market is quite simple: you have to know and be able to analyze the market environment and draw correct conclusions from financial event plus have a reliable broker.
Myth N 2:
Binary option trading is too hard to understand: I’ll never be able to sort it out!
The second myth about the binary options is quite contrary to the first one. Is it difficult to learn financial market trading? Yes, it is. Can you study it? Yes, you can! Thousands of people have made a lot of profit in financial markets with their primary occupation. Are they all acting members of the Academy of Sciences, financial geniuses, MBA or Ph.D in economics? Probably, not. The only thing that unites all successful traders is their ability to understand the market movement and everyone can learn it very quickly – you just need to want to learn it. Experienced traders often joke that the most difficult thing in binary options is their name.
Myth N 3:
Binary options trading is like an online casino
We think this comparison is incorrect as nothing depends on the gambler in these games of luck: you can never predict the roulette ball behavior and even the biggest analytical talent won’t help to win and make stable earnings in casino. The news about the metal ball price growth can’t change the place on the roulette where this ball is going to get. Analytical information about the paper price growth won’t help you to win in Black-Jack. But the information that Google is working on the global update of its mega-popular GoogleMaps service will result in the company’s stock price change with 99% probability.
Let’s do some math. If you bet on red or black on the casino roulette the winning chance is 16/33 (if there is the only zero on the roulette) and the payout makes 200% if you win. Thus, you’ll get 100% profit with the 16/33 probability and lose 100% of your bet with the 17/33 probability. It means that you’ll lose about 3% of every bet if you gamble more (16/33*100%-17/33*100%=3%). If you do binary option trading by “coin tossing” method binary options will be the kind of casino for you and you’ll lose several percent on every deal. But good understanding of financial markets, well-thought economic news analysis and trading strategy will help you to make the theory of chances work on you and make money on binary options.
If you compare binary options to other types of e-commerce you’d better compare them to sport betting. For example, if you know that the football match between Manchester and Arsenal will take place on the neutral stadium (instead of their native stadium as the result of the fans’ behavior) you can suppose that you’d better bet on Arsenal as this team is going to be in better psychological state. Binary options are much the same: if you hear the news that Europe showed the signs of recovery after financial crisis and is going to boost its production, i.e. its countries are ready for new gas supplying contracts, you’d be ready for Gazprom stock growth as Gazprom is still the main gas supplier in Europe.
Myth N 4:
Only rich people can make money on binary options and I don’t have any startup money!
In fact you can start earning if you have $50! If we take into consideration that the minimum deal amount is $1 you can open 50 deals. If your forecast is successful you can double your capital in several hours. On the one hand, $1 is the price of a cup of coffee in Europe downtown (OK, one big cup of coffee that will bring about acid indigestion); on the other hand, you can earn money for a bigger deal. What you’re going to choose? Coffee indigestion or a chance to earn capital for your own coffee plantation? That depends on you!
Myth N 5:
Binary options are a great risk: I can lose everything
All your possible trading losses are limited with the deal amount: if you bet $25 that the USD exchange rate is going to grow up in 10 minutes and your forecast is wrong you’ll lose just $25.
Taking all the above mentioned into consideration, we should say that your work in financial markets is characterized with high risks but you can estimate all your losses and success in advance. You can make a lot of money or you can lose but your financial success mostly depends on you!