Although the opportunity to earn big is there, it can’t be denied that derivatives trading is also accompanied by a high level of risk.
I’m not even going to sugarcoat it: every single beginner trader on Binomo will lose some amount of money, especially at the start. In fact, it’s important to approach investing with caution if you want to earn more than you’ll lose – and you’re sure to lose some, if not all.
Nonetheless, nothing worth having in life comes easy, and the same principle applies to derivatives trading. It may not be easy at first, but you have to remember that all successful traders had to start somewhere. No trader in the world has ever made millions on their very first trade. A lot of traders had to go through losses first before they could make their very first returns.
That said, going in blindly isn’t such a good idea either. That’s why today, my goal is to help soften the learning curve by providing you with tips and tricks.
Ready to dive in? Here are the 5 essential things you need to know as a beginner trader!
5 steps to trading successfully on Binomo as a beginner trader
These 5 steps are very critical for getting started in the world of trading. How long it will take you to successfully complete all these steps depends on who you are as a trader, but on average, it should take you around 3 months or so.
Step 1: Identify a trading strategy
The very first step is to identify a trading strategy that you can use on your trades. Preferably your chosen strategy is one that has already been tried and tested many times by successful traders.
Why is that, you may ask? Well, as a beginner trader, it’s not your job to become innovative just yet. You should only start experimenting once you already have a good degree of experience. Experimenting with strategies when you’re still the type of trader who doesn’t know much at all is a surefire way to lose your initial trades.
Here on Binomo, we’ve got plenty of Guides and Strategies that can help you out especially in the beginning. Find one that suits your trading style and practice using it on the free Binomo demo account.
Quick tip: try trading long positions only. These give you much higher chances of success than short positions like 1-minute trades.
Step 2: Practice, practice, practice
Practice makes perfect, so they say. The thing is, it’s 100% true.
Once you’ve already established a good trading strategy and you’ve already set up your demo account, it’s now time to put your skills to the test. Make sure that you practice trading on your demo account until you’ve reached at least a 70% success ratio. It means that for every 10 trades you make, at least 7 of them should result in profit.
A 70% success ratio is a pretty good one, really, be it a practice account or a real account. 70% gives you enough leeway to lose some, without losing more than you’ve actually earned.
Step 3: Open a real trading account
If you’re already profiting in a good amount of trades, you can now start trading with a real Binomo account.
Now, don’t get too confident and invest more than you can lose! A nice, low amount would be perfect for a beginner trader, say, $10. It’s high enough for you to be able to do something with it, but still low enough that you won’t miss it in case your trades end in a loss.
One thing to keep in mind is that although your main objective, in the long run, would be to make money, that shouldn’t be your priority in the beginning. Prioritize learning about trading first and learning how to manage your money well. If you can do those two things, that’s the only time you can start thinking about money.
Step 4: Set a target profit
Think you’ve got those two things down?
If your answer is a resounding ‘yes’, then the next step would be to set a target profit. This simply refers to the amount or percentage of money that you would like to profit from the market. You can even specify if you want to reach that target daily, weekly, or monthly. Normally, the shorter the period, the harder it would be to meet your target profit.
Avoid getting too greedy by stopping all trades for the week if you’ve already reached your target profit. Suppose that your target is $100 weekly. If you’ve already reached this amount, train yourself to be disciplined enough not to keep trading for the rest of the week. After all, you’ve already reached your goal. Investing more money in an attempt to reach past that goal is simply greed talking at this point. And that’s a huge no-no when it comes to trading.
Step 5: Enter fewer trades
Last but not the least, you should aim to enter fewer trades.
As a beginner trader, you shouldn’t be too excited to make trades here and there. Remember, although entering more trades provides you more opportunities to profit, it also heightens your risk of losing money. Just two or three trades per day should be fine if you’re only just starting out.
Simple money-making guide for a beginner trader on Binomo
Learn all the necessary skills
There are several skills that you need to learn if you want to earn money through derivatives trading. In fact, I dare say that there are three skills that you should prioritize as a beginner trader.
- Trading knowledge. This is the first and most important skill that you need to learn if you want to make money trading. Spend some time learning how to read charts, how to use indicators, and how to understand the markets for a more successful trading career.
- Emotion management. You need to know how to manage your emotions properly if you want to keep trading for a long time. If you always let your emotions get the best of you, you won’t be able to make rational decisions. You also stand the risk of experiencing more losses in the process.
- Money management. Even if you do end up making profitable trades, you still won’t be able to become a successful trader if you don’t know how to manage your own money. Not to mention, trading is a very high-risk way to earn money, so for many traders, it’s not even sustainable. Make sure to protect your account balance while making trades to ensure that trading remains sustainable for you.
Practice how to increase your success rate
One tip that I could offer to every single beginner trader out there is what we call the rule of ones.
The rule of ones dictates that you should only trade one instrument at one specific time frame, with one predetermined amount, using one simple strategy. The goal of this rule is to simplify the trading process for you so that you can focus on making profitable trades.
When practicing this easy to trick to increase your success rate, make sure that you don’t enter multiple trades at once or increase the trade amount. Also, if you’ve already implemented a profitable strategy, now’s not a good time to switch strategies.
Here’s a real-world example using the Binomo platform.
The screenshot below shows my chart while trading the EUR/USD currency pair at 1-minute intervals. The only trading strategy I have is that once the prices break the resistance line, I’ll enter a new position immediately based on what kind of pin bar develops.
When the bullish pin bar finally developed, I knew it was time to enter a buy position. You can see that it was the right decision since the trend continued going up from there.
Depending on the intervals, and to some degree, luck, I could’ve made a profitable trade sooner or later than how it happened the screenshot. Nevertheless, patience is one thing that you should always have while trading, especially as a beginner trader. In fact, the majority of your time will be spent just waiting for the right trade entry point, the right signals, the right indicators. With the patience of a saint, your success rate could improve significantly through practice.
Honestly, the real enemy when trading isn’t the markets – it’s you. You’re the only one that you’ve got to worry about. When you’re trading, the chances of you developing negative emotions like fear, anger, and worst of all, greed, becomes very high. It’s up to you and you alone to keep your emotions under control and to make sure that you’re always trading objectively, never emotionally.
Start trading on Binomo with only $10
Nobody starts trading with the goal of losing money. No, of course not, that’s absurd. The fact is that every single beginner trader out there starts out with the goal of making a lot of money in as little time as well.
But you know what’s worse than a beginner trader who doesn’t know how to trade? A beginner trader who doesn’t know how to trade but already has a considerable amount of money. That’s because they’re the kind of traders who tend to invest way too much at the start. Sadly, they also tend to lose a lot since, without sufficient practice and enough trading knowledge, all those funds don’t mean a thing.
Since you’re just a beginner trader, I recommend that you start out with only $10 in your Binomo account. That’s right: $10. It may not seem like much to you, but actually, that’s the whole point of it. Think about it. If you can’t bear to lose $100 right now, then why in the world will you invest $100? $10 is a much smaller, more palatable amount of money to lose in exchange for the price of experience. By investing only $10, you won’t have too many regrets if you ever end up losing it all.
Of course, this doesn’t mean that you should only have $10 in your account forever. Once you’ve learned how to successfully complete $1 trades and protect your $10 fund, that’s the time that you should add more, preferably a few dollars at a time. You could even just reinvest your profits and earn from the compound interest. If you’re going to do this, make sure to use our free Profit Calculator tool to determine how much profits you’ll end up with!
Create a plan with specific trading goals
When you’ve finally learned how to complete successful trades and how to manage the money in your account, you can then start turning derivatives trading into your very own business. Like any other business out there, you’re going to need a concrete plan with all your specific trading goals for a certain period of time. This could be monthly or weekly, depending on your personal preferences.
If you’re unsure how to come up with realistic goals, here’s an easy tip: take a look at your past trading history. If you’ve been earning around $500 a week by trading $100, it would be very unrealistic to expect your earnings to double in a week’s time without adjusting your investment amount. A more realistic goal would be to earn up to $1000 a week by trading $200 in this instance. Check out our article on making money weekly on Binomo to learn more!
Remember, your goal here as a beginner trader isn’t to do more trades every week. In fact, it’s the opposite: your goal is to make the most money with as few trades as possible. And by doing all the steps listed in this article, I’m pretty sure you’ll get there soon.
Good luck with your trading journey on Binomo!