It is a question many people ask but very few ever seriously look to answer. Can you really quit your day-to-day job and make a living from trading on the financial markets? Most people who have given it some thought would have stumbled across a blog or an article online that promises you can, and then probably launches into a sales pitch to try to sell you a PDF at a grossly inflated price that tells you how you can do it.As it is easy to find positive stories related to making a living in this way, many people might even look at opening a trading account and start trading on a casual basis, with small sums of money, to see whether they enjoy doing it and to get an idea of whether they might wish to do it full time. It is easy to see why this is attractive. Who, given the choice, would continue to go to work for 40+ hours a week when they could earn, at the very least, a living wage and similar sum from perhaps a quarter of that time, and perhaps even shorter depending on what they were trading?Due to the high returns that can be achieved, binary options are a popular thing to explore among those who want to discover if trading options for a living is a realistic proposition. One of the biggest challenges when making a decision is that any form of financial trading should always be looked at over the largest possible period. If you have been trading on a casual basis for six months, and have enjoyed success, is this a long enough period to use as an example when justifying a decision to quit your regular job, especially if you have a mortgage, children, and various other responsibilities to meet?
Trading Options for a Living: Getting Started
If you are serious about exploring the possibilities of options trading for a living you need to know the steps you have to take to get started. Everything you need is accessible and easy to use, enabling you to get started as soon as you wish. While you can get all of these resources from Bank of Trade, we have laid them all out individually so you have a full understanding of the process before you consider trading binary options full-time.
Steps to Trading & What You Need
- Find a high-quality charting package. This will enable you to monitor and track the prices of various markets and enable you to buy and sell binary options in an intelligent manner.
- Although not something you can buy, you will need to be able to draw parallel lines on these charts or spot virtual lines if you are using a software package. Not only do parallel lines help you spot clear upward or downward price trends, they also help you spot when prices have levelled out at support or resistance stages.
- Once you are ready to get started, you will need to start searching for markets where you can trade binary options. At Bank of Trade, we provide all the available markets for you, from commodities and indices to individual stocks and foreign exchange.
- Compare charts on a daily and on a weekly basis. Due to the nature of binary options trading, you can make money from both short term and longer term trades, so having knowledge of how the market is moving in all areas can be very powerful.
- You are now ready to place your first option trades. Choose something that looks to have a clear trend, or something that is currently stagnant but likely to increase or decrease in value shortly, and place a call or put trade.
Remember that when you trade binary options you are trading against whether the price will rise or fall. As the price of a stock or commodity does not directly affect you, the opportunities for making large profits with binary trading are much better, making the chance to trade options for a living a very real and potentially lucrative one.
Tips for Making a Living from Options
Because binary option trading offers an “all or nothing” outcome, while the potential for greater profits is exciting, trading these options can also lead to fast losses if you get too emotional with your trading. If you are options trading for a living the last thing you want is to be in a situation where you risk future revenues because you have been careless with certain trades.The biggest thing you can do to experience trading before doing it for real is to use an options trading simulator. This will enable you to replicate the choosing of an asset and placing a call or put trade, as well as the wait to see whether you succeeded.Depending on how you want to trade binary options, you should also look at the various types of trades on offer, such as 60-second trades and one-touch trades. These are usually better for experienced traders, but they are worth knowing, so they can act as a work-towards within your personal trading career.As important as learning various strategy tips and training yourself to become a smart trader and investor is, so is having the knowledge when you can sell options that are out of the money. This is critical for managing losses, as you may be able to sell a call or put option prior to expiry to another trader who is willing to take a chance.When you are option trading for a living it is critical to look at the bigger picture; ensure you are able to take a balanced view of your trades and remove all emotion from what you are doing. You should treat trading for a living like a business.
Can I Do It?
Back to the question at hand. There is no question that you can make a living from binary options trading. After all, there are people doing exactly that right now, all around the world.Because of the way binary trades work, your trade either finishes in the money or it does not, you do not need to spend time calculating potential returns or losses, as you will know them before you start.At the same time, the fact that binary trading is easy to get started with does not mean you should think it is an easy way to make a living. Treating options trading for a living as a get rich quick scheme will only lead to you being too hasty and not learning everything you need to know about binary trading before you get started, and ultimately you will be likelier to make bad decisions and endure potentially heavy losses.You will also need to build at least a basic knowledge of the finance industry, particularly around dates when markets are likely to be volatile, such as economic announcements by governments and the release of business results from across various industries. These have the potential to impact on a wide variety of areas, and if you are well-informed you can take advantage of the trends and maximise your returns.
How Much Money do I Need?
Let us break this question down into two parts. The first part will look at how much money you need to get started. The answer is you do not need much at all, but if you see heavy losses when you first start trading and are getting used to doing it full-time, you could easily see your funds quickly running out. If you do have a small amount of money to trade with, use this on smart, likely to be safe and profitable trades, so that you can build up your funds for when you do start trading options for a living.Secondly, you will need to consider how much money you need to make to live, plus what amount of disposable income you would be happy with. You can break this down annually, monthly, daily, or whatever works best for you. Whatever you do, you need to land at a figure that would deliver the lifestyle you desire, as well as enabling you to save for retirement, pay for any health insurance, and other expenditure, and then analyse whether earning this sum is realistic from options trading alone.Given the sums of money you can make from options trading are almost unlimited, especially when you consider one-touch trades can deliver up to a 500% return on investment, your biggest consideration will be the level of risk you are happy to take to achieve such an income. If the risk exceeds what you are comfortable with, what is your plan for carrying on? You also should think about whether you want to skim some of your early profits to reinvest back into trading to grow your capital fund. Over time, this will allow you to take more risk and potentially target options that are more lucrative.
What if I Love Taking a Risk?
There is nothing wrong with being a risk taker. However, when you are trading options for a living, it is not the same as having a few trades during your downtime at work. All of the trades you do will have a direct impact on your life, so the risks you take should be calculated, smart risks that are justified by the potential rewards.If you still find yourself tempted by a risky trade, then you should never put yourself in a position where you are going “all in.” Unfortunately, you are the only person who can control what you do here. You might decide that 50% is the maximum of your total capital that you are going to trade with, for example. Ensure you settle on a figure that leaves you enough to slowly build your finances back up with less risky trades should things go wrong.When you become an experienced trader you might also be able to acquire portfolio margin. This is essentially a credit line that allows you to trade more than what you have. Beware that you need to prove you are a successful trader in order to do this, however, as no one is going to give you 600% of your capital to trade with if you cannot prove a return is more than likely.
Learning Binary Options Trading
Trading options for a living is something everyone can do. Even if this article is the first time you have heard of binary options trading, there is nothing stopping you going away and learning about it immediately.However, you need to know that, while you can learn about binary options trading reasonably quickly, it is a little bit like learning to drive, in that what you learn after learning, and gain through experience, is what really matters. Experienced binary traders are still learning about what they do, even today. If you start exploring binary trading, think you might have an opportunity to start options trading for a living, but then get disheartened, think realistically. It takes years to become an expert trader, although if you dedicated an hour or two each day to learning about the different platforms and understanding how it works, you would probably find yourself in a position to start trading for a living after 9 – 12 months, depending on how quickly you learn.If you do not have time to learn all about binary options trading for yourself, then it is unlikely you will be able to make a living from it. However, if you can find a reliable, proven to be successful broker, then you will have the opportunity to make an incremental income from binary trading, although you will need to account for broker commissions and any costs associated with using their trading platform, if you still want access for yourself.
Summing Up: Can You Do It?
Trading options for a living is certainly realistic, but anyone who wishes to do this must understand that it is not as simple as it sounds. To make an amount of money that would sustain even the most frugal and low-expense lifestyles, it will take a great deal of commitment to learning about binary options trading, as well as effort and desire to actually go and do it, and to deal with the successes as well as the losses when they occur.If you are already participating in binary trading as a hobby or on a casual basis, you will need to refocus your thinking before starting to do it for a living. Do not feel pressured or rushed into doing it if you want to take the time to learn. Global markets and binary trading options are going to be here forever, so if you do not learn about trading in 9 – 12 months, you can continue picking up knowledge far beyond that.At Bank of Trade, you can immediately take advantage of our trading platform as well as access a large number of resources and pieces of expert advice when you sign up for your trading account.