In this article we try to answer some important questions you might ask about binary options trading. All questions come from interested readers or platforms such as forums where traders find answers. We hope that we can answer some of your most important questions and ensure a safe start into binary options trading.
First of all, you should choose the right broker and in case of novice traders we highly recommend Anyoption, one of the market leaders with a superior trading platform that is very easy to use. Click here to start your career with just $10 at IQ Option!
Can you make money with binary options?
It is obvious that you can make money with binary options trading. The question is how much and for what time frames? When you just buy one option for $25, you can earn $20 when the option is in the money, but is this already making money? It’s true that you make more money than your initial investment but not necessarily over the long term. But when you can earn $100 each month with a $1,000 investment over a long period of time than you definitely can make money. Just finishing a few options in the money is nothing special but making money over a longer period of time is. There are many traders that make a living with binary options but they put a lot of effort into it and they know the market very well. If you think you can make a living after reading a book or following a few trading tips then you’re wrong.
Are there good books for binary options?
Do you have to pay taxes on earnings?
This is a very tough question that is impossible to answer with confidence. If you’re a non-US trader you have to check your country’s tax law. For US traders, it’s not clear because binary options trading is fairly new. Common sense is that it belongs to capital gain/loss and you can deduct losses from other capital income. But it might be possible that binary options is classified as betting/gambling like horse races or the lottery. In this case, you can’t deduct your net losses. If you’re serious about making money long term you should hire a tax consultant.
What are the best platforms for novice traders?
All major binary option platforms (like SpotOption and Tradologic) are great platforms for beginners since they are very easy to use and navigate. Binary options trading is fairly simple and so are binary options platforms. If you choose one of our listed brokers we’re confident that you won’t have any trouble handling the trading platform.
Are there demo accounts?
Generally speaking, there are demo accounts for binary options traders but the offering is poor. Some brokers allow you to use their demo platform when you make your first deposit. Others limit it to a few hours of use and others don’t even offer demo accounts. Other brokers just offer trading simulations. Read our article about demo accounts for more details.
Many new traders are searching for demo accounts without registration such as is possible with Forex trading. With binary options trading, this kind of demo account can’t be found anywhere at the moment. It is possible that brokers may offer it in the near future.
What’s the difference between brokers and traders?
Some newcomers mix up traders with brokers. A broker is someone that gives you the opportunity to trade with binary options. A trader is someone that is trading (selling and buying options) and needs a broker that offers a platform for these trades.
Is it possible to trade Facebook options?
After Facebook’s IPO, many traders spotted the opportunity to make money with going short because they thought that Facebook stocks were overrated and that the price would drop soon. A couple of weeks later (in August 2012), it was clear that they were right and the question is whether the stock will drop further or consolidate. You can trade Facebook stock options at Traderush for example.
What bonus conditions are available?
Many brokers offer their new traders a welcome bonus to make their stay more comfortable. Bonus conditions and rules vary between brokers. One broker may let you withdraw the bonus money after buying or selling options for 15 times the bonus amount and other brokers for 25 times. This is a huge difference and you should study all terms and conditions before you make your deposit and then compare brokers before you decide to take advantage of a certain bonus offer.