Who are traders and brokers or what should a novice binary options trader know?
Before plunging into the alluring world of stock trading in binary options, a newly minted stock player must navigate the concepts and basics of unfamiliar financial activities.
What does it mean to be a binary options trader?
What does a broker do? What is its need, purpose and services provided by it? Here's what you initially need to know for a person who decides to set foot on the path of trading in the exchange market.
Armed with a complete set of information, a novice trader will be able to bypass all the pitfalls that are associated with the functional activities of an individual trader in the financial options market.
Who is a binary options trader?
A private exchange trader operating in the financial market is a person who is directly involved in trading financial instruments on the stock exchange and derives income from such activities.
It is easy to guess that a binary options trader is a participant who uses such a tool to conduct trading actions - the purchase of binary options.
It should be noted that the trader is engaged in his activities, along with all businessmen, at his own peril and risk, he takes into account his own theoretical research and forms of analytics of the general situation on the stock exchange.
In this case, the profitability of a trader - an exchange player, almost entirely depends on his activity, which is obtained based on his level of skill, the analytical services used and the amount of trading capital that is under operational management.
Simply put, the main mission of a trader is to analyze the overall market situation and open binary options contracts based on the results.
Binary options broker: what is it?
A real binary options broker is an official legal entity that has the ability to provide an exchange player with legal access to financial platforms from different countries.
The purpose of the broker is to provide the trader with technical online equipment for binary trading, the so-called trading platform.
With the help of this online platform, the trader carries out his exchange work.
The broker interacts with traders on contractual terms, which are limited by the scope of the agreement, which can be signed when creating a trading account with a brokerage company.
This agreement spells out all the conditions for the working interaction between the trader and the brokerage company. It will take a lot of time to describe all the conditions of such an agreement. We will discuss here only the main points.
As a rule, the following trading conditions are important for traders, which are prescribed in this agreement: the amount of the initial deposit, the minimum value of the transaction, the yield of options, the arsenal of underlying assets, the time and methods of paying income.
For example, a company in its own agreement describes the following parameters of trading conditions: the minimum deposit account is 10 USD (500 rubles), the initial cost of an option transaction is 1 USD (50 rubles), the maximum yield of options is 87%, the withdrawal of trading income is up to 24 hours from the moment the application was sent .
However, if you delve into the analysis of the overall activities of a stock player and an option broker, it is easy to see that, in fact, their relationship is built on banal mutual enrichment.
The stock player tries to earn as much as possible, while using modern strategies for binary options and investing the minimum or maximum amounts, it all depends on how much the trader wants to earn.
The brokerage company, in turn, on the trading turnover of the trader, seeks to make its profit.
And this is exactly what is most interesting. You understand that in any area where large finances are involved, there are scammers who pretend to be normal decent brokers. Therefore, when choosing a partner for binary options trading, it is extremely necessary to exercise caution.
You should definitely look for a broker to have a license from a special regulatory body operating in your state (in Russia, this is the CROFR). This is the only way to protect yourself from scammers. Of course, these are not all recommendations, but their complete list will be described in a special article.
So, now we can come to the unequivocal conclusion that an option trader and a brokerage company is really a mutually beneficial union of figures in the financial market.
A brokerage company without a trader will not be able to fully function and receive a normal profit, and a trader without a broker will not be able to access the exchange at all.
Based on this, we can conclude that if you work with an honest broker, you can be sure of the safety of your investments and the high quality of the services received in this company.
After all, its goal is not a banal mastery of your finances through a cunning fraudulent scheme, but operations with the volume of your trading turnover, which brings profit to the broker. And if the broker's client is more successful, then his profit will be greater, so a decent broker will do everything to increase the efficiency of his client's trading.