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Profiting from Binary Options Trading

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                <p>Like anything worthwhile in life, option trading for a
living requires a number of essential things. You need to have a plan, a
trading system that matches the amount of trading capital you have. This
plan should include a minimum gain per successful trade and a maximum
loss per losing trade. It should also include position sizing, i.e. how
much, or what percentage of your entire trading capital, you will risk on
any one trade. You need to decide whether your trading style will be more
speculative or longer term strategically focussed.</p>
<p>You should also know what methods you will regularly use to assess the
future price direction of the underlying stock, commodity or index that
your options are derived from. Will it be a "fundamentalist" approach -
based on company reports and management? Or will you be a "technical
analyst" - looking at charts for price patterns?</p>
<p>How will you match the approach you take with the option trading
strategy of your choice?</p>
<p>For example, if you want to be a straddle trader, your focus might be
on upcoming earnings reports, or on forming "symmetrical triangle"
patterns in stock charts, along with low option implied volatility. If
speculative trading is more your "thing" then you would be looking for
support and resistance levels, drawing trendlines and looking for short
term price breakouts using indicators of your choice.</p>
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<p>The very term - option trading for a living - implies reliance upon
your trading profits as your main, or even sole, source of income. So
before you take the plunge, you need to feel supremely confident that you
can actually do this; that whatever system you plan to use will work in
all market conditions and consistently over the long term. You need to be
committed to ongoing learning, together with continued paper trading to
test your strategies. In short, you must develop a passion for option
trading.</p>
<p><strong>Matching Starting Capital with Trading Style</strong></p>
<p>If you only have a small amount of capital to begin with, you should
quickly dispel any thoughts of option trading for a living... for now.
Keep your job and think of your trading activities as only a means to
increase your trading capital base over time. Once you have at least
$20,000 then you're in a position to make some decisions.</p>
<p>If you believe you have a good and tested system (you have tested it,
not someone else) which will enable you to trade as a short term
speculator - and are content to risk no more than 10 percent of your
trading capital on any one trade, then it's not unreasonable to conclude
that you're ready to give option trading for a living a serious go.</p>
<p>But if you prefer a less risky but also less profitable trading
approach, using more conservative option trading methods such as covered
calls, advanced spread trading strategies and the like, you should
ideally like to have at least $50,000 at your disposal and aim to return
between 5 and 15 percent per month. An average of 10 percent per month
would bring in around $5,000 per month or $60k per annum. This
realistically, is option trading for a living.</p>
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posted:11/17/2011
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