To learn how to earn money with binary option trading, experience is of great importance. Of course, you can learn everything in theory: read articles and books about binary options, follow training courses and webinars, or talk with other traders about your strategy (Read this article to learn more about binary options trading). But to really get a feel for the market, there is no alternative to practical experience.
To gain experience, you can open an account with a binary option broker and start to trade immediately. In doing so, you often get a lucrative bonus. But at the same time, you risk losing your investment.
Binary options trading simulator
Just like a pilot in training will start by practicing in a flight simulator, you can also practice with the binary option trading simulator. Follow this link to find a trading simulator which guides you through the steps of the trade. It was developed by Anyoption, one of the first binary options brokers (read a review of Anyoption).
Binary options demo account
Another way to practice with binary options is through a demo account. This gives you a virtual capital to trade with, while you don't have to invest any of your own money. You can take all decisions to buy or sell options as you normally would, but in the end it is only 'play money'. This is a good way to get a feel for the software of a binary options broker. A broker where you can open a free demo account is GTOptions.
The psychology of trading
Whether you practice with the simulator or with a demo account, one thing is missing: the feeling of real trading. When real money is at stake you will notice a psychological effect in yourself. No one can escape it: if you make a lot of money (profit) in a short time, you are sure to get a euphoric feeling. Conversely, if you lose a lot of money in a short time, you will feel demoralised. Those feelings affect your decisions. Winning traders are often over-confident, while losing traders are too risk-averse. The best traders in the world are able to recognize these emotions, and to stop trading if they know they are not in a good shape to make rational decisions.
This is a skill that you must learn. In the beginning you will inevitably make some bad decisions under the influence of your emotions. This is something you can learn to controll step by step. But you cannot learn this on a demo account, because you won't experience what real trading feels like. We therefore advise beginning traders not to spend too much time on the simulator or trade too long with a demo account and to open a real money account soon after. Trade in small amounts in the beginning. As you start to take better decisions and make more profit, you can increase your exposure to the market.