Binary option trading requires the use of strategies to get started. In much the same way as you use a trading strategy with the stock market, so it is with binary options. The point of using strategies is to gain a competitive edge in the market. When investors speak of binary trading strategies, they are essentially talking about fundamental analysis and technical analysis. Various other strategies are employed throughout, including the Martingale Strategy, Bollinger Bands and MACD, the Straddle Strategy, the Hedging Strategy, the Reversal Binary Options Strategy, 60 Second Trading Strategies, Bully Trading System, and more.
When you trade binary options, you can expect in the money profits of 70% to 90%, or more. There are 4 general asset categories to trade, including stocks, indices, commodities and currencies. And since expiry times range from as little as 60 seconds to several weeks in duration, you can generate profits in double-quick time. Before you begin trading binary options, it’s important to stay abreast of the effects of strategy and risk management. Staying in the loop as it pertains to financial news updates is important with binary options trading too. Fortunately, binary options (digital options) either finish in the money or out of the money. It should be understood that certain brokers will offer cash back on losing trades, but that is typically limited to 10% of the trade amount.
How to Trade Binary Options with Fundamental Analysis
Traders who have a keen interest in the economics of binary options – the number crunching – will instantly be drawn to fundamental analysis. This method of trading relies on the market fundamentals to anticipate future price movements. During the 2008 global crisis, markets were sharply revised downwards and the fundamental analysis at the time supported such a downward revision. But fundamental analysis is not limited to major market movements or events; it also includes daily data such as inflation rates, unemployment rates, non-farm payrolls, interest rates, et al. This information is made available through economic calendars at the top binary options brokers and other reputable sites.
How to Trade Binary Options with Technical Analysis
Traders who enjoy using charts will find technical analysis much to their liking. By studying the exchange rates of charts and other technical analysis tools (candlestick charts, digital info), traders attempt to gauge the future direction of asset price movement. The theory of chart analysis is predicated on the notion that past trading patterns imprint on the market. As a result, the market tends to remember what has previously occurred. By carefully analyzing the past behaviour of the markets it is possible to make educated forecasts as to the future possibilities in the market. This is especially helpful as it relates to exchange rates in currency pairs, stock price movements, indices, and commodities. Various technical indicators are available to assist in identifying trends and patterns vis-à-vis market behaviour.
Making Binary Trading Strategies Work for You
Becoming a success story with binary options trading is no mean feat. It requires hard work, insight and due diligence. Even with the best available insights, there is no sure-fire way to success in binary options trading. For starters, one of the best binary trading strategies is to trade assets that you understand. This could range from currency pairs like USD/EUR, GBP/USD to indices, stocks, and commodities. Risk minimization includes not investing everything in a single trade, or a handful of trades, and not investing too much capital. The golden rule for binary trading strategies is to limit your overall exposure to 5% of your capital. For a trading account of $2,000 the maximum trade on any one position should be limited to $100. And it is also ill advised to place trades on multiple assets that will all be in the money only if they move in the same direction.
Call & Put Options
Successful traders have a winning mindset. The psychological aspect of trading necessitates that traders understand how to trade and how not to trade. It is foolhardy to chase losses in binary options trading and it makes precious little sense to invest more than 5% of your capital on any individual trade. These rules are in place to protect your capital and your overall wellbeing. The absence of emotion in your daily trading regimen bodes well for your long-term success. The urgency of trying to force a winning outcome only leads to further losses. In all instances, the golden rules for trading binary options are clear: use fundamental analysis and technical analysis to the best of your ability. Despite the analysis, the fundamentals of binary options trading are simple: place a put option if you believe the asset price will fall below the strike price at expiry time, or a call option if you believe the asset price will rise above the strike price at expiry time.