Trading Binary Options – When, How, What
Imagine earning $350 a day, 5 days in a week, working only a few hours each day. That would give you a very nice monthly income of $7000. Not bad for someone who works by himself/herself and doesn’t have to commute to work, isn’t it? The fact of the matter is that the earning potential is much greater than $7000 a month. Successful professional traders can make thousands in a single day trading binary options. How is that possible, you ask? Well, the answer is simple, they posses the necessary knowledge of when to trade, how to trade, and what to trade.
When to trade
Binary traders need to know exactly when to trade. This is one of the most significant factors in successful trading, especially binary options. The entry time is absolutely crucial to winning. The short term binary trader needs to be able to recognize the trends, price reversals and fluctuations. Many professional traders believe that the best time to trade binary options is when there is a lot of volatility in the markets and big volumes are traded. This usually happens during the London/New York sessions. Many traders also stay away from times of important news announcements, as they may have a huge impact on price fluctuations with often unpredictable results. However, financial news can also be used in a successful trading strategy in which the trader follows the most important news announcements and enters the trades right after the news. The WHEN of trading really depends on the strategies used.
How to trade
Today all traders use the internet and online trading has become a lot cheaper and easier. There are thousands of indicators and strategies and technical analysis is freely obtainable using the MetaTrader or other similar platforms. Indicators are being freely exchanged on websites and many forums. See Free MT4 indicators for binary options for examples. You can copy strategies that have proven to work for others but you can also create your own strategies and follow them if they work. Forex traders usually prefer to follow the trend, hence the expression ‘The trend is your friend’. Many binary traders also believe that it’s easier to trade with the trend as it can be scalped. The best entry time for scalping is when the price of an asset moves slightly in the opposite direction of the trend but does not cross the moving average and starts bouncing back. This can be very effective technique across all time frames. On the other hand, there are many binary traders who prefer to trade against the price trend. They seek out price reversal patterns and try to capitalize on them as much as possible with 60 second or 2 minute trades. This technique with the right signals can be very effective as well. See Franco’s signals for a good example.
What to trade
Novice binary traders should trade the most traded currency pairs such as the EUR/USD. In the beginning it’s best to focus on one currency only and really observe and try to understand it enough to be able to predict it’s next movements. You can also choose to trade a world commodity such as oil. Both EUR/USD and OIL will provide plenty of price movements and trading opportunities. The EUR/USD is also a great pair for news trading because US news that affect the dollar is published every day. Experienced traders, due to their wider knowledge of the markets and longer trading experience can follow a number of currency pairs and commodities and enter the trades as opportunities present themselves that are in line with their learned strategies.
The above three points are crucial to every successful trader and each point could be expanded to a book. The thing to remember is that the vast majority of successful traders rely on entry/exit signals in their trading strategies. The signals may be their own, feeding from their own platform, worked out through testing for many months, if not years, or signals supplied by external providers, or both.
Published in Education