The Importance Of Time When Trading Binary Options

Timing is a critical element of all trading, but it has a unique function in binary options trading. Whilst most traders will always look at the timing of trades, binary options traders will not only look at the time of day they trade, but also the expiry time that they choose on each trade. This expiry time, ranging typically from as little as sixty seconds to several days is something that needs to be considered as the critical factor in purchasing binary options. This decision could mean the difference between binary options closing in or out of the money and, with the lack of stop loss or take profit level decisions; it is the key factor in a trader’s success.The fact that binary options place so much emphasis on timing is not something which should be considered negatively. On the contrary, the simplicity of binary options as a straightforward investment with an expiry time is one of its major attractions. Although it provides just one decision for traders to make by removing the complexities associated with stops and profit targets, several other timing factors should be taken into account when making your first trade.Timing with binary options trading involves several elements beyond simply the expiry of the options. The time that the trade was placed relative to the activity patterns of the market is an example where timing needs to be considered. Trading hinges on good and bad times to look for opportunities and this is true for binary options despite the fact that binary options can be traded 24 hours per day. Similarly, traders have to manage their active trading time to optimise the level of profit and limit losses. Developing a good understanding of these elements is beneficial for all binary options trading strategies and begins by developing a good grasp on when might the best times be to trade certain markets.

The best time to trade forex market

Currency markets are active 24 hours per day as the sun moves around the earth and markets open and close around the globe’s financial centres. They are, however, subject to both active and quiet times, depending on the currency pair and also on unforeseen news releases. Overnight currency markets are generally quieter than those traded during daylight hours, although this will largely depend on both the currencies in question and the geographic location which they are located at. For example, the USD pairings will tend to be most active during the morning trading hours on New York’s Wall Street when it overlaps with the European trading session. During the US trading session, however, the non-USD paired currencies in the opposite side of the world, such as Australian dollar against the New Zealand dollar, are likely to be quieter as most of the large institutions and influential traders sleep.

The best time to trade stocks and stock indices

Stocks and indices go hand-in-hand with the individual stocks compiling the indices. Stock markets usually officially open between 8-8:30 AM and close at 4:00-430 PM. These are the daily periods when the market will experience the most volatility and the most opportunities for traders will become apparent. Unlike traditional trading however, binary options do not require a great amount of movement in order to result in profits. This is due to the fact that binary options do not require price to move substantially further than the entry price in order to generate substantial profits. Price can simply move fractionally higher or lower for the investment to be profitable and this is a major advantage for binary options in terms of timing the entry in to stock and index markets.

The best time to trade commodities

Commodities are also 24 hour markets which are available to trade throughout the day and night from any location. Similar to forex and stocks, they are most active when the largest markets are open, but they can also react strongly to news and events making them potentially volatile during the night. The reason why commodities are affected by news is that many can be considered as the raw materials which respond to growth data. Poor forecasts or bad growth figures can be announced sporadically and the timing of these releases is fundamentally important for binary options traders. Since commodities are particularly affected by national growth and GDP figures it is good advice for all traders to know when these are scheduled to both avoid any shocks and also to look for trading opportunities. It is also worth remembering that commodities can be strongly affected by unpredictable shocks, such as political unrest and natural disasters which can occur without any warning.

The benefits of 24 hour binary options trading

The ability to trade binary options on a 24 hour basis is one of the major attractions for both new and experienced traders. Whilst some other markets, notably forex and spread betting, also provide 24 hour trading platforms, binary options have a very significant advantage for those looking to trade both day and night. This is not to suggest that a trader would necessarily want to trade both all day and all night, which would in fact be detrimental and demonstrate negative time-management, but for those seeking the flexibility to trade either, binary options can provide this. The reason for this is that binary options can be traded successfully even in very slow or sideways markets. They are not reliant on intense volatility or pip movements in order to be profitable, but require only small movement higher or lower than the strike price which can result in profitable expiry. For traders who have day jobs, this provides a great opportunity to trade during the evening or even at night when markets are slower and traditionally seen as unprofitable by other traders.

The rollover feature provided by many binary options brokers

The rollover feature is provided by many binary options platforms as a means to prevent losses and increase traders’ chances of success. The idea is based on the simple assumption that when binary options near their expiry and they are out of the money, providing an extension will give them additional time to recover and, hopefully, close profitably. This provides an excellent opportunity for those who have done their research correctly to turn a losing position in to a winning position by using this unique feature. However, it is also worth noting that using this feature can extend losses, given that an additional percentage investment is required in order to roll over the binary options.For more experienced traders this can provide an excellent opportunity and a second chance to improve the timing of their trade. Roll over’s allow traders to select any additional expiry time which is helpful and enables this decision to be made in the face of changing market circumstances. An example of successfully using this feature may be when a short term market shock distorts the market’s underlying trend and results in a short term price spike against a binary options trade. Experienced traders may assume that price will return to the original trend, but will need to extend the life of their binary options in order to achieve this.

Effective time management is essential for all binary options traders

Time management is a very important element in becoming a successful trader and at the heart of this is the very simple distinction of which type of trader you are. The type trader in relation to this question is the straightforward difference between those who do this as a full-time profession and the majority who undertake this outside of a main job. This is a critical difference in distinguishing whose livelihoods depend on their trading and those who trade with spare financial resources beyond that required for food, rent etc.Needless to say, those professional traders who are lucky enough to make a living are exceptionally good at their jobs,as they need to be in order to survive as a full-time trader. They are also highly organized in terms of their optimum trading time and the markets that they prefer to trade. For part-time traders, who are perhaps also working full or part-time in a regular job, the choice of markets may be much more limited and will most likely be based on the times that they are able to trade, rather than the availability of all markets to a full-time trader.One thing that both full and part-time binary options traders have in common is that the need to exercise effective time management. This applies to those who have vast amounts of time to trade and those who have very little. As with most profitable ventures, quality over quantity will always prevail and given the availability of 24 hour global markets, the necessity to enforce this mantra is even more apparent. Those who are able to trade most successfully are likely to not only know when the best time is for them to begin trading, but also the best time to stop. Overtrading is a symptom of bad time management and the tendency for this to occur will start with a fruitful trading session before trading away the profits to end up negative, tired and frustrated.Setting targets that are based on either a specific trading time or a profit/loss threshold for the day will help to avoid the situation and provides a good foundation for time management. This can be enhanced by trying to normalize your lifestyle whilst trading as you would do with any work; taking breaks and looking away from the screen for short periods as well as eating and sleeping normally. Professional, full-time traders tend to sleep poorly and work as late as necessary due to the fact that they literally rely on the success of their trading to live. Part-time traders have the advantage of trading as and when they want and this makes being selective and managing trading time far more straightforward.

Basic rules for binary options time management

There are several basic rules which can be applied to all binary options traders and which will improve time management and, hopefully, the potential to be a more profitable trader.

Selectively executing your binary options trading strategies

As a 24 hour market, it is essential that you select which markets and which times will optimize your chances of success. For a lot of people, this will mean not only choosing a suitable market for your binary options strategies, but also the ability to dedicate time to this. Understandably, for many it will not simply be work that clashes with access to the markets, but also family and social commitments. Establishing a dedicated period of time committed to trading will not only keep the time management of your trading consistent, but it will also provide the routine required to monitor performance and develop your binary options trading strategies.

Make sure your binary options trading times stay fixed

Whilst most activities outside of work can often be shuffled around in order to make way for unforeseen events, trading should not be considered in this group. Fixing the times that you have chosen to execute you binary options trading strategies is very important for consistency as well as generating meaningful returns from trading binary options. Committing to the time applied to trading should be considered in the same way as going to work; it is not optional, starts and ends at a specific time and can only be missed very occasionally. Binary options trading also requires a certain degree of understanding from those living around a binary options trader, as the long-term benefits of this are well worth it.

Be strict with ending your trading session

Many professional traders will say that success lies in exploiting the fear and greed of other traders. These are two emotional elements which help to drive market price fluctuation and are also major reasons why people will be tempted to trade beyond their set trading time. For those binary options traders experiencing a successful trading session, greed is the driver behind continuing in the search of higher profits. For those who have had a bad trading day, the fear of ending it with a loss will encourage many of them to trade later than normal to try to rectify the situation. Both of these situations can lead to lower overall profits and higher losses for those who chase a market in an emotional frenzy. Setting strict limits, whether in terms of profit/loss or a strictly defined trading timetable will prevent this and, most importantly, allows you to focus on the next trading day. Just as the end of a working day ends at a certain time, so should the trading day.If a trader can be strict with his or her time management in stopping trading, regardless of a profitable or loss-making session, it shows the required separation of emotions to become a successful binary options trader. Tomorrow is another day and another opportunity to be profitable regardless of how today’s trading session went. Limiting losses and appreciating profits without chasing trades will obviously benefit all traders; however, the ability to walk away with a loss and to focus on the following day’s trading takes not only willpower, but also highly effective time management.For those who are lucky enough to trade throughout the day, the temptations to overtrade are the strongest. This may be most effectively overcome by exercising a profit and loss threshold where, once hit, the trader will finish trading for the day. Such a threshold can be either a set number of units or a percentage based on the value of the trading account. Either way, this provides an alternative for those who may feel the need to trade until the job is done. In many cases the target may be reached earlier than anticipated and the trader can close up for the day, alternatively it may be necessary to work later before the daily target is reached.

Don’t simply trade for today, look to the long term

The one thing that distinguishes binary options traders from occasional gamblers is their longevity. Whilst gamblers will allow themselves the occasional punt, traders have to make sure that they can continue trading consistently. This means that today’s trading should not negatively affect the chances of being able to trade tomorrow and effective time and money management is necessary to reinforce this. One of the major benefits of trading within these strict rules is that it reduces the risk of over trading and pure gambling, especially when things are not going as planned on any given trading day.Losses are guaranteed to occur on any one day and the way that binary options traders deal with this will determine the length of time that they are able to trade. For those who refuse to accept this and hope to trade their way to a profitable position outside of their allotted trading session, the risks will be significantly higher. Long-term binary options traders will accept down days, maintain their carefully-planned trading schedule and look forward to another trading day the following day.

Summary

Whatever binary options trading strategies you choose to use, one of the most important factors in this will involve considerations of timing. For most traders, this will be the management of when they are able to trade on a part-time basis rather than those who can enjoy access to the markets whenever they choose. The careful balance between maintaining a job that provides the income that everyone needs to survive and trading with available, disposable funds will be common to all part-time traders, whilst professional traders will have significantly more pressure to perform given that their livelihoods depend on this.24 hour markets provide so many opportunities for everyone to be involved, regardless of when and where they want to trade. The existence of currency, stock and commodity markets which chase the sun around the earth allow trading day and night to fit within the timetable of any trader. Despite this, it is imperative that traders manage their time and access to these markets efficiently. More is certainlynot better in trading and exposure to the markets is proven to be most effective when trading is consistent and controlled. This means putting together a strict trading plan of when to trade and also to adhering to rules of termination o a trading session which is often the most difficult for traders facing both profits and losses over a single trading session. The negative emotional influence of both fear and greed are likely drivers of trading decisions at this time and will almost certainly become equally negative habits of the longer term for any trader.There are, however, multiple ways that traders can manage their time efficiently to make sure that they give themselves the optimum chance of success in the markets. This involves a disciplined approach to when and how long a trading session will occur each day and acts as a barrier to overtrading and loss of control. Part-time traders maintaining these basic rules will benefit not only from consistency to help develop trading skills and become experts in their markets, but also to deal with inevitable losses and trading sessions when things have not worked out. The most important and difficult decision here is being able to walk away from both profit and loss and look to the next trading day as all successful traders have learnt to do.

Selected Tools to Improve Your Binary Options Trading

There is a wealth of binary options trading tools and indicators available to help new traders to improve their chances of trading profitably. Understanding how these work, and how they can improve the probabilities of profitable trading, can be well worth learning and applying to existing trading strategies. A large number of the available tools is provided directly through binary options trading platforms and include features which change the way that regular binary options are traded. These add another dimension to binary options trading beyond the straightforward higher and lower options and enable traders to gain additional control over their positions. When applied correctly, these can prove to be powerful tools and it is well worth exploring how these can enhance the experience of many traders.Additionally, there is a huge number of trading indicators which can be incredibly helpful in providing signals of future price movements. They are often applied in greater detail by third-party software programmes but are also available on some binary options trading platforms. These indicators range from the highly popular and well-known charting tools used by professional traders to custom-designed individual indicators for highly-specialised trading. The importance of all indicators for binary options traders, however, is their ability to pre-empt future price movements higher or lower. Trading with some of the most popular indicators can provide an excellent way to pinpoint profitable opportunities.

Binary options trading tools: The rollover

Beginning with some of the most popular binary options trading tools, the rollover is certainly up there as one of the most effective in a number of select situations. The rollover allows traders to effectively extend the expiry of their binary options beyond the originally pre-determined time. This is not, however, a free tool and will usually require an increased investment, representing a percentage of the original. The rollover is an excellent tool which many binary options trading platforms provide but it needs to be used selectively. Rather than risking an increase in the investment when a trade is failing, the rollover should be used whilst the position is out of the money yet requires more time to develop. This tool will favour traders with experience who are able to analyse market movements, but it also needs to be used when there is a good chance that the position will become profitable rather than a last resort for a failing trade.

Binary options trading tools: The Close Early tool

This is another excellent trading tool which can also be used whilst the binary options are still active. Unlike the rollover, it can be used in both positive and negative trading situations and, as the name suggests, it allows a trader to liquidate binary options before their expiry time. Positions can therefore be closed early in two circumstances; the first being when a trader needs to cut losses and close a losing position and the second in order to take early profits on binary options in the money. The first situation will be favourable if closing the position will free up trading funds to purchase other binary options. Although binary options technically can become profitable right up to the point of expiry, it becomes obvious that certain market moves will make the prospects for recovery very unlikely.The second scenario allows binary options to be closed early when they are in the money for a lower profit than if they were allowed to expire at the pre-agreed time. The rationale for doing this is when continuing to hold the binary options creates the risk that they will slip out of the money before expiry. The value of the binary options when closing a profitable position early will depend on both how long remains to the original expiry and also where price is in relation to the strike price. As a general rule, the further the price and the closer the options to expiry the higher the value of the binary options pay out.

Binary options tools: The Protection Rate

Although this is less of a tool relative to the Roll Over and Close Early features, the Protection Rate is a feature provided by some brokers with the aim to reduce a traders risk in the market. The way that this works is that it offers an insurance percentage of between 5-15 per cent on all binary options expiring out of the money. This means that an initial investment of 100 USD may return up to 15 USD if the trade fails. Despite this sounding like a fairly small amount, over time this can be the difference between profit and loss on a long term basis. Additionally, given that many platforms offer up to 85% returns on in the money binary options, combining this with a 15% Protection rate offers a very favourable 1:1 risk to reward ratio.

Binary options tools: Fundamental analysis

Fundamental analysis is not a tool which is directly available through a platform but it’s a technique of analysis that traders use to determine the underlying direction of markets. This analysis uses the basics of what drives a market, primarily news and data, and interprets this to determine the level and direction of influence that it has. Trading platforms, therefore, which provide live news feed assist traders with their fundamental analysis and are a powerful feature for those who can interpret the market reaction to news events. Generally, these events are segregated into two groups; those news events which are planned, such as company data releases, and those which are unplanned. Understanding the potential impact on either is in itself a tool to interpret the future direction of price and can be used very successfully by binary options traders.

Binary options tools: Technical analysis

Technical analysis focuses on chart patterns and indicators to determine trading decisions. Due to its popularity, many of these are very powerful and are used by both professional and home-based binary options traders. There are a number of chart patterns and key indicators which all traders should be aware of and which may substantially increase the probability of success. Some of the most popular and effective of these are outlined below.

Binary options indicators: The MACD

This is a very powerful indicator used by many professional traders and comes as a standard feature of any charting software package. It falls into the category of a momentum indicator which means that it can function as an indicator of the strength of the near-term market. Momentum indicators have an amazing ability to predict future price movements, as they represent the current strength of the price and are excellent tools to use for those looking for price reversals.The MACD operates most effectively as a histogram, or set of bars which rise higher or fall lower than a central ‘zero’ line. When the bars rise higher this indicates positive momentum and lower represents negative momentum which can be interpreted as price moving in a similar way. The technical way in which this histogram is created is the convergence and divergence of two moving averages and the subsequent distance between these.Interpreting the MACD in order to look for an indication of future price movements on which to base your trade can be done in a number of ways. One of the most popular strategies for binary options traders is to look for divergence between the MACD and the current price. A very probable indication using this technique is if the price chart shows a new high but the MACD disagrees with a lower high. At this point it would be likely that purchasing binary options in anticipation of a fall in price may be a profitable trade. Alternatively, simply trading the MACD movements higher and lower as it crosses the zero line is also a popular way to seek profitable trading opportunities.

Binary options indicators: Oscillators

There are a large number of oscillators which are available to binary options traders and which also fall into the category of momentum indicators. Oscillators are designed to move (or oscillate) between higher and lower levels which provide a strong indication of when a market is becoming too hot or cold. Typically, oscillators such as the Relative Strength Index or Stochastic oscillator, operate on a scale of 0-100 with an upper indicator line of 70 and a lower line of 30. As price moves higher and lower, the oscillator will represent that on this index of 1-100. When price moves above 70 it is a clear indication to traders that the market may be becoming over-bought, signalling that a reversal in price may be due. Similarly, when it moves below 30, the market may be over-sold, and a rise in price is very likely to occur.Oscillators can therefore provide binary options traders with an excellent insight into the potential future direction of a market. Purchasing binary options either above 70 or below 30 can prove to be very effective if the expiry time is estimated correctly. Given the high probability of market reversals at these levels oscillators are considered one of the most popular indicators and also come as standard on all charting software.

Binary options indicators: Fibonacci

Fibonacci’s findings operate in all walks of life as the mathematical ratio that has been proven to exist in both the natural and man-made world. It consists of a set of ratios which govern the rules of nature, from the space between the swirls on a snails shell to the renaissance art masterpieces. The basis for its existence in trading focus on the natural attraction that all living species have in common with this and it has been taken up by traders as an especially effective way to anticipate market retracements.Fibonacci levels can be used on all price charts and are most commonly applied to the most recent high and low (i.e. the price swing) in order to establish where the future price will find support and resistance within this. When applying the Fibonacci tool to the chart it will produce a series of levels based on a percentage of the price swing. As price pulls back it is surprisingly clear to see how it reacts with these ‘natural’ levels which can, importantly, be seen as reversal points for binary options traders.

Binary options indicators: Chart patterns

One very important element in technical analysis is the study of price patterns within charts. This is a huge area with many different patterns available, however, there are several key patterns which all traders should learn to identify. Price patterns are formed by the bar charts on a chart creating identifiable, and historically supported, formations which indicate the future movement of the price. Some of these patterns are so powerful that they have become a self-fulfilling prophecy. This happens as thousands of traders identify the formation of a pattern and trade simultaneously, powerfully pushing price in the anticipated direction and creating very profitable opportunities to trade.As an example, one of the most popular trading patterns for binary options traders to be able to spot are ‘double top and bottom’ trading patterns. Double tops occur, for example, when price moves to a new high before retracing. Following the retrace it will try to again to move higher in order to maintain the market momentum but will form a lower-high. The pattern it creates is known as a ‘double top’ due to the fact that the momentum is clearly waning. The price is unable to move higher than the first higher high and the bears are very likely to set in to push the price lower very soon. At this point it provides an excellent opportunity for binary options traders to recognise this pattern and purchase sell options.

Trading with candlesticks

Following chart patterns, candlesticks are one of the most powerful ways for binary options traders to pinpoint potentially profitable opportunities. All charting software will has the option to apply candlestick charts rather than the regular bar charts and they can provide a much greater insight of the general market sentiment. ‘Candlestick’ analysis has been around for centuries since being devised by Japanese rice traders during the 1500’s. The fact that they are still used by many professional traders today is a testament to their powerful predictive qualities.Candlesticks are formed by taking the opening and closure of a price bar to form a coloured body (the colour depends on whether the bar closed higher or lower than the open). They can also have a ‘wick’ pointing from both the top and bottom of the candle, which shows the daily range of the candle. The combination of the size and colour of the body and that of the wicks will determine the strength and sentiment of the market as well as indicating which way price is likely to be heading in the near future.

Candlestick analysis: Engulfing candlesticks and inside bars

Of all of the candlestick patterns, several are considered to be the most reliable and form the core of candlestick analysis. These include ‘engulfing’ candlestick and ‘inside bars’. Engulfing candles can be seen on all price charts and on any timeframe, doing exactly as their name suggests. An engulfing candle is described as one which is entirely longer than the previous candle, having a lower low and a higher high. This tells the trader that either the bulls or the bears have taken control of the price and a movement in the prevailing direction of that candle is very likely. These candles are most powerfully found at the end of a large price movement with the engulfing candle signifying a reversal in the trend. Similarly, if these are found near to a popular support and resistance level they reinforce that the support level is very much being adhered to.Inside bars, on the other hand, can be considered as both indecision bars and also reversals. They are the opposite to engulfing candles in that they will not move higher or lower than the previous candle. They represent a momentary consolidation when the market considers moving higher or lower and are most powerful when several inside bars occur together. In this instance binary options traders can wait for a breakout either higher or lower to confirm the short-term market trend and a potential trade opportunity.

Candlestick analysis: shooting stars/pin bars

Shooting stars, often also known as pin bar, candlesticks are perhaps the most popular and profitable pattern for pre-empting market reversals. They are defined by a long wick in one direction which is at least three times the length of the body of the candlestick. These are at their most powerful when they occur at key areas of support and resistance with the long wick representing the price being rejected at these levels. Shooting star candlesticks are therefore a strong indicator of a market reversal when they occur after a strong price move. For binary options traders, this provides an excellent opportunity to purchase sell or buy options in anticipation of a market reversal.When trading any candlestick pattern it is important to acknowledge that these are at their most important when they coincide with other trading indicators. Whilst a popular candlestick pattern located at an area of support or resistance is a powerful indicator in itself, the combination of additional indicators always helps to confirm a trading position. An example of this is to combine candlestick analysis with oscillator indicators to reinforce a trading decision. When the candlesticks confirm that a price reversal may be close, if this is supported by an oscillator in its over-bought of oversold area, it will confirm that the trade has a very high probability of success.

Summary

Binary options platforms offer a range of tools for traders to use which will enhance their trading experience and provide additional profitable trading opportunities. The most popular of these are the Rollover and Close functions which allow trades to be shortened or extended depending on the circumstances and prospects for the options closing inhe money. Additionally, many brokers will offer traders a Protection Rate which acts to provide a small percentage of the initial investment back to traders for binary options which close out of the money. Although this seems fairly insig ificant on a single trade basis, over time this may provide a profitable edge.Beyond these tools, fundamental and technical analysis exist to help traders to make the correct trading decisions. Whilst fundamental analysis looks at the main drivers dictating the direction of a market, technical indicators can be applied to price charts to pre-empt future price movements. Oscillators and momentum indicators are some of the most popular indicators for binary options traders and the addition of candlestick analysis as reinforcement of these signals can provide very powerful binary options trading strategies.

Understanding Binary Options Indicators

Trading indicators can be divided into categories of default indicators and custom indicators. Traders generally understand the default indicators as those provided as standard on software such as the MT4 trading platform, which includes the ‘heavyweight’ indicator tools such as Bollinger bands, moving averages, RSI and MACD. These are some of the most popular and time-tested indicators and also those which a large number of traders rely on as the basis of their market analysis. Custom indicators, on the other hand, are often less well-known (having not been around as long) but they can also be highly effective in providing unique opportunities to make profits through trading.Since there are many hundred and possibly thousands of default and custom indicators combined, it is important for binary options traders to decide which of these are most likely to benefit their trading. Since many software programmes, such as the MT4 platform, were originally designed for forex traders and several of the default indicators work best on stocks, it is worth being selective in those indicators which can assist individual binary trading strategies. However, one factor which benefits binary options traders in using third-party charting software is the provision of many binary options markets within these. For example, the rise in popularity of commodity and index trading has resulted in many traditionally forex-only brokers incorporating these on their MT4 platform and thus allowing binary options traders to use them to apply their custom indicators.Custom indicators are always evolving due to the ability of traders with individual strategies to code these directly into the charting software. The custom indicators which result from these have evolved with the demands of the trading community and, in more recent times, have begun to focus on developing indicators that can be applied to binary trading strategies. There are now a handful of very good custom indicators with the specific aim of being applied to binary options. These attempt to cater for the unique differences that binary options offer, such as the irrelevance of a stop loss or take profit level and the simple notion that the timing and the broad direction of the trade need only to be taken into consideration to provide a profitable outcome. Trading binary options can therefore require a much simpler approach to trading, with the requirement of only a fractional change in the price to reap rewards or inflict losses rather than a focus on the degree of the price movement on a chart.

Introducing several custom indicators which can benefit binary trading strategies

The News Indicator

Some traders may argue that they don’t require an indicator to tell them what major news releases are planned for the coming day. Many fundamental traders will have already prepared for this and, depending on what underlying assets are being traded, will have a good grasp of the forthcoming major news releases on any given day. However, for those who generally enjoy trading from a technical perspective, using charting and binary trading strategies based on technical setups, the news releases are not necessarily going to be the highest priority. Whilst all traders should have a general idea of the daily news events, especially the large ones such as interest rates and US non-farm payroll data, it is impossible to be alert to everything when trading an individual strategy.Fortunately, there is a very useful and convenient custom indicator which has been designed to alert traders when a major news release is imminent. Not only is this valuable for traders who focus on fundamental trading and may actively look for news releases for trading opportunities, but it can be an important indicator for technical traders with very little interest in market fundamentals. For those who have experienced a sudden, detrimental price spike whilst trading directly from the charts, the news indicator will be particularly useful. This indicator not only highlights the news events directly on to the charts throughout the day but it offers 5 and 10 minute alarms before the event.Although this indicator is designed to highlight news events, its most effective function may be alerting people when not to enter the market. For non-fundamental traders who may not have assessed the impact that a particular news release may have on the market, the news indicator can provide good advice of when not to be exposed in the markets. Avoiding large news releases in the minutes before their release is simple with this indicator and it is likely to save technical traders the anguish of getting caught out trading with an unforeseen, but entirely avoidable, news event.

Paint the Town Red Indicator

This is another custom indicator which is appealing to binary options traders, not only for its simplicity and effectiveness, but also the fact that it works well alongside other indicators. The Paint the Town Red indicator provides a great visual signal of the trend. The background of the chart simply turns red or green depending on when the price moves above or below the moving average. Although this sounds fairly basic, it is particularly effective when used in conjunction with other indicators or chart patterns and levels to confirm the trade. Additionally, this indicator keeps traders aware of the trend, which is an important factor for all binary trading strategies.Since binary options only require that price closes fractionally higher than the original strike price, the short-term rise and fall of markets can be traded very effectively. Although the problem with this may be that it can be considered overly-simplistic, it is most effectively used when combined with the other chart-based trading tools. Two examples of these are incorporating the main support and resistance levels as well as some basic candlestick analysis in order to determine when to purchase binary options based on this indicator. Avoiding trading into potentially congested support or resistance, as well as looking out for reinforcing candlestick patterns to confirm a trade can be used very effectively with the Paint the Town Red indicator.

The support and resistance tool

As a custom indicator, this may not light up your charting screen like some of the indicators available to binary options traders, although it is arguably the most powerful indicator available. The support and resistance indicator shows a trader where the most popular levels of support and resistance have historically occurred on a chart. Whilst this is not a mind-blowing creation, the importance of support and resistance for binary options traders cannot be underestimated. Using an indicator which simply guides a trader to where these areas of support and resistance exist not only reduces the amount of preparation time required to plan a trade but also acts as a standalone identifier of a trade entry.It is important to begin by understanding what makes areas of support and resistance important in trading and, particularly, for binary trading strategies. These areas are created at technical points on the price charts of all forex, stock and commodity charts. They can be seen as the points where the price stops moving in one direction and reverses in the other. This occurs because of the existence of clusters of market orders and a collective response by traders at these significant points. As a general rule, the more times an area of support or resistance is tested, the more significant it becomes. However, if these levels are broken, support can become resistance and vice versa as their significance remains but simply in the opposite role.Where these levels become significant for binary options traders is when the price approaches these levels. As the support and resistance indicators clearly identify these zones, thus removing the difficulty of this for most new traders, we can begin to anticipate that the price will react. The support and resistance indicators are highly accurate at pinpointing the most significant areas and many binary trading strategies look for a reversal of the trend in these zones.Whilst taking a blind trade in the opposite direction is likely to be profitable many times, waiting for an additional signal when the price reaches the indicated support or resistance level is highly recommended. Candlestick analysis and other price action strategies are particularly effective when the price reaches these areas in determining if the support or resistance will be maintained, or if the price will break through this level.

The Relative Strength Index

The Relative Strength Index (RSI) is one of the most popular trading indicators available for the simple reason that it is one of the most reliable ones. Traders involved in all underlying assets use this valuable indicator to help them to make the correct trading decision. Although the RSI is not a “black box” indicator, providing a one-stop shop for purchasing puts or calls, it is an excellent indicator to support the convergence of additional indicators as explained below. Developed in 1978, it may be surprising that this indicator is still highly popular in an age when traders can design their own custom tools, however, this is a glowing testament of its utility to traders of both the digital and non-digital age.The RSI is an oscillator designed to measure the two elements of magnitude and velocity to provide traders with a reading which reflects the current strength of price in a market. The reading is reflected on the indicator within a scale of 1-100, with the default levels of 30 and 70 automatically included on many versions of the RSI. The idea behind the indicator is that the oscillator will move higher and lower on this scale relative to the strength of the market price movement by using an assessment of its magnitude and velocity. The outcome is that, as the price moves higher or lower, the RSI indicator will also move higher and lower on its index. Trading signals are commonly interpreted when it moves lower than the 30 level or higher than the 70. These areas suggest that the asset is oversold (below 30) or over bought (above 70) and that traders should begin to look for a reversal trade. Just looking at any historical price chart it is clear that the RSI is incredibly good at preempting significant reversals, however, it is most effectively used alongside a reinforcing signal where a convergence will assist binary options traders to time their entry correctly into an oversold or overbought market.One of the most powerful ways to use the RSI is to look for the many times that it actually disagrees with the price that is being shown on the price chart. This is known as divergence and is an incredibly popular and effective binary trading strategy. Divergence is basically all about trying to spot a market reversal when the chart price is “lying” to traders. This occurs most effectively when the chart price reaches a recent new high or low, but the RSI indicator does not reach a similar new extreme. In the case of a new high on the price chart, it is common for the RSI to make a lower high, indicating a divergence between the market price and that the wane in underlying strength will soon result in a reversal. Similar to many other highly popular indicators, the existence of a clear divergence has a self-fulfilling element which makes the large number of traders anticipating a reversal to increase the likelihood of this actually occurring.

The TRIX indicator

When traders talk about the most popular indicators available, they can generally be categorized in to two groups. On one hand there are those known as ‘trend-following’ indicators and on the other hand ‘momentum-following’ indicators. Trend-following indicators are most popularly known as moving averages and help traders to look for opportunities which agree with the general direction of the prevailing market trend. Although these are highly effective when viewed historically, their real-time application is limited due to the fact that they lag behind the current market price. Lagging indicators, such as the moving average, do not therefore provide great entry signals on their own.On the other hand there are also the momentum indicators, such as oscillators, which not only gauge the temporary directional movement within a market but also have the power to preempt market movements. Whilst this may sound like the holy grail of trading, the major problem with trading signals generated by the overbought and oversold areas of oscillators is that they can often provide false readings if traded on their own. The decision, therefore for many traders has traditionally been to take the valuable information from each different type of indicator without simply relying completely on any single one.The TRIX indicator, however, attempts to solve the problems that each type of indicator has by combining their predictive and trend-following attributes into one indicator. Whilst predominantly a momentum indicator, the TRIX indicator was designed to filter out the smaller movements within the market and also to provide traders with signals based on a combination of trend, high/low levels and moving average crossovers. At first sight it looks very similar to the MACD, with two intercrossing lines providing the trend-following element and the highs and lows of the indicator providing the oversold and overbought levels. The TRIX indicator provides trading signals which are highly reliable and have become a standard feature of the most popular charting software packages. For binary options trading strategies it can be used effectively alongside other trading tools such as candlesticks, support and resistance and Fibonacci analysis. The combined power of the two popular types of indicator makes the TRIX indicator an important tool for beginners and experienced traders alike.

The importance of convergence for binary trading strategies using indicators

Convergence in indicators refers to the way in which they come together to agree or disagree with each other in reinforcing a trading signal. Most traders will agree that using too many indicators on any one chart can be highly detrimental because it has a tendency to result in ‘analysis paralyses’ or the inability to make a decision. Waiting for all of the stars to line up to give the green light for a trade is therefore not always the best way to trade as it rarely occurs. However, there are several ways in which traders can use the convergence of indicators and trading tools to positively guide trading and to ensure the highest probability that the majority of decisions are profitable.Using the fact that technical analysis allows for charts to be viewed in different timeframes is one of the most effective ways to positively utilise convergence. This involves moving from the higher timeframes, such as the daily or even weekly charts, to establish the trend as well as the key areas of support and resistance. By subsequently moving to lower timeframes to establish if there is a general convergence between the different charts, traders can prepare to look for a detailed trading entry on their preferred timeframe. Many traders use this method to establish where these influential areas of support and resistance may interact with the current price on their preferred trading timeframe; thus maintaining that the trend remains their friend.Convergence between indicators and additional trading tools can also be a highly profitable trading scenario. A good example of both indicators and tools converging to reinforce a trading decision is the combination of a technical indicator, such as RSI or MACD, and Japanese candlestick analysis. Whilst using the indicator alone to signal potential trading opportunities is not advisable due to the lack of precise entry signals that it provides, adding a method of pinpointing these entries will increase the probability of success. An indicator such as the RSI can be used to determine when an asset is overbought orversold and the recognition of certain candlestick patterns such as a shooting star or engulfing candle will reinforce the reversal. This convergence is particularly useful for binary options traders to ensure that the entry is made as close to the reversal as possible.

Summary

There are literally hundreds of custom binary options indicators to use alongside thousands of binary trading strategies and several of these stand out as particularly useful. The emergence of charting programmes such as MT4, and the increased willingness of brokers to provide a whole range of underlying assets on these, is particularly good news for binary options traders. The constant demand for the development of new, exciting indicators allows both novice and experienced traders to develop fresh methods and tools to look for potentially profitable setups.Whilst there has been a large movement towards designing new indicators, it is true to say that some of the oldest provide the most reliable trading signals. Classic indicators such as the MACD, RSI and Moving Averages still play a very important role in many technical trading decisions. These time-tested indicators also provide excellent examples where convergence with other analytical tools can provide excellent trading signals and high probability binary options trading setups. This convergence is further enhanced when traders look beyond their favourite timeframe in order to determine important areas of support and resistance as well as the general trend on higher timeframes. Whilst binary options are often purchased based on intra-day timeframes, having a broader overview of the bigger trading picture is incredibly useful to reinforce indicator-based trading signals.

Fundamental Analysis for Beginners

Although binary options trading differs from traditional trading in that you are trading against the price of an asset, rather than buying or selling to make the best profit from the price itself, understanding how to carry out analysis of financial markets remains a crucial part of being a successful trader.Traders who do not learn about understanding the financial markets or how to carry out analysis reduce binary trading to little more than a gamble. We must be clear that binary option trading in and of itself is not a form of gambling, but as with any investment, if you haven’t dedicated the time and effort to understanding how best to trade it and analysing your chances of success, then you are simply blindly placing your money wherever you deem most attractive.One of the most confusing aspects of getting started with binary trading or indeed with any type of finance-based trades is that there are so many ways to analyse things. Conducting a search on Google of financial analysis methods will lead you to some useful tools as well as a number of blogs that contradict each other. Although this can be difficult for new traders to understand, it communicates an important message: the way you conduct analysis is down to you, there is no truly defined right or wrong way to analyse a financial market. Yes, there are ways to misinterpret the data, but if you are carrying out thorough analysis it comes down to whatever method you find is easiest for you to understand, and whichever one, over time, leads to you making the highest profits.Elsewhere on Bank of Trade, we cover how beginners can gain a basic understanding of finance markets and technical analysis of trading charts, and how you can build these into your binary option trading strategy. Here, we cover fundamental analysis, what it is, types of fundamental analysis, and ways in which you can build it into your overall strategy plan.

What is Fundamental Analysis?

Whereas technical analysis involves spending time looking at the hard data presented in front of you in financial charts and using a number of techniques for spotting trends and binary trading opportunities, fundamental analysis looks at the “bigger picture” for factors than can influence trading conditions. Intangible factors, such as what you feel to be the true value of something, or predictive analysis and news reports that you have read, could also be considered fundamental analysis.If you wanted to sum up fundamental analysis in one sentence, you would say it is a means of considering every factor, both directly and indirectly related to the financial markets that can influence them.At this point, you are probably thinking carrying out such a level of analysis is impossible. When will you have time to trade if you are looking at so much depth and detail? Your concerns are understandable, and many traders have battled with this conundrum themselves. The answer for many of them is to use an economic calendar, which highlights when big announcements are going to be made, whether this be company results or government economic policy updates. Even those with a very basic knowledge of financial markets know that they will shift both in the build up to and in the aftermath of such announcements. All that is then needed is to couple what we know with some technical analysis of previous times, to see what happened and to what extent we can perform binary trades and make a healthy profit.Fundamental analysis can be broken down into two main sub-categories that, when put together with what you have learned already, give you a clear picture of what, where, and how to trade: quantitative analysis and qualitative analysis.

Quantitative Analysis

Quantitative analysis uses mathematical and statistical modelling techniques to create a prediction of how the price of an asset will differ from a certain point. Although with binary trading you do not need to work out the high or low price in terms of profitability, it is worth knowing so you can continue to place call or put trades – forecasting a price is going to increase or decrease – with a high level of confidence.Individuals who prefer making statistic-based decisions will often employ quantitative analysis, although it is mainly a technique used by experienced brokers and traders in high-value trades and transactions. While as a beginner with binary trading you need to know what quantitative analysis is, you should ideally stay away from doing calculations yourself until you have become experienced. Working with a binary options broker and getting expert advice from Bank of Trade will enable you to learn about quantitative analysis and become competent at carrying it out.The easiest way to look at quantitative analysis is as a measurement of the price. Traders of foreign currency and stocks and shares would often use quantitative analysis to decide whether an asset was worth buying. As a binary trader, you only need to use it to work out at what point you should stop trading against a particular assets’ performance. From this perspective, quantitative analysis can be an excellent risk management method for binary traders.

Qualitative Analysis

Qualitative analysis can often be controversial, as unlike quantitative analysis there are no statistics to back up what you believe you see. This type of analysis is what you do when you carry out fundamental analysis based around external events. It is important to note that qualitative analysis is subjective. This means you probably won’t do a lot of it at the start of your binary trading career, but as you get to know binary options, understand the financial markets better, and build up a pattern of trading that leads to profits, you will start to do your own analysis without even thinking about it.The easiest way to define qualitative analysis is as anything that is related to a financial market that cannot be seen in the numbers. We separate this from bona-fide fundamental analysis by only looking at things directly involved with a specific market. For example, say you were looking at a business called “My Example Company.” Your quantitative analysis of My Example Company tells you that the price of something is likely to rise, therefore meaning you should be able to confidently place call binary trades on the share price of this company. However, your qualitative analysis might tell you that the CEO or a key stakeholder of My Example Company has a history of growing companies’ share price before presiding over a crash. You wouldn’t know this from just looking at the raw data related to a particular market, but it would be something valuable to factor into your decision making.Another form of qualitative analysis is to use what you believe the price of something to be as a guide. For example, if you think a company’s share price should be $20, but it is currently $10 following a period of sluggish trading, you might take out a longer-term binary option where you forecast the price will rise back to the level it should be at. You can blur the lines of qualitative analysis with such examples, by looking at previous history using financial charts.

Which Analysis Works Best?

As already alluded to, no type of analysis works spectacularly better or worse than another. All you need to understand is that carrying out analysis is better than not carrying out analysis, as this reduces binary options trading to little more than a careless gamble. Speak to binary traders from around the world and they will all have a different take on options trading strategies that work. Most of the time they will be talking directly about what has worked for them, which is why you will encounter a lot of conflicting information and contradictions.Over time, you will discover which forms of fundamental analysis, coupled with technical analysis and knowledge of the general financial landscape shapes market performance and works best for you. At Bank of Trade, you can use our tools to carry out all of this analysis and discover the best binary option trading strategy for you.

What are the Different Types of Binary Option Trades?

While the simplistic “up or down” and “all or nothing” nature of binary options trading makes it attractive to traders, especially those who are getting started with trading for the first time and haven’t yet explored spread betting, foreign exchange, or anything similar, the reality of binary trading is that it is not as simple as it might seem.This is not because there are any hidden tricks or secrets when it comes to binary trading, but because binary trading is actually a very general term. There are various different types of binary trading for you to explore, it is not as simple as just saying, “I’m going to be a binary options trader,” and then getting on with it.Before you start binary trading with Bank of Trade and are confronted with a number of different types of trade, take the time to understand what each one entails and how they work. You can then make a decision around which trades to take part in depending on how the risk and potential rewards balance out and inform your binary option strategy.

Up/Down Option Trades

This is the simplest type of trade, and the most common used by beginner binary option traders. All you need to do is decide whether a price will go up or down, and the timeframe in which this will happen – placing a call trade for increases and a put trade for decreases – and then go from there. If your trade finishes in the money – meaning the price went up or down as per your forecast – then you receive a percentage return, which will be detailed before you buy the binary option, on top of your initial investment. If your trade finishes out of the money, then you lose your investment, unless you are with a binary options broker that offers an out of the money refund, which could see you get between 10 – 20% returned, depending on the rate offered.This type of binary option trade is best to use when a market is clearly trending in a particular direction, as choosing whether to place a call or put trade is easy to do against such conditions. Avoid up/down option trades if the market is volatile, particularly over longer periods, when you are a beginner and are new to binary trading.

One Touch & No Touch Trades

One-touch trades are often bought with an expiry date of a week or longer, although you will be able to take part in one touch trading over shorter times should you wish to trade in this way.The difference with a one-touch option against a general up/down trade is that you only require the price of the asset you are trading against to touch a particular target price, hence the name, “one touch option.” For example, if you take out a one-touch option over the space of a week, if the price hits the pre-determined target when you bought the option, you are guaranteed the option will expire in the money irrespective of what happens afterwards. For you, the trade is over at that point, although you usually still need to wait until the overall expiry time before your return is paid out. Even if the price plummets after touching the target, you can still profit.A no touch option works in the opposite direction; if you trade against the price of an asset not hitting a pre-determined level, you are in the money if this price is not hit, in a similar way you would “lay” a bet.One touch and no touch trades are worth having in your binary option strategy if you are unsure about the sustainability of a certain price, or you find an option that you feel offers great reward when balanced against the risk involved. One-touch options are excellent if you believe a particular asset might break out or drop dramatically but not remain at a certain level; no touch is better if an asset has been historically stagnant and there is little to indicate anything will change. The obvious downside of a no touch option is that you will be waiting right until the end of the trade period to see whether you are in the money.

Boundary Trading

Boundary trades are also called range trades. When you are reading binary trading resources, be aware that they are the same thing. Different sites will use one or the other, although sometimes they will use both, even interchangeably. We will call them boundary trades for the sake of this explanation. In boundary trading, you are buying an option for an asset to expire within a particular boundary (or range) hence the name given to them. Instead of buying a call or put option, you buy a boundary trade based on a simple yes or no. Will the asset expire in the boundary at the determined time?Boundary trades are something that you can undertake with potential for success whether you have quiet or more volatile market conditions. While returns can be relatively low from boundary trades, the represent a good investment in a volatile market, as you can trade against the price within the range boundary but also place call or put options on the various levels within each range. For beginners, it is often best to start boundary trading when markets are quiet, but there is a definite opportunity at busier times, too.

60-Second Trading

60-second trading has emerged in 2013 as a popular type of binary option trade, and is favoured by many who are new to the market. 60-second trading is popular because it involves analysis of trends over a shorter time – you only need to know what is likely to happen from one minute to the next rather than over hours, days, and weeks – and it allows traders to make profit quickly and take part in many trades in a short space of time.A 60-second trade is an up/down trade that expires in 60 seconds. It is as simple as that, although there are some extra considerations you need to make before starting 60-second binary trading.The first thing to think about is how often you want to trade. If you want your trades to be fast and exciting, then 60-second trades are excellent, but at the same time you need to have the experience and knowledge of binary trading to identify when a 60-second trade is likely to be profitable.You also need to consider how confident you are trading in such a small window. You might be attracted to 60-second trading because of the potential for higher returns, but you also need to ask yourself whether charts and other things you would ordinarily use add any value. The prices of assets and markets change thousands of times during the trading day; how can you analyse the data at the one-minute level and spot trends?Whether you undertake 60-second trading is obviously a personal choice, but it is recommended for experienced traders. That said, if as a beginner you can spot particular trends, such as sharp increases at the start of day or at particular times, there could be an opportunity to make lucrative returns.The best time to follow a 60-second trading option is definitely when strong trends are seen in the market. If a strong trend inspires an up/down trade, explore the 60-second option for potentially higher returns.

Getting Started

Think about your binary trading strategy and keep these binary options tips in mind when getting started with your Bank of Trade account. Choose the binary options that are best suited to what you want to achieve from trading and that satisfy the level of risk you are willing to take on against your financial situation and the rewards from each trade.

Binary Option Technical Analysis for Beginners

Getting started with any type of financial trading can be daunting, although given it will have been your choice, you will also have a positive approach to finding out everything you need to know in order to enjoy success and be as profitable as possible.While most people find it easy to pick up the use of a trading platform, the analysis, always crucial for making confident and sensible trades, tends to be the thing that people struggle with. This can often lead to people beginning to trade without having the knowledge they ideally should have. New traders can often get away with this when trading on other platforms, such as foreign currency, stocks and shares, and commodities. This is because it is often easy to manage losses through selling before a price drops too low, while there is also widespread media attention given to these markets, especially by regularly used resources such as newspapers, who will often have large sections dedicated to financial news and various markets both online and in print.Binary option trading does not get the press attention of other markets, generally because of the major differences between binary trading and other types of financial trade. An effective daily news summary of binary options would be impossible to create, because you could be trading any market. Instead, binary traders can instead read the regular finance pages and look for trend analysis in order to target specific trades.There is no question being able to analyse trends within binary trading is more critical to success here than it is when trading commodities or foreign exchange, for example. As previously alluded to, with the other markets you can often take a punt and then reactively manage a loss. In binary trading, an option will finish either in or out of the money, meaning taking a punt is an extremely foolish thing to do. Do not mistake binary options trading for gambling; it only becomes a gamble if you do not carry out the analysis you should do and start trading blind.

What is Technical Analysis?

Technical analysis refers to the study of price charts, trends, and market movement so that a trader can forecast with a degree of confidence whether a market will move up or down, and therefore make the call or put trade that is going to see their binary option end in the money.Beginners can get confused with binary option technical analysis, ironically because it is as simple as identifying whether you think something will go up or down. It is not like viewing charts for a particular commodity where a trader or an investor might look at calculating the best price to buy at, when they want to sell, and how much of a particular asset they need to buy to achieve a particular level of profit.When talking about technical analysis, it is important to recognise that many different things fall under this umbrella. Rather than talking about how you carry out your technical analysis, we need to talk about the different types of technical analysis that will serve you well as a beginner, help you to use them so they become useful when you become more experienced, and look at how they can fit into your overall binary options strategies.There are four types of technical analysis that are generally used by binary traders; the first three we look at below are the ones that should provide the most help for beginners and enable you to get started with trading at Bank of Trade.

Trend Following

This is perhaps the easiest type of technical analysis to carry out, as it involves looking at the historical data available to you as well as the “real time” movement of markets and determining when a price is likely to increase or decrease. Because you can trade binary options over minutes as well as longer periods, it is also important to look closely at how markets behave at certain times of the day.For example, you might look at a market and see that it is generally steady with a consistent price, and not much movement over the long-term. Let’s say that the last month has been virtually flat, with only a handful of points between the top and bottom prices. However, looking closer might show you that a particular market always sharply grows at the start of trading, or on a specific time on a specific day of the week, for example.You should also make this analysis of the “bigger picture.” So, if the price of a particular asset has been steady for six months, upwards movement does not always mean there is a trend happening (see mean reversion in the next section). However, if a look at yearly charts shows you that the asset has steadily grown, you can ascertain that this new movement is in fact following the longer-term trend.The biggest lesson you can learn with trend following is to look at the data most relevant to your trade. If you are buying 60-second options, then look at minute-by-minute breakdowns, likewise whether you are trading in hourly trades, daily, weekly, or longer-term binary options. The longer-term the binary option, the more idea you’ll have of how to trade based on historical trend following, but you have to balance this against not knowing what might happen in the next few weeks or months, particularly owing to external factors.

Mean Reversion

If you become adept at mean reversion analysis, you will be able not only to take advantage of breakouts but also to profit from a put trade as the price comes back down. There is nothing complicated about mean reversion, it is exactly what it says. You are looking for markets where prices might periodically fluctuate but where they ultimately return to a specific average price or range.For example, in the example we gave related to trend following above, we spoke of a price that had remained steady for six months. Let’s say that the price at the start and end of this period was similar, but there had been many peaks and troughs, some large, indicating potential breakouts, and others small. If throughout the six month period these had all return to a point at or around the original price before stabilising again, you can see that mean reversion is happening.As well as using this analysis to profit from short-term trades and to trade successfully when traders who buy and sell the actual assets will be staying away, it can prevent you making losses by taking out ill-advised longer-term trades.

Momentum Study

Studying the momentum of a market can be useful both for short-term and long-term binary trades. This goes further than merely trend following, and involves the comparison of short-term trends against long-term ones. What you should do is calculate whether the short-term increase or decrease of the asset price outstrips that of the long-term equivalent. If it does, then the asset has momentum and you should be looking to place the relevant trade. You should combine momentum studies with mean reversion if you are looking at trades that are one hour or longer, and even remember what you have learned about trends. This is because price momentum can last a matter of minutes; if you haven’t looked at everything available you might place a trade assuming momentum when in fact means reversion is happening.Does an asset gain momentum in the morning, or at the start of the week or month, for example, before reverting to the average later in the day, week, or month? Try to find a binary options broker that offers momentum analysis, or find a software program that does it for you.

Pattern Return

This very technical type of analysis can lead to high profits for traders. Pattern return analysis is something you should keep in mind to study and use later when you have gained some experience with binary trading and are confident in formulating your own binary options strategies.You will need a specific tool to carry out pattern return analysis – known as a stochastic oscillator. This tool calculates and predicts closing prices based on previous trends, price patterns and momentum, and can help you act before trends have been established. However, you should understand this is not a failsafe to guarantee successful trades, but something that you can build into your analysis should you wish to do so.

Technical Analysis Tools

While you can take advantage of a number of technical analysis tools, you should also dedicate the time to ensuring you can understand everything related to these practices yourself. Your aim should be to become competent at carrying out your own analysis so you can act confidently without using tools. Use them when you are getting started with binary trading, and as you grow your own knowledge start to carry out your own technical analysis. When your manual analysis is starting to match that of your tools, you know you are ready to move on and confidently trade yourself.

Getting Started

By opening your binary options trading account with Bank of Trade, you can get started immediately on learning everything you need to know about technical analysis, and set yourself up to make healthy profits from whatever binary trades you get involved with.

Managing Risk, Losses, and Hedging Your Binary Trades

Whenever you deal with any type of financial trade, you need to understand not only how to make money – which is usually the purpose of getting involved with financial trading after all – but also learn about the best ways to manage losses. With binary trading, it is even more important to know about managing losses.This is because of the all or nothing nature of binary options. If you buy a binary option for $100 and it doesn’t expire in the money, then you have lost your $100 investment. In contrast, if you are investing in stocks and shares, and buy something at $100, even if the price drops you can still sell for $90 if you’re able to sell fairly early and do not want to hang onto something and wait for a potential recovery. Very rarely in other types of trading will you lose 100% of your investment if things go wrong. When you are binary option trading, however, it is a way of life. Managing risk successfully will put you in a position to make profits as often as possible, and means that you won’t regularly find yourself adopting your binary options strategy to account for losses and problems.The key phrase in all of this is “managing risk.” That is all you can do with it. There is no such thing as a risk free trading strategy that always guarantees a return. If there was, then everyone would be following it and everyone would be very well off!

Defining Risk

Before knowing your limits, you need to be clear on what the risk is; if you don’t know what you’re managing, how can you manage it? In terms of financial trading, we define risk as the probability of an unsuccessful result. Therefore, with binary trading, the risk is the likelihood that your option will expire out of the money, meaning you lose 100% of your investment. You are probably familiar with the term “riskeward.” This is a very important consideration to make when formulating a binary options strategy. Initially, a risk might appear to be one that is not worth taking. However, if the potential returns from a high-risk trade are better than they normally would be – some binary option trades can have returns of up to 500%, which would be a good example – then you might consider an increased level of risk to be acceptable. With most types of financial trading, the biggest returns from single trades usually come from those with the highest risk. Consider this when formulating binary options trading strategies. The most sensible approach is normally to take on lower risk for lower yet more assured rewards (remember, there are no guarantees), but you could always place a speculative trade from the profits you made from your regular strategy. Your approach to binary options trading will depend on your financial situation. Be prepared to adapt and evolve this should your finances change.

Determining Your Personal Strategy

The difference between binary option trading and other types of trade should also be considered. The biggest thing to keep in mind at all times is that if your binary option expires out of the money, you lose your whole investment. If you take out a high-risk investment elsewhere, you may lose money but you could also simply receive your initial capital back. Binary trading offers no such variables; you get the money or you don’t.If you are new to binary trading, a good approach to take is to look at your trades as a percentage of what you have. For example, if you are starting with a bank of $10,000, you might decide that 1% is the maximum you will stake on each trade, meaning $100 is your standard trade investment, which is a common minimum for binary trading platforms anyway. It is generally considered that anything at 5% or above is high-risk. Experienced traders will usually invest at 1 – 3% of their bank. Trading such sums means that you are not putting large percentages of your bank at risk.Remember that this is only one part of your binary options trading strategy. Determining how much you invest per trade is one element of the risk; you then need to look at the charts and determine whether the risk is worth it considering the market you are taking out a binary option on.

Buy Low, Sell High

Anyone who has shown any interest in trading of any kind will be aware of this mantra. Because you buy a binary option as an all or nothing trade, however, you should allow for further movement in the market. For example, say you are trading a particular commodity when the price is high. If you bought low, and the price continues to increase after selling, you might be annoyed at yourself but at least you have made a profit, which was your aim starting out. Likewise, if you buy low and the price continues to drop, you can manage the loss by selling to someone else looking to buy low.When trading binary options, it is harder to take a black and white buy low and sell high approach. There is no room for manoeuvre and no profit if a price continues to rise or fall. It is best when binary trading to pull back from this and await the establishment of upward or downward trendlines before making a decision.It is also worth avoiding breakouts during your early trades; when the price is stagnant and then suddenly shoots up, as they can just as quickly fall back and leave you with a loss.

Flexible Options Brokers: Benefits

Another method for managing risk is to find a binary options broker that offers some flexibility with your trades, specifically in the form of early exits or rollovers.

  • Early exits can allow you to “cut your losses” if a trade appears to be expiring out of the money. This moves away from the all or nothing nature of binary trades as you can still receive something back rather than lose 100% of your investment.
  • Rollovers allow you to lengthen the expiry time of your binary option. Typically given when options are expiring out of the money, some brokers will also offer higher returns should you extend when an option is in the money.

Early exits, in particular, should be considered by new binary traders, as they can be effective in managing losses if you are not yet totally comfortable with reading charts or spotting trends and patterns.Some brokers will also offer “out of the money refunds,” which are typically around 15%. Although not a huge sum, it is better than losing everything, and is definitely something worth looking out for.Another strategy for managing risk yourself is to consider hedging your binary trades.

What is Hedging?

You have probably heard the phrase “hedging your bets” used in some context or other during your lifetime. Although binary trading isn’t gambling, you can benefit from hedging, only in this context you are hedging your trades.To hedge a binary option, you need to buy a call or a put option before the end of an existing trade. For example, if you buy a call option, which is currently in the money, you can then buy a put option to expire at the same time, which will lock in at least part of the profit. Remember that you can’t hedge an option that is already out of the money, as you’ll just be increasing your losses.The biggest thing to understand with hedging is that you need to spend time working out how much you need to place on each trade in order to be profitable.Here’s an example of how you might hedge a trade:Asset: GooglePUT criteria: Below $150CALL criteria: Above $160Expiry: One hourThe above is an alert that you might receive through your binary trading platform. Say you’re trading at 1pm and after receiving the alert, you notice the price falls below $150, prompting you to buy the PUT option for $100 (or whatever sum your strategy dictates). Let’s say that this trade finishing in the money gives you an 80% return. At this point, you’re either going to make 80% profit or a total loss.Just before 2pm, your put option is in the money, but Google is showing as oversold and the price is starting to rise. You can then choose to hedge your trade by taking out a CALL option that finishes at the same time as your original PUT. If you buy the CALL option, which needs to be above a price lower than the original PUT criteria, you create a small opportunity to make a double return.For example, if the price is currently $145 and you buy a call option above $147, an expiry price of $147 – $150 will see you get the 80% return on both options, a total return of $360 ($160 profit).If this doesn’t happen, you will at least get a return of $180 (maybe more if your broker offers out of the money refunds), which reduces your overall loss to $20 instead of $100, which it would have been had Google continued to rise and expired out of the money without you buying the second option.

Should You Hedge Binary Options?

Although it is difficult to be profitable with binary hedging, it can be a useful way to increase returns and importantly, to limit losses. To be consistently profitable with hedging, you need to be an experienced trader who can recognize how the markets are moving. You need to be smart with binary hedging and recognize the opportunity to make extra money. Yes, it is a strategy you can use to limit losses, but you need to have the “double return” scenario in mind at all times, otherwise you’ll be losing up to $20, based on our example, every time you hedge.Hedging is not the simple binary options trading strategy many believe it to be – many use it but endure nothing but limited losses, yet somehow think they are being successful – and you will need to spend time building your knowledge of binary trading before following such a path.

Binary Trading for Beginners: Getting Started with Options Charts

Making any financial investment or commitment without first doing your homework is foolish at best, and downright negligent and careless in the extreme. However, many people do this habitually on a daily basis. Whether it is choosing the brand of canned food they are going to buy or the financial option they wish to trade, many reduce life to a series of gambles and punts.This is the last thing you want to do when dealing directly with financial affairs, and especially when dealing with binary options. Binary trading offers the potential for lucrative returns, so why wouldn’t you want to look at every binary chart and get all the information available before getting started?We understand that when you discover something as exciting and as potentially lucrative as binary options trading that haste can take over. Yet, it is surely best to learn about reading options charts and giving yourself the time to take in as much knowledge as possible. This way, you increase the likelihood of seeing returns from your trading activities at an earlier stage.

Getting Started with Binary Trading

The rise of online binary trading platforms and others like foreign exchange and commodities trading platforms have been fuelled by the fact they are so accessible. You cannot become an accountant or a leading stockbroker without having the necessary qualifications, but you can use online trading platforms. At the same time, there is no certificate that says you have become competent at reading option charts or can make sensible trading decisions.With this in mind, your approach to binary options needs to be realistic and honest. Ultimately, it is your own money you are putting at risk if you fail to ‘look before you leap,’ and it doesn’t take too much time to learn how to read an options chart anyway.Safe in the knowledge that anyone can get involved with binary trading, you should find a platform that provides an extensive range of options charts, like we do at Bank of Trade, although you can also download binary chart software if you would prefer to use something standalone. If you want to learn more before you get started, take the time to explore the wealth of knowledge and resources across Bank of Trade, including information about spotting trends and reading charts when you have mastered the basics.For those are 100% new to binary options trading, we have summarized what it is all about below.

How Does Binary Trading Work?

Binary options’ trading is unique among other types of online trading. The big difference is that, unlike with stocks, commodities, or foreign exchange, you are not actually buying an underlying asset. In these ‘traditional’ methods of trading, you buy the asset at a particular price, and the profit or loss you make from it depends solely on the price at which you sell, as well as how many units of each you own.When you trade binary options, all you are doing is forecasting whether you believe the price of these assets will go up or down. You are trading against the performance of them, not earning or losing based on the price itself.Another major difference is that binary options represent an “all or nothing” type of trade. Therefore, when you trade binary options, you simply say whether the price of something will increase – known as a ‘call’ trade – or decrease – known as a ‘put’ trade. If your trade ends “in the money” – the price increases or decreases as per your forecast, you receive a return normally ranging around 85%. If it doesn’t, you lose your initial investment.One of the main advantages of binary trading is that you know what the potential returns are before you make a trade, as your platform will tell you what you make if your option ends in the money. Contrast this with ‘traditional’ trading, where you simply buy and hope that the price goes up, and have no idea what your potential return is.Therefore, all you need to learn about reading a binary chart is how to tell whether something is trading upwards or downwards; you do not need to worry too much about to what extent the price will go up. One final advantage of binary trading is that it allows you to trade and make money even if markets are stagnant or generally falling in price. Again, this is made possible because you trade against the price and do not actually take ownership of an underlying asset.

Using an Option Chart to Pick Your Trades

You cannot hope to be successful with binary trading if you do not know how to read options trading charts. Yes, the returns from binary trading are potentially lucrative, but as with any type of financial trading, the losses can fast mount up if you do not know what you are looking for.

What is an Options Chart?

The easiest way to describe an options chart is as a visual demonstration of how a particular asset has performed through time. Using such a chart, you can look at whether an asset is currently trending upwards or downwards and the previous history of the price in both the short and the long term.This is essentially all an options chart is. While they might look simple and show you a pattern and trends, how you use them is all-important. For example, looking at a single binary chart on its own is worth doing, but it is even better to look at a number of them in conjunction with one another. This is because you can then identify which assets are ‘safer’ trades; some will consistently trend upward before trending downwards and following a set pattern, while others might look like a useful trading opportunity but actually not be as stable as others are.

Binary Chart Analysis

Having access to option charts is one thing; being able to interpret what they are saying is quite another. The problem many beginner traders face is that it all sounds simple when reading about it, but when confronted with your account and a selection of binary options trading charts on Bank of Trade they can be very intimidating, and give you a headache within seconds of you analysing them.What you need to do is forget about this. While ‘experienced traders’ might try and sell you a PDF that promises to share the secrets of how they read charts, the majority of these offers achieve nothing but to confuse the issue. You need to keep it simple; do not spend your time over-analysing option charts for any hidden trends, because they are not there. Remember, binary trading is “all or nothing,” and you are trading based on whether a price will increase or decrease, so you do not need to look too deeply at charts to try and spot the best “buy point” or “sell point.”

Spotting Trends with Trendlines

Using trendlines is the best way to spot trends on options charts. If your trading platform doesn’t put these onto charts for you, they are easy to spot and use yourself. All you are looking for is tops and bottoms – movement of a price upwards or downwards – to determine whether there is a trend or not. Three consecutive movements in either direction is indicative of a trend.Trendlines are excellent for short term binary options, because if you spot a trend just as it is starting you reduce the risk you take when placing a call or put trade.

Spotting Patterns

We can think of trends as a short-term, what is happening now type of thing. Looking at the bigger picture of option charts, you can then start to spot patterns. These might be related to the price range of a particular asset, so you can place trades with confidence as you grow your own knowledge, or how certain assets behave at certain times. For example, a keen trader might spot that a certain currency or commodity always seems to jump as soon as the markets open, meaning a 60-second call trade could deliver a high probability of returns from this one asset on a daily basis.Get used to spotting trends and creating trendlines first, and then move onto observing patterns and looking at the bigger picture when you gain knowledge and confidence. Remember always to look at the right option chart relative to what you are doing; if you are trading day options, a minute-by-minute breakdown will not tell you much, while the opposite is true if you are trading 60-second binary options.

Beginner Trading with Bank of Trade

Opening your binary trading account with Bank of Trade means you can instantly access free option charts and start learning everything you need to know about reading options charts as well as about binary option trading in general.Leave nothing to chance and learn as much as you can, and you will be in a great position to profit as much as possible from your binary trades. Remember to take your time when learning and do not jump straight into trading, but grow your confidence so you can start making sensible, evidence based decisions based on option charts and, in time, your own experience.

Binary Options Risk Management

Risk management and the 5% club

For all new traders, the choice of what, where and how to trade is absolutely outstanding. The internet has not only broken down the mythical image of trading as an exclusive activity, but it has also changed the way that individual traders can interact with endless markets on a 24 hour basis. Over the past ten years trading stocks, forex, spread betting and binary options have become available to everyone with an internet connection and a computer. With this explosion in popularity, a whole host of brokers and platforms have arrived along with websites dedicated to traders’ needs, forums, software and a wealth of literature for novices to learn how to make money from the comfort of their own home.Trading binary options, for example, no longer requires a big bank account and a Wall Street office. Within two minutes an account can be opened by anyone residing in a jurisdiction which allows online speculation and options can be purchased with the click of a mouse. Alongside the sheer simplicity of placing a trade, the brokers, software developers, support websites, strategists and analysts all thrive of the growing popularity of online trading. Popular advertising tells new traders that they can make hundreds or even thousands of US Dollars per month and hundreds of thousands of new traders join the market with this in mind.The thing that most of those with an interest in selling their products to new traders fail to explain is that approximately 95% of new traders will fail to make any money trading.The underlying reason why such a small percentage of new traders are able to be successful trading anything is because they have a thorough understanding of the risks of trading before throwing their money at the market. Whilst it is easy for any new trader to understand that all speculation is littered with the risk of losses, it is the 95% of new traders who consistently fail to act on this information. Risk management is therefore not just a theory or something to only implement occasionally, it is a membership card to a small club of successful binary options traders who use this to stay ahead of the other 95% who are consistently unprofitable.

What does risk management involve?

Risk management varies from trader to trader, depending on the individual circumstances and type of trading being undertaken. However, it also has several features which are central to all binary options traders. The first thing to acknowledge is the obvious fact that all financial speculation carries the risk of losses. If everyone made substantial amounts of risk-free money, the markets would not only cease to exist, but nobody would bother going to work. Risk is therefore essential to the markets and the management of this is central to the success of any trader.

Why it is so difficult for new traders to be profitable

One of the key difficulties for all new traders, and one of the principal reasons why many only ever flirt with the 5% club occasionally is that most unsuccessful traders will tend to focus only on profits. This is clearly not difficult when brokers, platforms, books and tipsters are throwing arbitrary profit figures in order to encourage new traders to sign-up or purchase their trading guides. Profits are attractive and losses are not, which is precisely why many brokers will not provide the extensive risk management education necessary to support new traders to become successful and profitable over time. New traders therefore begin full of confidence and enthusiasm which soon begins to fade once their capital reduces rather than steadily increasing. Instead of focusing on profits, if risk management is the starting point for all new traders, then many more will be successful in the long term.

Start with risk and watch the profits develop

Starting with risk management may sound like the boring option for everyone eager to begin to make money trading but it is the only way to ensure long-term trading success. The reason why so many traders fail is because they fail to address their risk, trade impulsively and without a plan and eventually deplete their account. Before looking a how to practically apply successful risk management it is important to look at the ways in which risk management can be applied to improve the potential for profitable returns.Regardless of the strategy or method of investing that a trader chooses; by protecting the capital that they already have will substantially improve their chances of success. Failure to incorporate the basics of risk management will turn a trading account in to a gaming account within no time at all. Below are several basic tenets to trading and then we can see how these can apply specifically to trading binary options:

  • Limit the first depositMany platforms require new traders to make a deposit in order to begin trading and often these are small relative to the amount of capital that a trader has put aside to trade. The temptation for many is to fill up their account with all their funds and begin trading immediately. However, as with all new ventures, proper risk management would encourage a trader to only part with a small portion of their funds within one account initially and in order not to risk any problems with the platform or broker. It makes a lot of sense to test the services that you will be provided with a minimum deposit before transferring larger amounts in order to both avoid becoming stuck with a poor broker and to avoid any potential of a being scammed out of having your deposit returned.
  • Trade in proportion to your account regardless of the potentialRisk management is centered on preserving capital and the only way that this can be done is to limit the exposure of a trading account to losses. This is known as trading in proportion and it is an essential discipline which all successful traders have mastered. It involves deciding on a safe percentage of the account that a trader is willing to risk on any single trading position. Typically, professional traders risk no more than 2% on each position which allows them to endure multiple losses without depleting their account. For many new traders, this seems like a tiny and pointless amount but there are ways in which small trades of 2% can be very effective of a short amount of time. The temptation for traders to increase their exposure on trades that seem like a ‘no-brainer’, or dead certainty, is one of the mistakes made by all traders at some point. Since there is no such thing as certainty in trading it is essential for all new traders to manage their risk equally through all trades in any trading strategy. Not only does allowing the discretion to apply rules subjectively reduce the essential discipline of traders, but it also disturbs the monitoring of steady account growth. Many successful traders point out that removing emotion and trading mechanically is the secret to success. Risk management of stake size should not be an exception and proportionally small trades should be placed robotically and equally regardless of the potential success of the setup.
  • Using stop losses and leaving them aloneStop losses can be used by forex, spread betting and stock traders to limit the risk to a trading account. Placing a stop loss order in the market will close the trade when losses hit a certain threshold. This will signal that the trade has either failed or the financial risk is becoming too great for the account. Due to the fact that markets can reduce to zero and fly higher without limit means that without stop losses an entire trading account, and more, is potentially at risk. Stop losses are an excellent way to manage risk but they also need to be used properly. Many traders will place their stops at technical or ‘fail points’ where they are triggered if the trading decision is proven to be wrong. It is essential for successful risk management, however, that these levels are not altered during the course of the trade. The temptation to increase stop losses, and thus to increase financial losses, in the hope that the trade will eventually turn good is one of the easiest ways to deplete a trading account. Stop losses can also be used to ‘trail’ profits in order to prevent a positive trade suddenly turning negative and to help manage the success of a trade.
  • Resisting the desire to over tradeStarting to trade is exciting and all traders are at risk of trading, or wanting to trade, too much. This happens to everyone and both patience and discipline are required so that only those setups or strategies with the highest probability of success are traded. Continuously wanting to be involved in any market has its pitfalls including the potential for multiple losses. Many trading gurus point out that new trader’s should start by trading larger timeframes, such as the hourly or daily, to help limit trading before taking these acquired skills to the shorter intra-day timeframes including 5 minute charts and below. Opportunities occur on all timeframes and waiting for the optimum trade will both increase success and reduce the risks involved.
  • Holding positions overnightModern internet trading allows traders to make money 24 hours per day on a huge range of markets. However, this can be both potentially rewarding and equally damaging as these are difficult to monitor around the clock. Holding short-term positions during regular sleeping hours can expose new traders to unforeseen risk and shocks which may occur on the other side of the world. Particularly sensitive to this are commodities and currencies which operate on a 24 hour basis and which are highly sensitive to global news and data. Stocks are equally vulnerable to volatility for traders who hold positions overnight in anticipation of a continuation of a profitable session the following day. Being aware that holding short-term positions can be exposed to these risks and using stop losses to prevent over-exposure are important risk management strategies for these trades.
  • Find a broker and platform that suits your tradingWhilst many trading platforms offer similar products, they can and do vary in their suitability to the risk exposure of individual traders. From the markets available to trade to spreads, bonus conditions, contract expiry times, charting software, support and trade limits, platforms differ in what they offer their clients. It is important to begin small with any platform in order to mitigate the risk that it may not be entirely suitable for an individual trader. Thorough research prior to parting with any real money, and ideally the use of a demo account, will help to reduce the risk of any problems. Similarly, talking to other traders who use a platform can be particularly helpful in getting feedback on the experiences of others.

Binary options risk management

Risk management of all financial investments has a similar basis as has been outlined in the basic tenets above. However, binary options risk management is distinct in several ways which can benefit new or inexperienced traders looking to speculate on financial markets. We will look at these below in order to show how risk management can be practically applied to all binary options traders:

  • Limiting the first deposit in binary optionsAlmost all platforms will allow traders to limit their exposure by allowing a relatively low first deposit to be applied to new accounts. However, it is worth noting that some platforms offering bonuses with new deposits will require the trader to deposit larger subsequent amounts in order to be able to withdraw account funds. This has been seen as a problem with some platforms such as BancDeBinary and new traders are advised to make sure that they read the terms and conditions carefully before accepting such an offer. bot.192.168.1.143.xip.io, however, maintains both a low initial deposit and allows withdrawals to all traders without such complications and which makes it an excellent broker for those wanting to start trading binary options with lower risk.
  • Trading binary options in proportion to your account regardless of the potentialBinary options have the unique benefit of providing the trader with precisely how much he or she is set to gain or lose before the options are purchased. One the transaction is executed these levels cannot be altered and therefore the trader knows exactly the level of exposure that an account will be exposed to in cases where options close out-of-the-money. By taking on board the basic risk management strategy of limiting an account to just 2% of the value of that account, binary options traders can benefit from strict control over their trades and develop in to profitable traders. Furthermore, for those who think that 2% is too little, it is worth remembering that using this strategy will compound an account as it grows. An example of this is an account growing at, say, 1.5% for each successful trade then the subsequent risk of the next trade will also grow in financial terms whilst maintaining a 2% risk threshold. This can be explained with the example of a $1000 account with a $20 risk threshold which, over time, will grow in to a $2000 account with a risk threshold of $40 and an increasing profit value relative to this.
  • Using stop losses and leaving them aloneAnother great attribute that binary options have over other forms of financial speculation is that a stop loss is not necessary. This is particularly helpful for new traders who are already aware of the maximum risk that they can expose their accounts before purchasing any options. There is also no possibility to extend the stop loss and therefore the position cannot close out early for this reason. One of the distinct advantages of this is that a binary option can potentially close profitably and stress on traders is greatly reduced without market volatility increasing losses. SOM platforms also allow positions to be ‘rolled over’ or alternatively ‘closed early’ for a lower profit which can increase the chances of being consistently profitable.
  • Resisting the desire to overtrade and holding positions overnightUnfortunately, the same risk management is required for binary options traders in terms of limiting the temptation to overtrade. Binary options can be purchased with expiries of just sixty seconds so there are literally 86,400 opportunities to trade each day. Learning to be selective is the most effective way to limit risk and sticking to a tested strategy is also key to continued trading success. One benefit, however, of binary options in terms of holding positions overnight is that this is not a temptation if the expiry does not allow this. Although the same risks would apply to positions held overnight for any investment, binary options expiries can be set to close within just a matter of hours of minutes or hours to limit the temptation to hold these overnight. Additionally, because they do not rely on the degree of the price movements (only if it is higher or lower than the strike price), a sudden overnight rise or fall would not extend the losses already predetermined before the options were purchased.
  • Find a broker and platform that suits your tradingA suitable platform and broker are essential to binary options risk management. As already noted, some of these may not necessarily be operating in trader’s best interests and it is important to choose the one which will best suit individual styles of trading. Whether it is sixty second trading, range, touch or longer term options that are most appealing, finding a platform which can offer these is a good start to a long-term relationship. Furthermore, those platforms which offer little in the way of educational support and information will be those least suitable for any new trader. Binary options risk management will be hugely improved if the platform provides warnings and advice in regards to limiting financial exposure, especially to new traders.

Summary

Risk management is absolutely ssential for the success of all traders, regardless of the form of speculation being undertaken. All professionals, with track-records of success, will have risk management strategies in place (however basic) to prevent losses which may threaten their ability to trade. There are several basic risk management tenets which all new traders should focus on before jumping in to the markets expecting to be profitable. If these are observed the probability of becoming a successful and profitable trader increases exponentially. Among all forms of speculation and investment, binary options offers some distinct advantages to new and inexperienced traders in regards to risk management. The transparency and foresight of potential losses which binary options provide to all traders allow binary options risk to be managed highly effectively relative to other forms of trading.

What is a One Touch Option, and How Can You Make Money from Them?

In the world of binary option trading, there are many different ways to get involved to try to make money, whether you are a serious investor or someone dealing in small figures looking to make a small incremental income on the side. One-touch options are one such way of binary trading, and are popular as they give the trader or investor a new level of control that is different from their usual method of dealing with binary options.

What is a One Touch Option?

One touch options can be exercised before the end of a specific trading period if they reach their target. One touch binary option trading works in a similar way to sports betting websites that allow you to ‘cash out’ if an income looks favourable, although the trader still has to wait for the binary option to expire as they normally would.These are often referred to as an exotic type of trade. The added level of flexibility and allure with this type of binary options trading comes because the trader or investor can set their own limits and timescales. They are available to buy at weekends when the markets are closed, offering an excellent opportunity to enjoy high returns outside of traditional business and trading hours.For example, if you were using Bank of Trade for one touch binary option trading, you could choose a particular stock or commodity, perform a call or put trade, and set your own target price. This type of trading differs from other types of binary option trading in terms of the payouts. A one-touch trade pays out as soon as a particular barrier has been exceeded. If you place a call trade on a commodity moving from 20000 points to 20010 points, the one touch option pays out as soon as it hits 20010.01. This is where this type of trading gets its name. After ‘one touch’ on the target price, your trade pays out.Much like regular binary option trading, there are only two outcomes available once you place your call or put trade. The barrier or benchmark you have set is exceeded, and you get paid, or it is not, and you do not get a return from your initial outlay. This type of trading is attractive because it allows traders and investors to make money on markets that are unsteady or volatile. A particular market might be trending upwards, for example, but the trader or investor might know that a higher price is unlikely to be sustained based on his or her own knowledge and previous history. Smart individuals can therefore make a lot of money by repeatedly dealing in this type of trade, and it is an area increasingly exploited by those with knowledge and expertise of binary options trading.

One Touch Binary Options: The Big Opportunity

There are several reasons why one touch binary options are seen as a huge opportunity, and why experienced traders love them and why beginner binary option traders are increasingly using them as their introduction point to these markets. Above all else, one touch trades can significantly enrich your binary option trading experience. Here are the main reasons why.

One Touch Returns

The potential for large returns is incredible; one-touch trades will commonly have a return between 150% – 500%. Contrast this to other binary trades, such as 60-second options, which typically return 70% – 85%, and it is easy to see why they are favoured so much. The level of risk a trader or investor takes on to see these returns, in terms of the capital they stake on a call or put, is within their control, too. Aiming for the bigger returns does not mean loading yourself with a higher risk. Clearly, there is a greater risk the more you expect the price to move, but in terms of financial outlay what you stake is the same. Contrast this with traditional trading and investing where the correlation between increased risk and reward is generally consistent, and you can see why people love one touch option trading. The higher returns are available because you are trading on the price increasing or falling to the level you predict. It is like choosing a sports team to win by a particular score rather than merely saying they will win.

One Expiry Point

One touch binary options with Bank of Trade expire once a week. For example, if a commodity closes at 20000 points at 1730 on Friday, you can place your put or call based on performance over the next seven days. Therefore, if you place a call and predict this particular commodity will exceed 200010, you only need it to reach that price once in the next week for you to see a return.

Fixed Price

At Bank of Trade, our one touch binary options are sold at a fixed price, which is not the current market price. This allows binary options traders using our platform to take advantage of favourable prices and the best market conditions in order to increase the likelihood of them seeing great returns.Like normal binary option trades, one touch trades are an “all or nothing” investment; you either get your full return, or you get nothing at all.These three points all demonstrate why one touch trading is becoming increasingly popular, and how they offer an alternative opportunity to alternative types of binary options trading, including standard trades and 60 second trades.

Buying Your One Touch Options

Buying your one touch options from Bank of Trade is easy. All you need to do is log into your trading account and select the relevant menu instead of binary options, option building, or 60 second binary options. Our options are available at a cost of $XXX per unit, and traders can buy up to X units, although there is no limit to how many one touch trades you can have going at a particular time.Whenever you buy one touch binary options, you will be presented with both the rate at which point your call or put will achieve its one touch, as well as the potential percentage return on your initial investment.

A Summary of How One Touch Trades Work

You know what a one touch trade is, you know why they are a huge investment opportunity whatever your objectives may be, and you know how to buy them; how do they work in terms of monitoring your trade?Options can be purchased from midnight on Saturday morning to 1900 on Sunday evening. They are then traded from midnight on Monday morning to 1710 on Friday of that week. The options you have bought and are trading then have their prices taken at 1700 each day. The prices, for avoidance of confusion and doubt, are taken from the Reuters sample rate, ensuring fairness and consistency for all traders and investors. If an option has moved above or below the call or put rate during the five weekdays, the return stated when the options were bought is paid out. Regardless of when the call or put target price is hit, monies are transferred to trader accounts during the Friday evening following the ceasing of trading for the week.All one touch platforms should offer a similar setup, so you know what you should be looking for and to expect in terms of timescales and deadlines.

Example

To give you an idea of how one touch binary option trading could bring you returns, we have prepared the following example.Say the commodity is gold, which has a starting price, known as a spot rate, of 1000. When you look at this one touch option, you will see the rate it needs to grow or fall in order to see a return, which is called the “in the money” price.In our example, gold would need to move from 1000 to 1010, which in this case would give you a 500% return. If you took out this one touch option on Saturday, you would then need gold to reach a price in excess of 1010 at 1700 hours on any day, Monday – Friday, for your option to expire in the money. Failure to do so will see the option expire out of the money, and there is no return.

Conclusions

For traders and investors who already enjoy binary trading, one touch options give them the opportunity to try something different. Due to the more specific nature of one touch trades, they are often best suited to experienced traders, although they can be an exciting introduction to binary option trading for anyone who finds the simple call or put mechanism too basic for their own tastes.You can open your one touch binary option account with Bank of Trade and get started trading right away, as well as benefit from our range of advice and resources that aims to point you in the right direction and make your one touch trading as productive as possible.