Binary Options Review

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.

Binary Options Reviewer

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