When you decide to trade binary options, it is no enough to randomly invest, call and put the options. This is only a certain way to disaster. Instead, you should take a few steps to become a successful and professional trader.
Before you even begin trading, you need to choose a reliable broker and avoid binary scams, which can take many forms. You need to devote some time to learning all you can about binary trading, the market and learn how to analyze its changes. There are also many trading strategies you should use in order to make your trading well organized and more successful with every trading cycle.
Why are strategies important?
Trading strategies, just like a trading plan, make your trading better organized and help you stay within certain boundaries. Strategies are formed so the traders can minimize the loss and maximize the earnings they make in binary trading. When you apply a certain strategy, it helps you control the emotions and disallowing them from interfering with your decisions.
If you use a trading robot you can also apply the strategy of your choice. You should set the parameters so that they fit the strategy and let the robot do the trading. Explore the best examples in this kind of a software at 10 Best Binary Robots.
You can create a strategy on your own, but it is more suitable for experienced traders. If you are still not skillful enough, there are some already designed strategies that many traders use and they work for them. You can choose some of them, and as time goes by, you can modify them or create a strategy of your own.
The Straddle is likely to be the most popular among binary traders. Beginners use it at most, but more experienced traders also tend to rely on it, especially when market volatility is extreme. With this strategy, you are supposed to choose both of the two possible options, so you can minimize the loss. For example: you invest a certain sum of money and call an option with longer expiry period. Then you should monitor the market. If it seems that the price is going to fall, you should invest a larger or the same sum of money and put an option of the same asset, but with a shorter expiry period. This way, although one option will lose the money, the other will make profit and cover the loss.
More experienced traders use this strategy more than beginners do. You should again trade the same option twice, but by choosing the same option both times. It maximizes the earnings, but the risk is higher as well. If you want to earn from this strategy, you need to know the market quite well.
You need to predict as accurately as possible that the asset you chose is not going to change direction while your trade is open.
The traders with lots of experience and skill in binary trading and market analysis are likely to use this strategy. It relies on the presumption that the changes in one asset’s price will cause the changes in other assets’ prices. For instance, if the price of some stock rises, the prediction is that the index in which this stock is traded will also change. If you want to profit from knock-on effect, you need to be able to analyze a few different markets and trade different types of assets.