It is hard to be successful investing in the financial markets without careful planning and binary options trading is no exception. Even though trading binary options is straightforward and easy to do, you still want to learn all you can about the basics of binary options trading and have a good idea of how the financial markets work and respond to economic reports and events. Once you have done that the next thing you want to do is come up with a sound strategy for success.
Recommended Binary Option Brokers:
|Banc de Binary|
|CherryTrade||US traders accepted|
Why Is Having A Sound Binary Options Betting Strategy Important?
Sure people can get rich in a hurry trading binary options but someone can hit the lottery too and what are your chances of that. The most successful binary options traders don’t try to go all out and hit it big all at once; they try to make a steady profit as they go and keep building on their investments and sometimes they will hit it big from time to time. In order to be successful doing this, the investor must find a strategy that works and then adjust it or get a new one when it doesn’t work anymore. That is the hard thing about market trading; something that worked for someone yesterday may be a totally irrelevant strategy today.
The easiest way to make profit is to use a good automated binary trading software:
Strategies Help Identify Key Trading Signals
The basic idea of binary options trading is to correctly pick the trending price of an underlying asset at a set period in time. In order to do this a trader will have to do a lot of careful analysis and thinking to determine the price trend. Part of that analysis will include such things as studying technical charts, planning strategies, and evaluating such factors as world economic events and current financial news. Once all this analysis is done correctly a few areas on a chart should highlight themselves as being very favorable areas that an underlying assets price will travel too. These prime trading spots are commonly called “trading signals”.
Trading signals have to be much more than just a hunch or an educated guess in order for an investor to trade successfully; that is why technical analysis must be done carefully and be done using a sound and proven strategy also. Improper analysis can lead to an investor getting mixed or false trading signals that can result in losing trades. So the most important part of making successful binary options trades is by identifying key trading signals. The best way to do that is by using a sound and proven trading strategy to identify these all-important trading signals. Using a reputable broker such as Banc de Binary and good automated trading software also helps a lot.
The Two Main Types of Strategy Models
There are two main schools of thought when it comes to binary options strategies to identify key trading signals. Here is a brief overview of each.
Historical – These types of strategies are often used by novice investors because they are based on historical price trends of an asset as opposed to needing analysis by someone who has a large amount of trading knowledge and experience. They are based on the fact that price trends for certain assets tend to closely repeat themselves as far as the patterns on charts go over the course of time. The only thing a trader needs to do to use this strategy is to be able to identify repeating patterns.
Trend Prediction – One of the best things about trading binary options is that an investor can win on a trade just by correctly choosing which way an asset will trend over a certain amount of time. These types of strategies help to determine which way that price trend will go. They require more trading knowledge in order to use them correctly.
Time Tested Signal Identifying Strategies for Beginner Binary Options Traders
It would take a whole book the size of an encyclopedia to go over all the different binary option trading strategies there are out there; obviously we can only scratch the surface here in this article. The importance for every trader to find a sound trading strategy cannot be emphasized enough.
Since someone coming up with a strategy of their own would take a huge amount of knowledge and time, it is best to form a strategy based on another that has been proven to work. Once an investor gains more knowledge and skill, then they can modify that strategy a little to suit their own needs and trading style. Often times the most effective way to trade is by combining more than one strategy, as well as more than one broker, and using the different strategies as a check against the other to make sure they each give strong trading signals in the same spot.
Popular Trading Strategies:
Three Indicators Strategy – This strategy combines three very popular signal identifiers and uses them to check to see if they are all giving the same reasonably close trading signals. This is a very low risk method for beginner traders to find places that are favorable for making trades.
The three popular signal identifiers it uses are RSI Indicator Signals, MA Indicator Signals and Stochastic Indicator Signals. These types of signals are known to have consistent historical data trends and when combined can act as a type of filter that helps eliminate false trading identifiers.
Pinocchio pattern trading – This is a type of stand-alone signal identifier. It is very effective for predicting trend reversals on currency pairs, commodities and stocks. It works off what is known as a candlestick chart.
Each ‘candle’ on the chart has a thick body which represents the underlying assets opening and closing price and a thin wick which represents the daily high or low price. A Pinocchio candle has a short body and a very long wick. The long wick is said to be a “liar” because the price trend will not continue in that direction and will soon reverse itself and the investor places the trade in anticipation of the price reversal.
Summing it Up
It is always important to remember that the markets are constantly changing and fickle to say the least. If your strategy stops working then modify it or develop a whole new one altogether but always make sure you are trading with a sound strategy firmly in place. If you do this and you plan your strategy over a longer time frame you have a good chance of being a successful binary options trader.