Trading binary options is in many ways similar to more traditional forms of trading, but there are some major differences. This article gives 5 tips to assist you with binary options trading.
Get to know the markets you’re trading
Binary options brokers such as TorOption provide access to many different markets. You can trade multiple pairs of currencies, various commodities (precious and industrial metals, agricultural products, energy including gas and oil), stocks, and international stock indices (Dow Jones, S&P 500, CAC 40, FTSE, and so on).
This wide acces
s to markets astounds many traders and they attempt to try trading all these different markets. However, it is best for you to understand dynamics of these markets before entering your trades. At the beginning, focus on what you know well. Then, you can experiment with other markets with small bets.
Eventually, knowledge of multiple markets can pay off as what happens in one market often affects the other market. For example, a declining dollar may lead you to buy bets on other currencies. At the same time, many commodities will rise as often a decline in the American dollar leads to increases in prices of such commodities as gold and oil. This is because many commodities are priced in dollars.
Understand how binary options work
The way binary options work differs somehow from trading markets in more traditional ways. Above all, binary options have expirations. On the other hand, when you buy, let’s say, stocks, there is no expiration.
Another important difference is that once you enter a trade, you need to hold it until expiration. There’s no need to place a sale to exit as it will automatically happen. There are some exceptions, though. Brokers such as Titan Trade offer “Buy Me Out” options where you can sell your binary options prior to expiration.
It is also important to understand different types of binary options. Some are for ultra-short term such as 30 or 60 seconds. Others are for longer time periods. You need to ask yourself which style of trading works the best for you. Shorter or longer term?
Get a good trading platform
A good binary options trading platform is quite important. You need a system that is easy to operate. A system where you can make quick trades once you see opportunities.
Also, you’ll need good analytical tools. These are composed of technical analysis tools such as charts. A good charting system will let you analyze patterns based on different time frames. You may want to look up one-minute charts, then move to 15-minute charts, and finally to one-hour charts. These give you different overview of trends.
Good charts come with other options including various moving averages as well as Japanese Candlesticks. The Candlesticks are widely used by traders. What’s more, you should have access to other tools such as Bollinger Bands, Relative Strength Index (RSI), MACD, and so on. Find a broker that provides an advanced real-time charting system.
A good trading platform will also contain real time news so you can tell what’s happening in the markets. A respectable binary options online broker will also provide analyst reports or recommendations.
Some brokers will even let you see what the top traders are doing. Possibly, you can replicate their trades, or learn from them.
Payouts are stated before you place your binary options bet. When you select an asset, a price level, and time to expiration, you’ll see on the screen what’s the payout for that bet. Make sure that your risk is worth the payout. You should also find a competitive binary options broker.
You may want to ensure that the payouts you get on your bets are as good, or better, as the payouts you get when using other top brokers. It’s like looking for a best deal around.
Analyze your trades
All traders make mistakes. No one wins 100% of the time. But, you don’t need to win on all your bets. What counts is to win more than you lose.
Top traders have a trading system (a set of rules) based on which they make trading decisions. The system may rely on trading only certain assets and looking at specific chart formations and other technical tools when making a trade. Top traders also analyze their trades to learn from their mistakes.
Perhaps, you make money betting on stocks, while you lose on foreign exchange trading. By looking at your past trades, you can determine that and change what you’re doing. There’s no need to keep on making the same mistakes over and over.
What’s more, you should always stay flexible with your trading. Market conditions change and what worked in the past may no longer lead to continued success. See what market is telling you and adjust to a new reality.
The binary options are attracting new traders. You can exploit many market opportunities with these options. If you’re successful, the payouts can be tremendous.