If you are new to trading binary options, you might feel overwhelmed at first. Yes, it’s exciting, but once you make a few trades, you can quickly get sucked up in the momentum and feel like you have no idea of what you are doing. Don’t worry, this is common. However, if you stay in this mindframe, you will not be successful in your trading and lose money. This is obviously something that you do not want to happen. By having a set strategy in mind, you can take control of your trading and make money on a regular basis.
Here are a few easy to learn strategies that will give you an edge in the binary market. No strategy is 100 percent perfect, but these are tried and tested methods that have worked for countless people and they will work into the future, as well.
Using the Trend
This is the heart of what a binary options trader should be trying to focus on. After all, you are not trying to figure out how much an asset will move in price, just that it will move in a certain direction. With this type of strategy, you are not trying to invent anything new or do anything breathtaking. You are looking for an established trend and jumping in on the action. In regular types of trading, this isn’t worthwhile sometimes because the bulk of the momentum might be out of the way and you will not be able to maximize your profits. This is not the case with binaries. Remember, it doesn’t matter if you are only right by a single penny. You will still get the full profit rate. So if an asset is going upward and signs indicate that it will keep doing so, a call option is correct. If it looks like it will keep dropping in price, go with a put option. This is not something that will work well when you are unsure of what an asset will do next, though.
How to Look at Breakouts
This is a bit more difficult to be successful with, but sometimes it’s a necessary move. This is especially true in bullish markets when a new high is achieved. It might seem like the asset should drop in price now that it’s at a new high, but if signs say that it should keep going up, a call option is the right move. In this, the past isn’t as important as the future. You already know what’s happened beforehand; now you want to make the right choice for what’s going to happen next. It doesn’t matter with breakout trading if a new high is already achieved. If the price looks like it will go up, make the right decision.
Watching the Range
A range, by definition, is when the price of an asset is bouncing around stuck between two points. You see this a lot in slow market times or when there isn’t a lot of information about an asset. Ranges can be tight–within a few pennies–or they can be broader–giving the asset more freedom to move around. The broader ranges are the ones that you want to be aware of. When prices have more freedom to move, and you know that they are bouncing back and forth (range bound), then you can predict with a higher level of accuracy whether or not a continuation or reversal will happen within the timeframes you are trading at. This is not always as accurate as trend trading, but it is a highly effective strategy when you notice that your asset of choice is range bound.
Trading the News
For short term traders, this is one of the most effective trading strategies there is. Basically, you wait for an announcement or press release of some sort, and then act quickly, hopefully before the momentum disappears. This works best with very short term trades, usually 15 minutes is too long in nature. If you have 60 second binary options at your broker, this is the time to use them. The reasoning is often psychological, but when an announcement happens, traders react quickly depending upon the nature of the announcement. If you can predict what the reaction will be with accuracy, then you can string together a lot of little trades to equal a big profit.