Binary Options 201
How Much Should I Trade Per Day?
Knowing how much to trade per day is tricky business. You definitely want to focus on quality over quantity, but there is a fine line that you need to hone in on. For example, if you trade five successful trades per day at $10 each with an 80 percent rate of return, you will make $40 profit* assuming you have no losing trades. But if you trade 25 trades per day, and you are successful on 15 of them and wrong on 10, wouldn’t this increase your earnings?
*Amount to be credited to account for a successful trade.
This is tricky. If you are using $10 increments again, you would have been better off with just the five successful trades. Even though you were right more often, you were wrong often enough that you would end up losing more money than you would have with just those five correct trades. In fact, with the same rate of return, you would have earned a total of $120, but lost a total of $100. So while it might seem pretty boring to only have a few trades per day, if you can drastically reduce your incorrect trade rate, the conservative approach is going to be more beneficial to you.Try trading with a Trusted Broker of our Choice
How Do I Find the Best Opportunities?
Finding the best opportunities for you to trade requires a lot of work. Just because binary options trading is pretty simplistic in nature, this does not mean that it is easy to master the subtleties of this type of trading.
The easy answer to this question is that you want to have some sort of criteria for selecting only the most profitable trades. If you have experience with Forex trading, for example, you want to commit to only trades that you think will be profitable enough to overcome the spread. Binary options trading is quite similar to this. You don’t want to focus on only the smallest movement, but rather try and identify the trades that have the most potential for big movement.
The next step here is to identify your strong points. If you are a Forex trader, like in the above example, trading currency binary options is probably the most logical step for you since you won’t need to learn a whole lot of new information in order to be successful. The knowledge that you have in one market can quite easily translate over into this marketplace.
The most important thing to remember about selecting the right trading opportunities is to go with what you know, of course, but you also want to pay careful attention to the rates that you will be getting in return. If you are extremely knowledgeable of the Euro/U.S. dollar currency pair, but it is only receiving a 75 percent rate of return, it might be more profitable for you to trade the U.S. dollar/ Japanese yen pair at 82 percent. This can be true even if you are not as comfortable with the yen as you are with the Euro. Your return will be much larger over the long term so the lack of advanced skill here will ultimately not be a big factor as long as you can trade it with a good degree of certainty.
When Should I Trade?
Picking out the best moments to execute a trade is one of the toughest things for new traders to grasp. Still, when you are able to pinpoint with confidence the exact moment to execute a trade, you can drastically increase your correct trade rate. In other words, you want to go with only the instances that are most likely to pay off for you.
Predicting this is a lot harder than it seems. At first glance, you might think that trying to predict the next big trend is the only way to accomplish this. However, this is far from the truth. In most instances, you will want to trade with the trend. Trying to figure out when one trend will end and another begin is tedious at best, impossible at worst. Many good traders have lost a lot of money trying to predict new trends, and while this is possible at times, most of the time you will not be met with success here.
Binary options are quick moving. If you’re trading 60 second binary options the shortest time frame available—there simply isn’t enough time in the life of your trade to try and buck the trend. Even five minute traders will have a lot of difficulty attempting to do this.
One way to alleviate this problem is just to wait until you have identified a strong trend that is not about to reverse. For example, if you see that the price of oil is in a definite down trend and indicators say that this trend will continue, it makes absolutely no sense to put in a call option here. Trade a put option if the price looks like it will continue to be dropping.
There’s a secret to doing this successfully. You need to find the trend and then look at its volume. If it’s a strong trend with high volume, it is very likely that the asset will continue to move in that direction. You won’t always be right here, but a strong trend with high volume is more likely to be profitable for you than not.
Which Asset is Right for Me?
This is a complicated question, and there are a couple big ways in which you can approach it. One answer is to trade what you know. If you’ve traded in the stock market before, stick with stocks. If you trade Forex, trade currency binary options. This will help you out a lot. Binary trading is a completely foreign type of trading. The knowledge that has let you become good at trading currencies can easily be transferred over to this market.
Trading what you know best simply isn’t enough to be the best trader you can be, though. If you pay careful attention to your trades, you will find that will make more money off of trades with a higher rate of return—even if your correct trade rate is a percentage point or two lower. If you have a correct trade rate of 65 percent for the EUR/USD currency pair, but you’re only getting 75 percent returned to you, it will be better to switch over to something you only have a 62 percent correct trade rate on if the rate of return is 82 percent. The math behind this assertion backs it up. So in reality, it is sometimes better to trade the asset that you are not as comfortable with since you can sometimes make more money by doing this.
How Can I Maximize my Trading Income?
This should be a question that each and every trader asks themselves on a regular basis. There are a few components to this, some of which you have already heard. You want to trade the assets that give you the most profitable balance of a correct trade rate and a high rate of return. There are many other aspects to trading that you will need to account for, however. For example, taking advantage of rebates can be helpful. If you find something that has an 80 percent rate of return, you will fare much better here than you would on just an 82 percent returns—assuming you have a realistic correct trade rate. So rebates are something that you will at least want to consider. 24option offers up to 88% on a lot of trades. Learn more here.
Also, look at the customization choices available. The more you can adapt your trading strategy to fit your trading the better. Most people never stray beyond the call/put options, but if you can spot opportunities that lie outside this scope, you will want to capitalize upon them. Maybe you think an asset will jump up in a big way soon. Some brokers even allow premium type trades that have hard to fill stipulations, but they also have huge payouts. You won’t want to use these often, but customizing your trading is only going to help you. Don’t be afraid to use boundary or one touch options if you think they will help you out.
Finally, consider using more than one broker. If Broker A has an 82 percent return on an option, but Broker Z has an 85 percent return on the same asset with the same conditions, going with Broker Z is going to always be the best choice. No one broker is going to give you the best returns all the time. Go with the broker that offers you the best opportunity, even if this means that you have two or three different brokers that you are using at any given time.
Binary options trading is tough and has many nuances. The best way to get ahead is to keep tight control over the factors that you can control. What you trade, when you trade it, and which broker you are using all fit into this description.Try trading with a Trusted Broker of our Choice
***Your capital may be at risk. This material is not investment advice.***