What Will Make Me a Good Trader? This is a tough question to address for two reasons. The first reason is that it is really hard to be a perpetually “good” trader. If you are looking at the span of a month, you will probably find that maybe around 50 percent of people have winning trades and 50 have losing trades. You would think that this makes about 50 percent of people winning traders, but this is far from the truth. You will find that most people lose money trading binary options. This happens because of the differences that take place between the amount risked and the amount earned in return. When you are losing 100 percent of what you risk, but only gaining 80 percent, there will be a natural disconnect between earnings and losses. So while binary trading has a 50/50 proposition, this does not mean that winning and losing is 50/50.
The other reason why it’s hard to be a good trader is that each person will need to find a method that works best for them. What makes one person a good trader will not always work for others. This is because of a phenomenon known as “tilt.” When emotions come into play, people make bad and illogical decisions. You want to stay as emotionally removed from your trading as possible, and if you are using the wrong trading techniques, you will not be able to accomplish this, so finding a good trading method is definitely not something that can be solved by a universal silver bullet.
There is only one way to really become a better binary options trader: practice. The more experience you have, the better equipped you will be toward making the right analyses and the right decisions. There is no get rich quick solution here, unfortunately. If you want to become a professional trader, you need to have a lot of time trading under your belt.
Demo trading is the best way to get experience, yet it is often overlooked. There are some very good things to take away from your time demo trading. You will learn the software platform inside and out in the matter of just a few trades. This might not seem like a big deal but it is a good way to eliminate user error on your part. It also teaches people that are brand new to trading just how rapid and unexpected the markets can be.
However, there are also some downfalls. Most brokers do not let you keep a demo account open long enough to really use it to your advantage. Some brokers will allow you to keep your account open 72 hours after making a real money deposit. Three days is hardly enough time to master a new trading technique, and the brokers know this. They want you to start trading money right away because they make no money if you just demo trade for a few months.
Devising a Strategy
So demo trading is important, but it’s often a problem that needs to be worked around. Still, this does not mean that you can just enter trading haphazardly. Even if your demo account is not cooperating with you, you still need to take the time to come up with a good and profitable trading routine.
Start off by trading inconsequential amounts. If you have $10,000 in your trading account, $10 trades won’t make a huge impact upon your lifelong profit numbers. There is a steep learning curve here, and you want to minimize the ill effects as much as possible. While you are still ironing out kinks, you want to make sure you are still getting real life experience all while not risking a lot. Even if you are on the losing end of 100 trades in a row, you will have only lost 10 percent of your trading capital. This might seem like a lot, but when you are earning 80 percent on each winning trade, this number can be made up for quite easily.
A Few Things to Look Out For
The shorter the trade period that you select, the more heavily you will need to rely on technical analysis. This happens because during a 60 second period, assets are moving more heavily based upon price action than they are moving because of overall ongoing trends. Think about it this way, prices move in an oscillating fashion; they revolve going up and down in price. If you look at a five year chart for any asset, you will see that they regularly moved up and down in price. If you’re lucky and you held onto a stock for five years, hopefully the overall trend would be upward, but there will be ups and downs within that upward trend.
The oscillation occurs at every single level of an asset’s price chart, be it five years or five minutes. There are always ups and downs and sometimes this movement is predictable. The overall trend is more often predicted by fundamental analysis methods, but if you look at a tiny snapshot of a price chart, even in an predominantly upward moving asset, you will see that over a very short time, prices went both up and down. This is natural and is something you can use to make money, even over the seemingly un predictable 60 second binary options.
If you stay within the overall trend while playing price action movement, your odds are much better than if you just randomly try to predict movement. Prices aren’t always rational, but they are more often than not. This is why trading is profitable. Many people miss the subtle clues that will predict where prices are headed, but if you pay close enough attention, you can find these things and start making money today.
Tools that Can Help
If you want to start making money with binary options, you need a few tools in your arsenal in order to be best prepared. The price chart is the most important thing. You will want to look at a few different times on these charts in order to give yourself as much information as possible. Look at the price charts directly above and below your given trade time. So if you are trading ten minute binary options, look at five minute and fifteen minute intervals on your chart. This will help you get a better overall picture of what the asset is actually doing. Below is a screenshot of a 5 Minute Metatrader Chart.
You also will want to look at volume. These are often included on price charts, but not always. Times of high volume are usually less volatile than times of low volume. This is a fact that you can sometimes use to your advantage. The next point will illustrate how you can use this.
Next, you will want to have easy access to relevant news sources. This is tied closely to volume because prices can move more quickly when there are fewer people trading. So during low volume times, if a piece of important news comes out—say that the European central bank is raising interest rates on borrowing—you can trade the EUR/USD pair more easily since prices will be more likely to move in the direction that you think. High volume tends to bring more stability when news comes out. Low volume increases volatility during these times since there are fewer traders in the market that can help fight sudden movement.
A Couple Quick Tips to Remember
Assets do not move in a vacuum. When one market is moving, there is often a residual effect that happens within other markets. Take the price of gold and the U.S. dollar as an example. These two things have an opposite effect on each other, time has shown us. This is called the market pull effect. So when the dollar goes up, the price of gold goes down and vice versa. The dollar is the most popular traded currency in the world and gold is the biggest hedge that people take against the dollar.
Looking for these relationships can be tough, and you need a lot of data to make a real connection, but this can be an easy way for you to predict movement at a glance.
Also, you will want to look out for support and resistance points. These are imaginary lines that the asset has had trouble going above or below in the recent past. These can be extremely helpful within 60 second binary options as traders are loathe to trade beyond these points for fear of a sudden price reversal.
Binary options trading is not easy despite the appearance that it gives off. The more you trade, the more you will realize this. Experience is definitely going to be the best bet for you, so if you are new to binary trading, make sure you get in as much demo trading as possible. After this, trade only small amounts until you feel that you are an expert. The money you save by fighting the learning curve in this manner will be a huge boost to future earnings.