Those who trade binary options are given the opportunity to profit from all types of market conditions. Even so, there will be times during which unstable market conditions make this a tougher task. Volatile markets are not necessarily the enemy, but some extra thought will need to be given to whether or not to enter […]
The introduction of limit trade orders in the world of binary options has been incredibly helpful for the handful of traders that know how to effectively use them, and detrimental to the many that try these without really knowing what they are doing. A customized trading strategy is a great way to help streamline your trading so that you can have trades ready to go. You can spend a couple hours at the beginning of each trading day setting these up, and then they will be executed whether or not you are at your computer monitoring the markets or not. Before you start customizing your trades with limit orders, be sure that you know what you’re doing and the dangers that inevitably accompany this type of trading.
Application of Customized Trading
First, it’s important to know what a limit trade is. It is an order that will be filled only when an asset’s price reaches a certain number. Once this occurs, the trade that you executed, either a call or a put option, will be executed—from the specific price that was established.
The best way to set these up is when you know that you want to place a specific few trades throughout the course of the day, but you will not be at your computer later when you expect the opportunity to arise for the trade you had in mind. Let’s say you are trading the EUR/USD pair, and you expect the euro to rise up to 1.1100 later in the day, but that you don’t expect it to go any higher than that because of your data. You can execute a put option at 1.1100 to match this analysis. When the price reaches that specified number, your trade will open up, and at the expiry, if the price is below 1.1100, your trade will be a winner. If not, you will lose what you risked, just like a typical trade. In this sense, limit orders allow you to automate a bit and save time.
This strategy is only helpful when you have a very firm understanding of range bound assets, and only then. They are not that helpful with channels as there is far more fluidity here. If there is any potential that a range will be burst, the customization aspect disappears and you need to take a more intensive approach and cannot use a hands-off one like this seems to be on the surface. If your potential trade still matches this criteria, then it can be extremely beneficial.
Drawbacks to Customized Trading
There are many obvious drawbacks to this customized trading strategy. One, if conditions change and you’re unable to cancel your trade orders, you are likely to lose money. This is a convenience, but if you aren’t constantly monitoring things, you can be at the mercy of the whims of the market. In this respect, customized, hands-off trading isn’t really all that more beneficial to you. It’s not quite as automated or worry-free as you might be led to believe.
Also, although limit orders add a huge amount of customization to your trading, they are not perfect. Most brokers have very limited ranges when it comes to expiries, and if you don’t find something that matches your analysis, it can be easy just to pick one and move on. This will end up hurting you more than helping you, unfortunately. That completely defeats the point of using tools to help you make money, and brokers know this. Still, many people fall into this trap because of the convenience. You should at least have an alert service set up on a mobile device so you can be made aware of any major changes that might occur while your limit order still stands.Try trading with a Trusted Broker of our Choice