The Best Guide to Trading Binary Options Online
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How to Succeed with Binary Options Trading
If you would like to trade binary options, just like forex trading uk then there are some binary options tips and tricks that you should fancy heart. It’s important that you trade on the basis of a specific binary options strategy. Because without one, trading would in many cases be like a game of chance and one would also be too guided by one’s emotions, which in most cases won’t lead to lasting success.
Since binary options aren’t always immediately easy to understand for beginners in terms of successful trading , even though the financial product as such is designed very simply, one should first affect some strategies that can serve as a basis. There are a number of main strategies that many traders use, such as the following three strategies:
The trend following strategy is especially suitable for beginners in the field of binary options, as it is easy to execute. This is why this is often chosen as a basis in this area.
Trend following strategy: for beginners and professionals
The trend following strategy is a very popular binary options strategy. It’s therefore one of the tips of many experts that newbies should make their first trades based on this strategy. This strategy is largely based on the well-known stock market adage “The trend is your friend”. This wisdom means that in the financial markets it rarely makes sense to oppose the trading behavior of the masses, but that it’s better to follow the general trend.
Instead, it’s much more promising to follow the trend, i.e. to behave like other influential market participants do. The strategy is based on the assumption that it’s much more likely that an existing trend will continue in the near future than that the trend will “reverse” (which is also referred to as a trend reversal).
The trick with the trend following strategy is to identify an existing trend, ideally when the trend has only just developed. Because the beginning of a trend is of course the optimal point of entry for a trader. the problem here is that trends are of course easier to recognize if they have been around for a long time.
Both upward and downward trends may be seen relatively well in the chart. For instance, an uptrend has several higher highs and higher lows in a row. In the downtrend, this is exactly the opposite, because then successive lower lows and lower highs can be identified.
The binary options tips and tricks in this context also include the fact that the trader draws certain trend lines, which is relatively easy to do by connecting the individual low points (in the upward trend) and high points (in the downward trend). in this way, the trends can be identified quickly.
Summary: Here’s what you should know about the trend following strategy:
- The strategy is well suited for beginners
- The prospect of a successful trade is very good
- Following a trend is the basis of the strategy
- Trends can be recognized relatively easily
- Trend lines can be used as an aid
Try out the trend following strategy directly with one of my certified brokers. IQ Option is best here, as this broker provides a free demo account, which doesn’t cost you a cent. So you can practice here until you get the hang of it. Although some forex brokers in UK tends to offer binary option services, it is recommended that you trade binary options with a binary regulated broker.
Trading Binary options on fluctuating markets
Knowing about binary options tips also means the trader is aware that there aren’t always clear trends. The situation on the stock market as well as on the currency and commodity market is often such that the rates or prices fluctuate strongly and no clear direction can be identified. In such cases, the trend following strategy described above wouldn’t be suitable because no clear trend can be identified.
In this situation, another binary options strategy is much more suitable, namely the volatility strategy. It is mainly used by traders from BlackBull Markets Canada. The basis of this strategy is to benefit from larger price fluctuations, despite the direction in which the prices develop. This is also the big difference to the trend following strategy, where the “correct” direction of the price development is very important.
With this strategy, too, it’s important to recognize when a major price movement could take place. If you’re taking a share as an underlying asset as an example, a major price movement could take place, for instance , after the company publishes its balance sheet figures (this usually happens every quarter) or makes some other important announcement. The advantage is that the trader doesn’t have to “predict” whether the news will lead to falling or rising prices. It’s only important to predict that a larger price movement will follow.
In practice, the volatility strategy can be implemented by the trader buying both a call and a put option on the same underlying asset. However, this strategy only works in the area of one-touch options (high-yield area), because the possible profit per option should be more than 100%. It is important that both options have the same term. If, for instance , the share price has risen significantly after positive company data has been reported, you have made a total loss with your put option on falling prices.
However, since you’re right on the call option and have won 300 percent or more, that loss is more than made up for. Of course, buying 2 options increases the capital investment and thus the risk of loss – however, the loss of the investment only occurs in both options if there’s no major price movement. However, if the volatility strategy is used correctly, it’s very effective.
The most important things about the volatility strategy at a glance:
- This strategy should be used in volatile (i.e. more strongly fluctuating) markets
- As a customer, you benefit from strong price fluctuations
- The direction of the price movement is irrelevant
- The strategy can only be used in the high-yield area of trading type One- Touch can be applied
The binary options hedging strategy
The hedging strategy should only be briefly explained, as it is basically not a real binary options strategy with which profits can be made in the field of binary options. Rather, it’s with this strategy that the binary options are used as an instrument for short-term hedging of other trading positions, for example a forex position. Stock positions can of course also be hedged using binary options, which is also known as hedging. Alternatively, share positions can also be secured against falling prices with the help of CFDs.
With hedging, an existing, long-term equity position is hedged against short-term price risks. Put options or short CFDs on falling prices can be used for this purpose, which generate profits in the downward movement and may thus compensate for the losses in the stock position in whole or in part.
The most popular types of trade include:
- Call / Put Option
- Range option
- Touch option
- Early close / roll-over
Most traders use so-called call or put options when trading binary options. Call options are used to speculate on rising prices. If, for instance , the trend following strategy is to be used to speculate on falling prices, this is often done by buying a put option. These options are particularly useful when the markets move fairly evenly and the trend can thus be easily followed. In numerous situations, however, the markets don’t act evenly, but fluctuate strongly or hardly move. In times of strong fluctuations, the touch option can be a sensible alternative.
Traders bet here that the selected value will touch a specified upper or lower line at least once during the investment period. If this is the case, the financial bet is won. If, on the other hand, the markets show hardly any movement, the range option can be useful. In this case, a certain corridor must be adhered to in order to win the bet. In sideways markets, traders can make profits with this type of trading even if clear trends aren’t discernible. With the early close function, however, it’s possible to close existing orders, but with roll over these can be extended. It should be noted here that not every broker offers all types of trading. A broker comparison gives the answers here.
Test new strategies without any risk
Traders who have previously only used the trend following strategy, but who now want to try out other strategies, like to use the test account offered by many brokers. With this account with a broker like IQ Option, it’s possible to open trades and pursue strategies without having to invest your own money. Trading takes place exclusively virtually. However, the basis is of course the current prices that are posted on the market during this point . Traders therefore have the chance to copy the market 1: 1 and invest risk-free. Such a demo account is therefore not only suitable for experienced traders who want to try out a new strategy, but it’s also ideal for beginners. With these accounts you’ll test binary options trading and also get to know the various trading platforms of the providers. If you’re satisfied, you can then open a live account and start trading.
Our recommendation doesn’t only refer to IQ Option because the broker offers an absolutely free demo account as a bonus, but also because the broker can convince with very good trading conditions. IQ Option offers three different trading accounts that differ in a few points. For instance, VIP customers are supported by a personal account manager.
General binary options tips and tricks for beginners
In addition to the strategies, there are of course a few other binary options tips which will be very helpful for beginners. in the following i would like to introduce some of these tips and tricks.
- Before you start trading, you should first familiarize yourself with the strategies and, above all, with the trading platform. It’s best to choose a binary options broker who offers a binary options demo account or at least a detailed tutorial.
- At the beginning you should only invest small amounts, such as 10 or 20 dollars. After a few successful trades, you can then slowly increase the amounts.
- In principle, don’t bet more than 10 percent of your account balance on a binary option, unless your strategy is predicated on only depositing the minimum trading amount into your trading account and multiplying the initial capital through aggressive trading with high-yield options with a higher risk of loss, in order to then act strategically.
- With a few brokers, you can negotiate the amount of the bonus as a new customer. Take advantage of this option, because “asking doesn’t cost anything”.
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