Binary options trading is risky type of financial investment. Traders make huge profits by predicting in which direction a certain financial asset will go within a predefined strike time, if the predictions is correct the trader will have stayed in-the-money producing an outstanding profit which can reach up to 95% on the initial investment within minutes, so if you invest $500 on Microsoft going down in the next 15 minutes and your prediction is correct, you will have made $475 in 15 minutes. On the other hand if you’re wrong you could lose up to $500.
Although it can produce very high profits, trading binaries is a risky type of investment and requires skill, learning and understanding of various binary options strategies which can help the trader to end most of his trade in-the-money.
There are many strategies which can easily be adjusted to trading binaries. The next few strategies are simple and provide the ground for deeper analysis and strategic thinking.
One of the most important strategies any trader should adopt is a money management strategy. This strategy is not only about maximizing your profits but will also help you control your losses, by doing so traders are looking at a binary investment as a long term investment rather than a onetime shot and are looking for ways to control their money in case they lose a trade. The strategy’s main idea is to take your free capital and to limit your trades to a certain predefined amount, so you’re not investing all your capital in one investment and therefore can-not lose it all at once. The idea behind it is that in case you lose you should always have enough capital left on the side to help you get back in the game. The ongoing trend used by binary options traders stands on risking 10% of the capital per trade. For example if you have $1,000 you can use up to $100 per trade.
Technical analysis – this strategy will help traders identify the assets highest and lowest price points. The analysis is performed by gathering data from various sources; stock charts, news feeds, financial reports etc. the goal is to create a price graph and then understand which of the factors above influenced the assets price. Once you have created your technical analysis you should have a fairly good indicator to the asset near future behaviour.
Another strategy used by novice traders is the trending strategy, it doesn’t require a lot of skill or previous financial understanding and it allows the trader to take advantage of an ongoing trend. The market trend is a direction in which the market is trading at i.e. up or down, using a trending strategy is best used in short period binary options. Binary options are offered on a variety of different strike times starting with 30 seconds and up to a week’s long. Using a 60 seconds expiry time the best option for trending.
There are many trading strategies available out there each and every one fits a certain market situation. Experienced traders recommend a combination of a few strategies into your own strategy, it also recommended to try many strategies and to change then from time to time.
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