Many retail traders are often advised to use only market technology as a trading tool. This is not surprising, since beginners in particular cannot do much with the wealth of information that is pounded on them by the media. This is because information has to be assessed regarding its influence on the prices, and usually only experienced traders can do that.
But even experienced traders often only rely on market technology. They assume that all information is included in the course and therefore follow the market. As a rule, this is also sufficient for retail traders. The disadvantage is that the market technology often only sends signals when it is already too late. The big players are either already on the market or are already getting out. In this case, risk management is more difficult to implement because an unfavorable entry price fluctuations often cannot withstand.
Why is it so important to be in the market early enough? There is a very simple reason for this:
- This is the only way to ensure that you are not stopped or, in the case of binary options, that you are "in the money" right from the start.
The problem is that many traders don't see trading as a business. If you would consider the DAX index a real product, such as a car, you would do everything to get a good price for it. Strangely enough, many forget that when it comes to trading. The big market players don't forget that. So if you want to follow not only the retail market, but also the big players, then you should take this to heart.
And this brings us straight to the point why events are so important. Because big money mainly follows events. The influence of events, be it monetary policy decisions or the publication of labor market data, has a direct influence on the expectations of the participants. And because they want to get the best possible price, they go out of their way to be on the market as early as possible when an event arrives that they believe will have a huge impact on the price.
How do you get a good entry?
There are two ways to get a good entry or time to buy binary options. Either you only use the market technology or you try to interpret events correctly. As already mentioned above, the latter is usually only possible with experienced traders. Beginners can get a good entry using market technology.
It's easy to do by trying to anticipate. Anticipating means that you counter at certain levels (supports / resistances). One does not act outbreaks, but sells with rising prices to resistance or buys at supports when prices fall. This tactic ensures that you get a price that is as high as possible for put options and as low as possible for call options.
Trading idea for event trading and anticipating
The DAX future is currently trading at 11 points - an all-time high since last week. The Greek crisis caused very high volatility, but the majority of market participants expect prices to continue to rise. To participate in the increase, you need a good entry, i.e. a good price - and this is the case if the price drops briefly.
Another factor is the publication of the IFO Business Climate Index for Germany. This is an event that should also be positive based on recent positive economic data. A call option in anticipation of the positive data could be made in advance, as many will try to anticipate these expectations.
Since the DAX index is currently in a consolidation, a good price could be reached by using short downward swings for the purchase, but choosing a term that is over an hour, since the data is only published in 45 minutes.
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Especially beginners should always remember that trading has something to do with buying and selling products. This makes it easier to get started against the trend. This is so important because you get a better price and land more "in the money".
Traders can either use the market technology and try to counter levels, or they anticipate certain events that have a significant impact on courses. Both tactics have been used successfully by traders in the past.