Beginners who want to try trading usually trade on short notice. A study shows that seven out of ten interested people prefer to become day traders rather than being oriented towards the medium to long term. Why is that? On the one hand, the attraction lies in quick wins and the assumption that this way you can better keep control of what is going on.
Whether this is true cannot be said with certainty. But what can be said is the following. Those who can keep control are in good emotional shape during a trade and this is not always due to the duration of the trade. Often you only get self-confidence when you have seen what works for you personally. Also regardless of how short or long-term you trade.
Strategy for short-term trades up to several days
The following strategy is suitable for short-term traders, but it can also serve as a framework for larger ones Time window can be used. We take the 30 minute chart. Thus, the strategy can also last well for trading over two to three days.
The upper chart shows the DAX future on a 30-minute basis. You can see the downward trend very nicely. Both the 200 series (red) as well as the 50 series (blue) and 20 series (turquoise) moving averages (MA) run above the price for most of the time.
The strategy is based on simple crossings of the two short averages, namely the 20's and 50's. The rules apply to put options as follows:
- The price must be below the 200 moving average.
- The 50 moving average will decrease from the 20 moving average cut
- Entry if another test of one of the moving average and the distance between the two increases.
As you can see, this long downtrend on a 30 minute basis would only result in two options, although the rules are pretty simple and there are only three of them. The first circle marks the point at which the 20 employees cross the 50 employees from top to bottom. However, this is not yet a signal for entry. The signal marks the second circle. At this point, the course tests the 20 MA again and the distance between the two MAs increases significantly.
Since there are often no sales opportunities with binary options, there is no need to worry about the exit. However, the runtime is important here. In this case, a runtime of 1-2 days would have been optimal. However, there are also brokers that allow early sales. In this case, you can definitely buy a long-running option. The rules for the exit would then be as follows:
- Selling either if the distance between the two MAs becomes significantly narrower.
- Or selling if the 20 employees from 50 employees crosses below.
Now to the exclusive demo account of IQ Option
Strategies for short-term traders: How to trade in just 5 steps
Binary options are highly speculative financial instruments, and although a well thought-out strategy can certainly increase the chances of success, traders should inform themselves in advance about binary options and the trading itself. We have therefore created a small guide in the form of a slideshow, which briefly summarizes what really matters when trading binary options and which five steps will surely lead to the first trade.
How can you spend a minute?
There is a saying among traders. In many cases there is no correlation between the cost of a trading system and the quality of the system. This is not surprising, because in the end it is less about the system and more about the correct use. If you look at the trading system presented above, it becomes clear that it is quite simple. If you take a closer look, you will also find that with this simple system there would only have been two trades within a month.
In the meantime, keeping your feet still and implementing the simple rules in this way does, however, succeed least. That the majority of traders want to become short-term traders, even when you look at the system above, seems counterproductive. Another difficulty is that you apply systems to past courses and only realize later that current courses have no lead, so you have to make more forecasts than what the tests look like.
With the broker BDSwiss you can such strategies are also traded on the DAX.
Click here to learn more about the Martingale system.