Many things must be taken into account when trading financial market products. The saying goes around among traders: "Every mistake is punished on the stock exchange". Binary options are not an exchange product, but the same applies. Trading in itself is not that complicated, but trading flawlessly is extremely difficult. So here are some tips and tricks for successful trading with binary options.
Note trading hours
Especially in intraday trading, the trading time should always be observed. Times when the markets open, either at 9:00 a.m. or 3:30 p.m., are not recommended for buying short-term options on indices. Since the orders from private traders are always executed the day before and the big players only then give the direction, it is easy to make the wrong decision.
Quotations often return at least for a short time to the opening price. Either you can use this effect or you wait and then get in. The main trading hours are between 9: 00-12: 00 and 14: 30-18: 00. The US market is open until 10:00 p.m. As a rule, however, trading activity ceases after 6:00 p.m. if no economic data are published.
Seasonal effects should be taken into account on a somewhat long-term basis. The expiry days for futures and options must be observed especially for indices and commodities. As futures contracts expire every three months, the positions in front of them are closed the week before, which causes the markets to trend downwards. There are seasonal effects on different time bases, from year to month to weeks and days.
Which values should be traded?
That is the question of all questions. In most cases, the broker will not give you a correct answer. But the answer is as simple as the question. You should only act with what you are familiar with. But what do you start with?
Every retailer, especially in the short term, tries to focus on just a few values in order to achieve a certain specialization. That would also be recommended, but there are basic value properties that apply to certain values and therefore make them easily tradable.
In the area of stock indices, the S&P 500 index would be recommended, for example. The US leading index contains 500 values and that is exactly what makes it so tradable. It is less volatile than, for example, the DAX or the DOW JONES index. Beginners should therefore concentrate more on the S&P 500 index.
In the area of raw materials, oil is volatile because it is the most liquid raw material, but oil shows very clear trends. In addition, the development of the oil price and all related information can be evaluated very well.
Currency pairs are fundamentally difficult to trade, since the currency market is the largest capital market, in which predominantly banks frolic. Having banks as competitors is no easy task. Trading currency pairs would therefore be more advisable on a medium to long-term basis, since fluctuations in the intraday area can be very strong. On days with little data, however, currencies can also be traded intraday.
As far as individual values are concerned, it would always be advisable to look closely at the stock beforehand. Equities have good technical trends. If overall equity indices are in one direction, such as B. run down, but sooner or later it will also pull the individual values, sometimes more, sometimes less - depending on which industry.
Since you can also buy puts with binary options, it would be one Tip to look at stocks that are extremely market dependent as they are dragged down to a greater extent. The chance of a higher profit would increase.
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Where can you get the best market information?
This is the biggest problem for a trader. There is enough information on the Internet. But which are relevant and how do you evaluate them? A good trader either does not need any information at all because he relies entirely on market technology. Extensive market technical information is available online. Or the dealer has collected information over the course of time, compared it with the course of the price and thus got an idea of the relevance of the information. This information is accessible everywhere and at the same time the evaluation is the same in almost every source. But the trader should always ask himself at this point: "What advantage does he gain compared to the mass?"
The advantage in this case is small for the private trader, since it only has sophisticated, quantitative models can be reached, and this is where banks and other large market players are already bustling.
The private trader can only gain a real advantage through broad knowledge and experience. It would therefore always be recommended, provided that there is time to deal properly with the values that you are trading. However, the best information is not available through brokers, you have to search for media that give you the right input. This is also not an easy undertaking and is part of training to be a good trader.
There are some basic characteristics that make trading more successful, even if the media industry does something different want to tell. Success can only be achieved through experience and hard work, and that doesn't apply, but especially when it comes to trading.
With the Broker OptionTime, beginners can test their trading skills and prove that they are able to use their skills Stand out from the crowd.