Binary options trading is very profitable. With profits over 75% in an hour, you can make money instantly. However, that fast movement of money is a double-edged sword. You can also lose money very quickly if you don't follow some basic concepts. If you follow these three strategies, you will greatly improve your chances of making money.
Do Not Over-trade
Warren Buffett once said, "There are no called strikes in the market." What Mr. Buffett meant by that was it's no problem to pass on as many opportunities as you want. You don't lose money by passing on potential trades. This definiltey holds true with binary options, since new options with new strike prices and new expirations are being constantly issued.
Becoming too active or moving too fast will burn you when trading binary options. Relax and do your research. Do not trade on insticts or hot tips. If you miss out on a winning trade, don't sweat it because there are constantly fresh chances opening up. Don't feel hurried to jump into something simply due to the fact that you see it start to move higher. If you ever think you're trading too much, take a step back and call it a day. There will be many new chances later, and you'll have a much clearer head to see them with.
Manage Your Position Sizing
The best thing about binary options trading is that you can generate big gains in no time at all. However, this quick movement in value works both ways. You can also suffer devastating losses in a short period of time. Due to this, it's critically important that you don't enter too large of a trade in any particular contract; no matter how sure you are in the trade's likelihood of making money. Don't get into the trap of, "betting the ranch on a sure thing". You may have some of those trades go your way, but it's just a matter of time before one of them hurts you.
Trade size is critical because regardless of how correct or how extensive your research is; even the most experienced traders will eventually end up in a difficult stretch of losing trades. If you've managed your trade sizes appropriately, you will have enough money to trade though it until the profits start coming.
We recommend that you never put more than 5% of your binary trading account into any one contract. If you get started funding your account with less than $600, you won't be able to live by this rule, because the $30 trade minimum will be more than 5% of your account. If you simply don't have $600 to get started with, that's alright, but just remember that you are putting yourself at a higher risk of running out of money if you have a few bad trades in a short period of time.
Use Technical Analysis Appropriately
There are several varied techniques and theories behind technical analysis. We have found that for the majority of profitable traders, it's not the technique that used, but how it's used that determines the ultimate success or failure of the trader. If you have a technical analysis game plan that has been tested for accuracy, it's important that you use it consistently, and don't second-guess the data. If you can't completely trust your strategy in this way, you're better off looking for a new strategy.
The other key item regarding your charts is to use a time interval that is appropriate to the short-term nature of binaries. We generally recommend 3-minute charts for all options that will expire that same day, and hourly charts for any contracts that expire at the end of the week. As always, check for accuracy within your strategy, but there's no point in using a daily or weekly chart when trading binary options.
Author Resource:
Charles Clark has been trading options for nearly 20 years and is now bringing his wealth of experience to the binary options market. To learn more about binary options, or to get started trading, visit: Binary Options Trading
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