5 Tips for Trading Binary Options Successfully
Binary options trading has become one of the most popular methods of trading financial assets for profit. Its easy trading style and accessibility to investors without large amounts of capital have allowed it to very quickly come to the forefront of the online investing world. However, even though it is a very simple method of executing trades, there is still a great deal of analysis and strategy involved in trading for the highest possible return rate. Here are 5 easy to implement tips and strategies for trading binary options successfully.
Specialize in a Handful of Assets
This piece of advice is most relevant in the beginning of a binary options trader’s career. Some binary brokers offer dozens or even hundreds of assets that may be traded as binary options. While this diversity plays well to more experienced traders, it is best for those who are just starting out to focus on just 4 or 5 assets. This is because every asset will have its own set of trends and factors that affect its value. Learning a few assets inside and out will allow traders to be more profitable than trying to trade every asset immediately. Of course, it is beneficial to branch out once you have become good at trading your selected assets, but it is best to start off with just a few.
Keep up to Date on Market News
While binary options do not involve the actual ownership of an asset, they are affected by the real world marketplace just as much as traditional assets. For this reason, it is important that binary options traders keep abreast of current financial news and events. For example, an astute trader seeing a potential for the euro to weaken against the dollar when the Federal Reserve raises interest rates can use that information to trade the EUR/USD currency pair profitably in that time frame. Knowing what the market is doing and why is critical to success in any trading medium.
Keep Your Trades Low
This may seem counterintuitive when it comes to making larger profits, but keeping your trade amounts low will help you to manage your risk level, resulting in less loss on options that finish out of the money. No trader, no matter how experienced, can trade to finish in the money 100% of the time. With that said, it is important to make sure that no one loss can seriously impact the amount of capital available in your trading account. A good rule of thumb is never to risk more than 10% of your capital investment on any single trade.
Learn to Trade Turbo Binary Options
Many binary brokers now offer what are commonly referred to as turbo binary options. These are options with expiry times between 60 seconds and five minutes. Analyzing price trends in such a small time window is, of course, much more difficult than finding long term trends. However, traders who are willing to learn the analytical techniques that apply to turbo options stand to make substantially greater profits by doing so. The reason is that trading in short expiry windows allows a much greater volume of trades to be placed in a given time frame. For example, if a trader is executing turbo trades times at five minutes, he or she can execute six trades for every one that would be executed using a 30 minute expiry time. Traders who successfully trade turbo options can therefore greatly increase their returns in a given time frame.
Take Advantage of the Resources Your Broker Offers
Nearly all binary brokers provide a good deal of free market analysis, learning resources and even trading recommendations to their customers. Many binary traders are missing out on these valuable resources by overlooking them, instead using the broker’s website only to execute trades. This is a mistake, as binary brokers employ highly experienced traders to do their educational analysis. In additional to weekly or daily analysis and tips, many brokers offer periodic webinars or other learning events designed to help traders learn and become more successful. Take advantage of free education whenever it is available.
Trading binary options successfully can involve a great deal of time, patience and research. By following these simple tips, however, traders can improve their chances for profitable returns. Binary options trading is one of the easiest and most profitable methods of trading available today, and it is an opportunity that should not be missed out on.