With-trend trading vs. Counter-trend trading for Binary Options

One of the biggest questions binary options traders ask is whether they should always trade in the direction of the dominant side of the market, or if counter- trend trading is also an alternative.

The answer is that both can be effective and this article will focus on the advantages both alternatives can have and when you should them when trading binary options instruments.

binary options trading

Source:http://binarysignalsapp.com

With-trend binary options trading

Highly effective, especially if the market has a well determined directional bias. The big advantage of this is you are putting the money where most of the market participants are also, so the probability of ending up with profits is higher. Since you are trading binary options, by going with the “flow”, you are most likely to hit a winner, as the price can end up higher when you place a call option in an uptrend, or it can end up lower, if you place a put option. Also, the time frame is very important. If the trend had been going for several days in a row, placing a longer term option can help avoid price corrections that might intervene. If you want to place a short-term binary options, placing it around strong support/resistance levels can be highly effective.

Counter-trend binary options trading

Most of the time you should be trading with trend, but as you know, the market will turn at some point in time and the trend will reverse. Counter-trend trading is very effective when you spot that the market is very likely to reverse or, if you spot a strong support/resistance area in front of the trend, where the counter-trend players might see an opportunity to get in.

Also, news trading, when it comes to headlines that don’t support the overall trend in the market, could represent another opportunity for counter-trend binary options trading.

Risk Warning and Disclaimer

Trading binary options on margin carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to invest in binary options you should carefully consider your investment objectives, level of experience, and risk appetite. No information or opinion contained on this site should be taken as a solicitation or offer to buy or sell any currency, equity or other financial instruments or services. Past performance is no indication or guarantee of future performance.


US Dollar Index Sinks Following Weaker Retail Sales

US Dollar Index weakened on Friday following lower than expected Retail Sales figures for the month of August. Binary options traders might have been profiting along the way down, since the price moved lower by 80 pips. There had also been new rising tensions, triggered by a new missile launch over Japan by North Korea, which raised again concerns that the situation might escalate again further.

August Retail Sales MoM down to -0.2%

Even though the market expectations were around 0.1%, the actual figures turned out to be much worse, at -0.2%. Also, the July numbers had been revised lower, from 0.6% to 0.3%, adding extra pressure on the US dollar index quote.

US Retail Sales

Source: www.fxstreet.com

 

Looking at out chart above, you can see that the Retail Sales are in a downtrend since the start of the year, as each low had been followed by a swing high and then a lower low. This suggests a weakening in the underlying numbers and also that the numbers could continue to underperform in the upcoming months.

Binary options activity might be intense around 91.80 and 92.26 resistance levels, since they represent strong selling areas where sellers might react pretty strongly. If the price will continue to weaken further, it might head towards 90.84 support, where the recent upward leg started to build up.

So far, there are no positive news that could support the upside and we expect the downside to extend lower as long as pressure will continue to mount. We also have the Fed meeting this week and investors might look for new hints regarding a new rate hike until the end of the year and also, a guide regarding the reduction of the Fed balance sheet.

Risk Warning and Disclaimer

Trading binary options on margin carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to invest in binary options you should carefully consider your investment objectives, level of experience, and risk appetite. No information or opinion contained on this site should be taken as a solicitation or offer to buy or sell any currency, equity or other financial instruments or services. Past performance is no indication or guarantee of future performance.


Trading Time Ideal for Binary Options

As you already know, most of the market across the financial world are opened 24 hours a day, 5 days a week so theoretically you can trade binary options whenever you want. However, statistically speaking, there are some periods during the day when trading strategies perform better. If you are at the beginning with binary options trading, you need to understand that placing trades all day long and expecting to make a ton of money isn’t exactly the right way to approach trading.

London Session and New York Session

trading time

Source: https://forexhero.eu

 

The City of London is currently the world financial center and because of that, most of the financial transactions are done during the London trading session. Why is that important? Because liquidity is very high during this periods and statistically speaking, technical strategies, no matter which one you choose, tend to perform better in high liquid environments. Especially when you trade around the London Open (around 06-07 am GMT) or New York Open (around 01:00 pm GMT) you have a much greater probability of gunning winning trades. By making a schedule and trading only in this periods of time you will manage to avoid most of the false signals that your strategy can generate.

Also, it is very important that you stick to liquid US stocks, US indexes, European liquid stocks and indexes and also, when it comes to forex, the pairs containing the euro and the US dollar are more suitable.

Since you want to trade binary options, you need to understand that you are a short-term trader who want to profit from small price movements. By placing binary options and by choosing the instruments we recommend you can avoid some of the pitfalls beginners usually encounter.

You can’t let emotions like greed affect your trading decisions and you must stick to this plan.

To conclude, no matter what strategy you choose, it most likely will perform better during the London or New York session, that’s why we recommend being actively involved in the markets during those periods of time.


Money Management for Binary Options Trading

If you are a beginner and just started to learn about binary options, you should understand the fact that treating it like gambling won’t help you too much. Even though there are some similarities with gambling, having a more professional approach with regards to binary option can definitely give you an edge. This article was designed to give you some basic tips that can help you design a mathematical model which can generate consistent profit.

money management

Source: http://blog.wallstreetsurvivor.com

 

Tip #1 Never put all your money at risk

The ultimate goal of a trader is to make money and binary options trading is not different. However, letting greed influence you and make you risk all your money on each trade, is one of the strategies that will lead you to failure. Risk less, much less, 10%, 5%, 2%, so you won’t be wiped out by a single mistake. Trading is a competition and money is your ammunition. Without it, you are dead in this game.

Tip #2 Reward to risk ratio higher or equal to 2:1

Risking small is just one side of the problem. The reward as well plays a major key, especially when it comes to binary options. Since if you are right, you’ll make between 80-90% profits, depending on your broker and if you are wrong you will lose all your money at risk, having a high reward to risk ratio is a must. With 1:1 R/R you are doomed to failure, no matter how greater your accuracy is.

Tip #3 Improve your accuracy and keep it above 60%

The third and most important piece of advice you can give is to have at least 60% of your binary options in profit. By doing that, combined with a 2:1 Reward to Risk ratio and a small portion of your account at risk, you will be able to pass through some of the losses you will encounter, no matter what you are doing.

To sum up, at least focus on these three aspects, as they can help you a lot when trading binary options. Hope you found this articles useful.


US Dollar Index Gains as Risk-On Mode Returns

This week the situation turned on the upside, as the Irma hurricane had passed and there have been diminishing tensions between the US and North Korea. In terms of US dollar index binary options activity, the price had been trading upwards, covering some of last week losses.

Current price structure points for further gains

Looking at our chart below, you can see that the price had been trading impulsively since Monday open. Interestingly though, the gap that formed at the open had not been filled, as usually happens, confirming that the bulls were eager to continue to buy.

US dollar index chart

To refer a little about the technical analysis, if the upside trend will continue higher, we expect selling pressure to emerge around 92.03 and 92.78, were binary options activity on the downside could resume again.

A retracement lower, on the other side could send the price towards 91.41 swing point, where buying activity could emerge again.

A downward leg is expected before a continuation higher, since the price had been trading lower for a decent amount of time and from a technical perspective, V-shape bottoms occur very rare.

The political situation could play a major key in the future. A UN meeting scheduled for a new round of sanctions against North Korea could revive the downward pressure and the bearish trend could resume. The recent surge in price had been driven by a calm situation in North Korea as the communist regime did not made any significant statements in recent days. In case the UN will decide to add new sanctions, they could respond to them and tensions could arise again.

To sum up, current upside leg had formed due to a relief of the tensions that had been high for a decent amount of time. However, the risks to the downside persist and any new surge of political risks can have a bearish effect on the US dollar index.

Risk Warning and Disclaimer

Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to invest in foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. No information or opinion contained on this site should be taken as a solicitation or offer to buy or sell any currency, equity or other financial instruments or services. Past performance is no indication or guarantee of future performance.


Binary Options Terminology Explained for Beginners

If you want to invest in binary options, you’ll most likely encounter many terms which do not seem familiar. That’s why we’ve assembled this material so you will be able to understand better each of them.

The most important terms you should know

Put option – it is an agreement between two parties (a buyer and a seller) that gives the person who buys the put the right to sell a specific financial instrument at a specific price and time. More simply put, it is bought by a trader who expects the price to fall in value before the option will expire.

binary options

Source: https://www.quora.com

Call option – it is an agreement between two parties that gives the person who buys the call to buy a specific financial instrument at a specific price and time. Basically, it is bought by a trader who expects the price to rise in value before the option will expire.

Underlying instrument – an asset upon which an option is structured. Examples: stocks, currency pairs, commodities etc.

Market price – the current price of an underlying instrument.

Expiry level – the price at which the option is located when it expires.

Early closure – The ability to close an option before expiration. This is not offered by all the brokers and it might have some commissions attached to it.

Strike price – the price accepted at the placement of the option which will be used to determine at the expiry if you are in the money of out of money.

In the money – It generally refers to a situation when the market price is above the strike price, for a call option and below the strike price for a put option.

Out of money – It generally refers to a situation when the market price is above the strike price, for a put option and below the strike price for a call option.

With that being said, the terms above are the ones we consider you should know when trading binary options. Hope you found it useful. Also, we’ll do a part two in the future, with more advanced terms.

Meta description: Find out what are the most important terms related to binary options. See what each of them mean, so you can understand better the process of trading binary options.


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