There is no perfect strategy, it is only strategy that can work for your personality and your style of trading. That is what you need to find. That is why even if the strategy is supposed to be the best, it can not work for you if you are not comfortable with it but it can be great for someone else. That is why it is good that you try and read many strategies and see what can work for you. So let us take at another binary options strategy.
HOW THIS STRATEGY WORKS?
I have to point out it is a simple strategy so it is easy to give it a try and see for yourself if it works for you. Only thing you will need here is to download this aprticular indicator, called Trend Winner:
Download Trend Winner here
Although it has this cheesy name it does the job done for this strategy. When you install the indicator, it will show you overall trend of the choosen asset and it will do so by changing the color from red to green and green to red. To put this into binary options trading, when you see green trend, then it is time for call only and when you see red, it is time only for put.
You now have some basic overview on how this works but we also need to determine when to enter the trade exactly. This is what you need to wait for, setp must be two one hour japanese candle bars of the same color as our indicator, trend winner is. The exact entry comes into place at the start of the third candle with the same color. Expiration time to use with this, should be 60minutes but you can also use higher time frames. For a higher win probability, it is suggested that the candles are in a slope motion, meaning there is a strong trend. Therefore it is not recommended to enter a trade when the price is the same height even though it is the same color, so make sure it is in a trend like shown here:
You can see white marked areas, each of them contains candles that are green colors and if you would take a call at each one of them at the begining of third candle, it would have been a successful trade. To make sure, here are entries you need to watch:
- When you see the trend winner indicator is in green color
- Wait for two candle bars turn green, one after another and in a slope
- Enter the trade at the start of third candle with a call
- When you see the trend winner indicator is in red color
- Wait for two candle bars turn red, one after another and in a downwards slope
- Enter the trade at the start of third candle with a put
WHY IS THIS STRATEGY BAD AND WHY GOOD?
As you can see it only works with a strong trend behind, so do not go into a trade if there is no trend since you will be out of your money. Of course you can easily avoid this by following the strategy rules, that is why it is good for you to keep with volatile binary options pairs. It is easy to follow the rules since it only wants you to determine colors and a slope. When you get this in order, you will have more winners then losers and that is the point.
As with every strategy, you have to follow the rules that are meant for it, otherwise it is not the same strategy and you will get frustrated. It also uses higher time frames which means it is even more reliable to use. I think it is great for beginners to try this out but as always, test it first yourself.
It is more of a system then a strategy that is used in various fields and it is known for a long time, it could very well be one of the most known strategies. It is originating from France where they played a game of coins in q8th century where a player would win if the coin he tossed turns up heads and it loses if coin comes around on tails. As you see it has nothing to do with trading but you can apply it to trading. To simplify things, if this player wins then it is ok, he can go and spend the winnings but if he loses, he has to double the bet and win in order to cover the loss. Let us take a look at the example:
Starting with 1$ bet. Coin flips and is a loss, so the next bet is 2$. This way the player ensures that if he wins now, he covers for previous loss and also makes 1$. Now, he lost again, therefore he has to double the previous bet, which is 4$ now, which will cover his previous loss and also make him 1$ of profit. This can go on and if doubling the initial money would go on it would look like this: 8$, 16$, 32$, 64$, 128$, 256$, etc… Eventually it should win and cover the losses. This is the explanation on what in essence martingale strategy is.
WHY IS IT BAD AND WHY IS IT GOOD?
In theory it may sound good but think if 5, 10 or 15 strikes of loss occur, which is very possible. What to do then. Means that you would need a hefty amount of money in order to profit from such strategy and it can go out of control really fast. It is based on pure luck as tossing coins is. But there is also some hope aswell for it.
You need to also know that this is mathematically proven fact that eventually you should win. Loss after loss just means that you are closer to a win that is why you should keep in betting. Problem with this plan is that, as we have already pointed out, infinite amount of money and other hand also time but it is not as much as important as money is. No one from us has infinite money, otherwise we would be enjoying on the beach. But also, a trader does not gamble, he wants to put the percentage of win in his favor, that is why he does the analysis and prepare for the trade. Imagine then, this strategy with a great analysis, this way it is more possible to win but you really have to be consistent and not a beginner in order give it a try.
I would still suggest that you use this at extreme precautious. This is more of a money management strategy if you look at it this way. As we say it is possible to use this to turn into profits for yourself but the other way of loss is also possible so keep it in mind. You have to be extremely cautious when dealing with this kind of things.
Binary options builder tool is offering traders to customize and make their own trades from start. Basicly, you have a control to choose which asset, what expiration time, risk settings you are comfortable with and the amount to invest into. In theory, this is the best thing that can happen to a trader and least risky since you are in control of what is going to happen.
WHAT YOU WILL LEARN HERE:
- What is binary options builder tool?
- Why is it bad and why is it good?
WHAT IS OPTION BUILDER TOOL?
First step is simple since you just have to pick the asset you wish to trade. On the next step is where it is starting to differentiate from normal binary options trading. In normal setup, you would just click on the list and choose the expiration time while here the idea is to choose in a list of hourly, daily or weekly expiration time and also the minutes you want. This can be put into good use for traders who rely on news since you can close the trade before the news will come out so you make sure the investment is in safe place. It also comes in hand for traders who like to trade over night. Next or third step if you would have been trading normally, you would see one outcome or percentage of reward while with this tool you can pick from different outcomes that of course affect the payout or profit you will be able to get from the specific trade. It is reasonable that the lower you will want to risk, the lower be your reward at the end. After you have choosen and go through these steps, only thing that is left is to choose the amount you are willing to invest and start trading.
Let us take a look at the picture for example. We have choosen the asset that will expire in 3 hours and 10 minutes from the start of a trade and it will give us 62% of profit if the trade is going to be profitable and 20% if it is going to be a bad investment.
WHY IS IT BAD AND WHY IS IT GOOD?
In theory the tool is very good since who would not want to setup his own trade and profit from it. But if you login into your brokers platform and check this tool you will see it is actually very limited and not as described. All the options are preset and very limited. There is a room for imporvement of this tool to work as they describe it because it is definitely not working now as it should.
But on the other hand there is some advantage for traders who like to trade short term since it allow them to trade over the night. As you can see, majority of binary options is to trade through the day but with this you can trade over night if the market is open the next day of course.
At first it felt like this is something that could benefit all but after using it and trying it out, for now it has far too much limitations to be worth of use. Maybe if you ahve some special strategy setup for it, then yes. Otherwise i would suggest to use normal binary options for now.
We have covered several strategies that are great for beginners in binary options. Since all of these strategies cover technical analysis, let us now check how you can use economic news for your profit but you have to now from what sources to read it. We know that binary options is still new to people and therefore is considered as volatile investment. Even if it is so, rules of economics apply even here. For example, if in Middle East there is something going on, it will impact the oil and even US dollars aswell as companies that operate with that region. Another example can be, if there is a natural disaster in South America which i hope does not happen, it will change the price of coffee to a higher value simply because the supply is not steady. Because of so many possible scenarios, you have to look at the news.
As we know, with binary options, if we simplfy them, we have to choose only beetwen two options. One option is, if the asset will increase over a certain period of time and second option is, if the price of the specified asset will decrease in certain period of time. That is why it is good to keep an eye also on the news. You should always have open some trusted finance source of news since you never know when something new will come in.
WHAT ARE GOOD SOURCES OF NEWS?
It is true that there is no such thing as too much when it comes to this but eventually you will have to pick few websites that you like otherwise you can read news your whole day and not trade. I would always suggest to read news and then check also technical analysis of that asset. If technical does not meet the fundamental as we call this part of news analysis, then i would not trade yet since technical analysis on chart is what is important and what you trade.
I would suggest that you start reading Bloomberg, The Economist and of course Wall Street Journal. These website are very well known in the industry along with Yahoo finance and several others. They are in constant motion as you and they even offer you analysis on what is going on, on the market. If you are a beginner i would suggest that you make a decision and only follow what you want to trade, so niche sites are also great idea since they will ofer you news based on what you want. For example, if you are into currencies then you must bookmark and check investing.com and also FXempire which is a great source for currency pairs and updates. Another example, if you want to trade oil, you have to be up to date on what is going on and therefore it is a must to read oil & gas journal.
Since majority of binary options traders like to trade short time frames there is no need for them what are trends in finance for long term therefore it is a must to follow news. Since price of certain asset can change in a matter of seconds and minutes based on news and hw powerufll it is. So if you will not follow news, you will be blind and will not be able to predict what can happen next.
Volatility is a word which means measuring a financial asset movement over period of time. In this measure, you do not take the direction of the asset but simply, only the movement itself. Volatility can for some traders be good but for others even bad and they can fear it. But it is good that you are aware of what is going on. Currency pairs that are more volatile means they move around more.
WHAT YOU WILL LEARN HERE:
- What is volatility?
- How to measure it?
- Should you be afraid of volatility?
- Why is volatility good for binary options?
- What are most volatile currency pairs?
- How is the best to trade it?
Now you have a better perspective on what volatility is but it can also mean for some traders that the market is becoming more active so it has different meaning for different traders. Since in binary options it is all about movements, higher volatility is better. You can see here with what you can measure volatility:
- Bolinger Bands
- Average True Range
- Elder Rays
- Chaikin Volatility Oscillator
SHOULD YOU BE AFRAID OF VOLATILITY?
As we said at the beginning, there are traders that actually are not comfortable with volatility since it really can be unpredictable. They are afraid because with one swing of a price, they can be in profit while the price can turn in other way aswell and they are in loss really fast. That is why, there is a higher chance to lose your account this way. Trading it in binary options is different since it is based on expiry time and therefore you can not be influnced by this huge movements in the middle of the trade since it all just depends how it will be at the end of the trade. That is why it is much easier to trade such volatility with them. But there is another problem which can happen even in binary options and volatility, that is, you can get fals indicator to enter the trade but with practice you can learn this aswell.
WHY IS VOLATILITY GOOD FOR BINARY OPTIONS?
We said that volatility is measure by movement and that is also the reason why is it good for binary options. We trade binary options based on movements and assets that are highly volatile means that they will also move much more and this is good for everyone that is trading binary options. You are probably asking yourself how can this be good for trading binary options and here is why. One of the reasons is becuase you want your asset to be moving since you want clear definition after exipration time that it will be below or above your strike price. The worst is that you have to watch your trading asset moving always around your strike price. Another reason is similiar but different and it is the amount of the movement. Meaning for example, you probably want your asset to move far in the money zone. That can only happen with volatility.
MOST VOLATILE CURRENCY PAIRS
We have six currency pairs that are the most traded and they are: AUD/USD, EUR/USD, GBP/ USD, USD/CAD, USD/CHF, USD/JPY. All of them have different level of volatility and what is the best pair to trade depends on the trader itself. You have to feel comfortable with trading and do not trade all of them at once. It is also good for a beginner to first learn and feel comfortable trading a pair that is less volatile and then move on. This is just to keep money on the safe place but you can always try it out in your demo account.
WHAT IS THE BEST WAY TO TRADE THEM?
You can apply same strategy you are using for less volatile assets even on high volatile ones but you really have to be alert on what is going on in the market and have bigger picture in front of yourself, meaning you ahve to look at different time frames. Because the difference is they are more active, therefore you can get signals that is not even there and can be faked. Follow the trend and i would suggest to look for breakouts or breakdowns. We have covered strategies for beginners which can be applied even here, that are MACD, TSF and so on, learn more about them here. Other thing that can work well with this can be fibonacci retracement. High volatility can be used for trading binary options with 60 seconds expiry time but always be cautious.
As you can see, volatility can be a good thing since you can make big movements but there is always another side to that. That is why you have to learn and get knowledge so you can be better trader. Get in place proper technical indicators which will singalize you when to enter the trade and profit from them. Since there is more volatility in the currency pairs, mens there is also more opportunities that you can take advantage of.
May the force be with you. But we will not do any mind tricks to the market, only measure the momentum of the price. This indicator was made by Alexander Elder who also wrote a book called Trading for a living which is recommended for a new guy. This indicator is actually an oscillator which is trending in a boundary over and also under zero. It is using movement of price and volume to determine momentum in the current market you are trading in. Alexander who invented this indicator believes that three things are important for specific asset movement, which are: direction of the asset, volume of trading and extent. Now, this indicator is measuring this power with which as we said you can determine trend and also reversals.
WHAT YOU WILL LEARN HERE:
- What is force indicator?
- Download force indicator
- How to use it?
- Why is it bad and why good?
Download Force Indicator Here
HOW DOES FORCE INDICATOR WORKS?
Ok, so let us take a closer look at how does this work. It is actually simple to use. First thing you need to do is to get closing price of specific asset from day before and substract it from current one. With this, you get direction and also extent. When you get the number, you have to multiply it with the volume to get F1. Nex thing we have to make oscillator plots that will be moving average of results. Alexander is suggesting to start with 13 exponential moving averages. When you will get familiar with the indicator, you can adjust it for yourself. When you have days that have small movements and small volume means that the force is weak. When you have days with big movements and high volume,means you have strong force. You can see the force is showing on onscillator this way:
WHY IS IT BAD AND WHY GOOD?
To be honest it just needs some time for a new trader to get used to it, otherwise it is not bad at all. Of course it is not 100% and can happen it can fake it, so you can make sure of that. Beside that, it uses good information for displaying indicator from which you can get signals for trading. You can use it reliably as trend support and it is good to check with multiple time frames. It is also good if you want to determine the top.
It is overally a great tool which is great for a beginner to start with and learn for future. Indicator can also provide you insight on volatility of certain asset. You can add it also to your current strategy as momentum oscillator. Just remember when your chosen asset is quiet and lazy the line will be flat and when the asset will be high in volume or daily range then you will see that also in force index.