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
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.
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.
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.
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.
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.
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.
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.
US indexes had performed badly yesterday, with the Dow being the one who was hurt the most. The price slumped more than 200 points, top tick to bottom tick, as the tensions between the US and North Korea continue to be at high points. Binary options activity had been extremely intense yesterday as the move progressed on the downside.
Latest comments from both US and North Korea officials had fueled the risk aversion as the situation seems that it will escalate further in the near future.
Technical pattern suggests further continuation might follow
Looking at our chart below, the downside move started on September 1st, after the release of the US NFP and Unemployment figure, which came below market expectations. The market then gapped lower since over the weekend news regarding a successful test of a hydrogen bomb by North Korea had been released. A consolidation structure followed after the gap, confirming that the buyers were not eager to fill it and regain terrain.
Following the consolidation period, we see an impulsive bearish leg down, which took place yesterday, which account for more than 200 points. Interestingly though, after yesterday slump we see again a consolidation structure building up, so a usual impulsive vs. corrective move structure, which could signal additional selling might follow.
If the political tensions will escalate further we expect the price to resume the downside and break below the bottom of the current consolidation. Binary options could be placed in case a breakout occurs, so there is a lot of profit potential on the table.
The US equity market is in a very bad technical position and current downside risks might trigger a stronger wave of selling as the prices are still located around all-time highs.
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 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.
If you are reading this articles, you most likely want to learn more about binary options. And you want to learn more about this subject because you want to make money. That is the ultimate goal of trading, no matter what market you are involved and it should be yours as well.
However, just saying “I want to make money” won’t get you there and also, this is not the most exact finish line you can have.
Planning is a critical aspect, but before we dig into the actual process of making a plan, let’s first focus on the objectives of a plan: goals. And more specifically, let’s see how you should set them effectively.
As George T. Doran said “There’s a SMART way to write goals and objectives” so let’s see how his method works.
From his point of view, a goal or objective should have 5 basic characteristics:
S – Specific: it should be clear and define exactly what you want to achieve;
M – Measurable: you should quantify it with at least a progress indicator;
A – Achievable: specific to those you want them to become real;
R – Realistic: you should set goals that can be achieved, in an objective way (becoming a billionaire out of binary options trading in less than a year is not one of those).
T- Time: you should also set a deadline for the goal that you’ve set.
By taking into account the aspects described above, you can effectively set your own goals and set them in a way that you could accomplish them.
Knowing exactly what you want and having it all written somewhere, is one of the factors that make a difference between those who are making money when trading binary options and those who don’t.
With that being said, think about what you have done wrong in the past when setting your goals and see what you can improve from now on, in order to be able to achieve great success when trading binary options. In a future articles we’ll discuss in greater detail the planning process, but until then, we hope you enjoyed this one.