Volatility and Binary Options

If you are familiar with the financial world, you have probably heard many times about volatility. For those of you who do not know what volatility is, we must begin by saying volatility represents the degree of variation of a trading price over time.

volatility

Source: https://flextrade.com

We say volatility is high when price variations are high and it is low when price variations are low. Volatility is like water for traders, they need volatility to make money.

Warren Buffett, one of the greatest investors of all time once said: “If the market would be balanced and stable I would be a poor man”. So, he acknowledges the importance of volatility in the investing sector.

Does volatility have an influence on binary options traders?

Of course it does. Even though as a binary options trader you are not trading the underlying instrument, binary options are influenced by the actual assets they represent.

If you are trading binary options on the EURUSD and the pair is very volatile, your trading activity will be influenced by that.

How to protect and benefit from volatile environments?

Volatile periods could be profitable but bad for some traders at the same time. And that is because most of the traders do not have a strategy designed specifically to that kind of environment. You should place your stop losses at a distant place, trade lower volumes, place binary options around critical support/resistance areas, monitor your account constantly etc.

Trading in volatile conditions is tough and you will need to dedicate more time than usual if you expect returns.

Also, you need to understand the behavior of each asset you are wanting to trade. Look how the price had fluctuated in the past, see the average weekly range, monthly range in order to see how volatile that instrument had been in the past.

Information can save you when trading binary options, so make sure to constantly study and learn new things, improve your current methodology and develop that mindset which can lead you to success. Remember that volatility could be your best friend and knock you down each time you are overconfident.

15 Responses to “Volatility and Binary Options”

  1. What’s Taking place i’m new to this, I stumbled upon this I’ve discovered
    It absolutely useful and it has aided me out loads.
    I hope to contribute & assist other users like its aided me.
    Good job.

  2. Somebody necessarily help to make significantly posts I might state.
    That is the first time I frequented your web page and to this point?
    I surprised with the research you made to create this actual put
    up extraordinary. Wonderful job!

  3. You could certainly see your expertise within the work you write.
    The sector hopes for even more passionate writers like you who aren’t afraid
    to mention how they believe. At all times go after your heart.

  4. Hey there! Someone in my Myspace group shared this site with us so I came to take a look.
    I’m definitely loving the information. I’m bookmarking and will be tweeting this to my followers!
    Great blog and brilliant design.

Leave a Comment

Binary Options Zone Copyright © 2019