Binary options trading strategy
Below are the main types of binary options trading strategies:
- Discretionary type of trading strategy. This type of trading is based on the trader’s intuition and criteria. There are no hard and fast rules that he must follow. However, a trader usually uses the same analysis tools (technical indicators, chart readings, information about the economy, and so on). The trader relies on his subjective perception based on personal experience, and not on the objective use of the analysis programs that he has at his disposal.
- Mechanical trade. Based on proven back-testing parameters of historical market data. When the entry and exit points of a position are fixed by a trader, it is necessary to follow the instructions of these signals. The emotions of the trader are excluded here. Mechanical trading is similar to automated trading and the opposite of discretionary trading.
- Fundamental trading. This is a type of market analysis based on the reasons for price changes, such as news, political and economic events. Analysis of charts and characteristic indicators of technical analysis are shifted into the background. Markets often react differently to the news. Therefore, many traders combine a combination of technical and fundamental analysis. It all depends on the financial instrument being analyzed.
- Technical trading. Technical analysis is a common term among traders. It includes everything related to charts. The analysis of charts is based on the change and movement of quotes. In this case, the past quotes are taken as a basis. This is an analysis of historical data, the purpose of which is to predict price movements in the near future.
- Trade on the current trend. The main goal is to monitor market trends and benefit from both rising and falling prices in financial markets. Most investors use a variety of tools to determine the direction of the market: chart patterns, average movement indicators. The trend is followed until it changes or fades away.
- Range trading. The base is the segment in which the price will return to its starting point. Here, all traders speculate on the possibility that the price will remain between two levels and move from one level to another. The highest level of the range is resistance, the lowest is support. The price cannot pass these levels.
- Trading on trend reversals. This view is used when the current trend is no longer relevant or has changed. Thus, forming a new direction in the market, thanks to the new trend. To determine the end of a trend, it is important to monitor the support and resistance levels on the chart that the price has reached. Trend reversal patterns are also important.
In order for options trading to bring good income, it is necessary to choose an effective and successful trading strategy, which is the key to successful trading. But out of the many different strategies, it is very difficult to find the one that will help you make money. There are a large number of binary options indicators that are used to develop various strategies for trading options.
All strategies are complex systems that have been developed based on the experience of traders. However, before you start using any trading strategy, you need to make sure if it works for you and if it really is the best one. It is worth noting that a reliable binary options trading strategy should include more than just indicators. For good earnings, you need to add to it:
- risk management – budget management;
- fundamental analysis;
- volume analysis.
Many successful brokers advise, before starting trading and choosing a certain trading strategy, to familiarize yourself with the presented list of brokers and choose the best and most suitable one. Cooperating with him, you will use the trading strategy with indicators that he uses.
Please keep in mind and do not forget that any trading strategy can ideally work with any asset, and at the same time absolutely not work with another asset. For example, strategies that perform well on EURO / DOLLAR cross-rates may not work at all on Indices and Stocks, and this is normal. If the trading strategy does not work, this does not mean that it is bad – it is just that each has its own asset to trade.
There are many different types of binary options strategies. Some are easy to apply, others are difficult. The main thing is to choose your own from them.