The binary options industry owes much of its popularity to the ease of which traders can place their trades compared to other forms of trading which generally requires more technical understanding and deep knowledge of financial markets. Trading randomly does not make someone a pro, but being able to interpret factors impacting the value of assets even at a basic level increase the chances for traders to make successful trades.
Characteristics of a good trader
To succeed in binary options traders need to have several characteristics which will help them to better assess the risk associated with the trade and hence decide whether or not it is worth it to go with this particular asset or it is better to move to another trade. This traits can be nurtured to become a professional. BinaryOnline want everyone using its platform to acquire these, here are some of the most important one.
One of the most important characteristics of a trader is discipline. Discipline is required at all levels of binary options, if he/she does not have this characteristic then his/her journey becomes complicated. It is also required to be able to stick to their plans, carry risk and money management which are crucial. This particular characteristic helps to know where one needs to let it go for the day and not being too emotional.
Let’s be clear, nobody becomes a trader overnight. Persistence helps them to get over the rough times for better days. There will be some who will fail at the offset because they have not yet mastered all the features that BinaryOnline has put at their disposition. In every new thing which you attempt, there is always a learning curve which takes a certain amount of time. Some traders are able to make it great from the start while others might require some more time. Some can make consequent losses then give up, while those showing perseverance catch up all their losses with a huge profit after a few trades.
It is often recommended that not to trade while being emotional whereby their trades will be influenced by emotion. But as a human being, it is almost impossible, not to feel any emotions especially when money is concerned. Some traders prefer the term of being calm in approaching their trades, rather than being emotionless. Being calm will allow them to properly identify the various factors affecting the chosen asset and the potential risk which its trade faces without being actually biassed.
It’s in our human nature to be cautious when it comes to money, however, this might lead some people to take endlessly to decide whether or not they will invest in a trade and in the end lose the opportunity of investing in a winning trade. Decisiveness is an important characteristic as it is what trigger the process of carrying a successful trade. Traders need to strike the right balance between being too quick to place a trade and to be too slow to go forward. Decisiveness however in all fairness also relates to confidence, the more confident you are, the higher the probability of placing a trade at the right time.
Strategies to adopt
Strategies are of key importance to guide traders in their trades. Without a proper strategy, the possibility of a smooth trading journey is considerably reduced. Strategies help them to know in which asset to trade when to trade and even how much to invest. Strategies exist in numerous forms and of different levels of complexity. The more complexed are usually those who are the most appreciated by professionals. It is, however, interesting to note that even the basic strategies give very interesting indications to make the right decision.. Those basic strategies, though being simplistic are often used by advanced traders as well.
We have listed a few of these strategies below.
- Trend Line strategy
This is one of the most basic strategies which is appreciated when trading binary options. It consists of drawing a line on the chart showing the movement of the value of assets to know in which direction they are moving. This valuable piece of information will help traders to determine whether they should opt for a Call or a Put.
- Pinocchio Strategy
The Pinocchio strategy is used mostly when there is a persistent belief that there will be a drastic change in the value of an asset in either direction. Also called Pin bar, when the Pinocchio wick gets longer, it mean that it is lying to us, consequently traders need to place a Call option when the long wick is down and place a put when it goes up.
- Straddle Strategy
The Straddle Strategy is used in special circumstances, that is when there is high volatility in the market or it is rumoured that there will be important news which will affect the value of the asset. The strategy relies upon placing a Put option when the value have risen while bearing in mind that it will shortly fall. It can be carried the other way as well.
- Risk Reversal Strategy
The Risk reversal strategy entails placing both a Call and a Put on an underlying asset while significantly investing more in either the Call or Put option. One of the trade will be successful while the other won’t. This strategy is about loss limitation. In the event that the trader have invested more in the winning trade, the trade will be profitable while the risks associated have been mitigated.
Useful tools for binary options
Tools are very indicative and are useful to maximise the profit potential. While several tools are nowadays available, there is no doubt that these tools will continue to evolve on the long run.
Even if there are several charts which are used for trading purposes, the candlestick remains one of the most popular among those trading binary options. The candlestick was in fact developed by Homma Munehisa, a rice trader from Japan. Each candlestick represents a time frame which will depend on the chart, colours represent direction. White or Green candlestick tends to indicate that the price will go up, on the other side Black or Red, represents a downward direction.
The Candlestick is divided into two parts, the wick and the body. The longer the wick gets, the more it means that the market will actually move in the opposite direction. While the candlestick gives valuable information, traders will get a better insight if they confirm their findings with the candlestick by choosing other tools as well.
- Support and Resistance levels
Support and Resistance levels are crucial, no matter which chart you opt, few match how important the Support and Resistance levels are. Both lines show the limitations of the market. The Resistance line is found at the top of the chart and indicates the highest value that the asset has reached during the process. Resistance lines give precious information. Likewise, Support lines are found at the bottom of the graph, it is a point where the value of the asset will not go lower. Traders use the Support and Resistance line to portray a possible movement of an asset while getting more indication on the maximum and minimum limit that these values will not exceed or fall under.
Tips to remember
Above the strategies which we have provided. There are several other tips which could be handy when trading on binary options.
- Submit all your compliance documents
Make sure that all your compliance documents have been submitted. BinaryOnline adheres to strict financial regulations even though we are not liscensed yet. In order for you to be able to start trading and to withdraw your profits, you need to make sure that all your documents have been submitted.
- Do not invest more than you can afford
Binary Options like in any form of trading involves some form of risk, it is wise to set aside a fund for trading. But do not over invest by trading money which was intended for basic needs such as rent, food or medical cares.
- Stick to your strategies
Strategies as we showed in this section, is an important aspect of binary options. Hence it is primordial that you stick to your strategies to ensure that you are moving in the desired direction.
- Learn to decipher news
News have a direct impact on the value of assets. You should know that the prices of asset can move by heaps upon important announcements, reports or international developments.
- Remain Calm
Remaining calm is an advice which most senior traders would give. Keep a calm mindset, do not let feelings of bitterness take over you. Emotions are what most of the time create unfounded situations.