This article was written by Connor Haеаrison from Binary Brokers (BB). BB makes efforts to train its traders so that they can understand the recommendations regarding binary options, international legislation, risk management and other issues related to trade.
Trading binary options are one of the most popular trends in financial markets today. Both experienced and novice traders are rushing to include them in their investment portfolios. Like any other trading platform or business, you need to have a strategy for using to consistently earn money.
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If without a strategy or tactics to help you trade binary options, you can also think about yourself in gambling. Reliance on luck is not very safe in trading binary options because it ultimately does not work for you and can lose all your investments. You will need a solid technique that you can use every time that will help you make the right predictions. In addition, you need to use a strategy that you understand well and that constantly increases your chances of winning.
Bet or trade?
Strategies are usually divided into two groups. These categories;
· Rate strategies based on models - In these strategies, it is assumed that the investor will use the bid strategy, whether they are familiar with the financial markets or not. These strategies use several tactics, which are designed to increase the probability of winning. Strategies based on the news are the best example in this category.
· Market behavior strategies - In this strategy, the investor is based almost exclusively on the technical and statistical data that are readily available or that they have researched and worked. Although these strategies are a little more difficult to understand and master, they are the most reliable, because they are objective. There are techniques that will help you understand some data, such as charts, and which will facilitate a new trader.
I - Strategy of fundamental analysis
This strategy involves analyzing the behavior of the overall performance or attributes of the company. As an investor or trader in binary options, you are interested in knowing the balance sheet, profit and loss statement and cash flow statement of the company before considering buying an option. Other factors that you should check include the satisfaction of the employee and business partners. In short, this strategy tries to look at the overall picture of the business that they want to invest in their shares, and sometimes in the overall industry.
II - Technical analysis strategy
This is a pretty popular strategy in trading options. Basically, this concerns the study of the past, using various parameters, such as diagrams, to predict the future price of an asset. This method is not related to obtaining the intrinsic value of an asset. This is quite useful in trading options, because, as a trader, you do not need to delve into the company's financial statements. Among the tools used in the technical analysis, including Bollinger bands and Moving Average among others.
III - Core Options Strategy
This strategy is quite popular among options traders. It is designed and used by the trader to protect himself from the total losses from his investments. You will choose the underlying asset or currency that interests you, and then, if the market price movement for strikes goes to a good direction, say up, you put a call option. At the same time, you put the put option on the same asset.
Let's use an example:
The exchange rate GBP / USD is 1: 4000. You set a call option in the amount of $ 100, which expires in 30 minutes. The payment is 70% and 15% if you lose. During the first 15 minutes, the asset is at the level of 1: 4015, which is good so far. At this particular time, you buy a put option for the same asset at 1: 4015, expiring in 15 minutes, at $ 100. Payouts are the same as the call option.
After 30 minutes there will be two results;
· You get a win on 30-minute options and 15-minute options. You will receive $ 185 from 70% of the winnings from the winnings and 15% consolation from the put option (the opposite may occur, you can defeat the option and options).
·Both the call and put options turn out to be in the money. You will receive $ 340 ($ 170 + $ 170). Since it is almost impossible to lose only $ 15 to win $ 140 in both cases, the overall risk of loss in this strategy.
IV - Algorithmic and signals
There are applications that are sold and that are very good at trading or analyzing market data. Perhaps you will benefit from investing in such an application. This application is installed on your computer and collects the necessary data, and then analyzes it to get the best results. Here we use the data of technical and fundamental analysis.
Then the computer will choose for you a deal in which you can trade. You can even go and develop an application that will bargain for you. However, you need to regularly update the raw data from which the application selects its analysis data.
V - Strategy of joint integration
There can be two stocks on the market with a high correlation. This may be due to the fact that they are in the same industry and are traded in the same market, so they have the same effect on many factors.Given the high correlation between such a pair of shares, you will find that whenever there is a gap between them, it will soon close. The gap may be caused by the weakening of one stock temporarily. The main task here is to identify the gap.
After determining the gap, you should buy a call option for shares, which is a weak or put option for the asset, if the stock price is worth more. In the end, two assets will fall into the path of correlation, and this should be the "exit point".
Strategies, as well as investment options, are many, and you can get one that gives you consistent winnings. If you are a new trader, study well and determine the strategy that best suits your trading portfolio and template. If you are a little more experienced, you can create your own strategy or combine the two existing ones to form a hybrid