The Keys to Profitable Binary Option Investing
Binary options trading is extremely lucrative. With profits as much as 75% in an hour, you can make money very quickly. However, that opportunity for gain is a double-edged sword. You may also lose money right away if you don’t pay attention to a few basic concepts. If you follow these three strategies, you will greatly increase your likelihood of taking profits.
Do Not Trade to Often
Warren Buffett once said, “There are no called strikes in the market.” What The Oracle of Omaha meant by that was it’s fine to pass on as many trades as you like. You don’t get hurt by skipping over buying opportunities. This definiltey holds true with binary options, because new options with new strike prices and new expirations are being constantly issued.
Trading too often or acting too quickly will burn you when trading binaries. Stay grounded and do your analysis. Don’t trade on gut feelings or hot tips. If you miss out on a winning trade, don’t worry about it because there are always new opportunities opening up. Don’t be rushed to jump into an opportunity simply because think it will begin to move higher. If you ever think you’re trading too much, take a step back and call it a day. There will be plenty of new opportunities tomorrow, and you’ll have a much clearer head to view them with.
Regulate Your Trade Size
The great part about binary options trading is that you can make big gains in a very short period of time. However, this quick movement in money works both ways. You can also suffer big losses in a short period of time. Due to this, it’s very important that you don’t take too large of a trade in any particular issue; regardless of how sure you are in the trade’s probability of going your way. Don’t fall into the trap of, “betting the ranch on a sure thing”. You may have many of those trades go your way, but it’s just a matter of time before one of them burns you.
Trade size is critical because regardless of how good or how thorough your analysis is; even the most successful traders will inevitably end up in a difficult stretch of losing trades. If you’ve moderated your trade sizes appropriately, you will live to trade though it until things turn around.
We recommend that you never put more than 5% of your binary trading account into any one contract. If you get started funding your account with less than $600, you won’t be able to abide by this rule, because the $30 trade minimum will be more than 5% of your funds. If you simply don’t have $600 to get started with, that’s OK, but just remember that you are putting yourself at a higher risk of running out of money if you have a few bad trades in a short period of time.
Use Technical Analysis Appropriately
There are several different techniques and theories behind technical analysis. We have found that for most successful traders, it’s not the technique that used, but how it’s used that determines the ultimate success or failure of the trader. If you have a technical analysis plan that has been checked for accuracy, it’s important that you use it consistently, and don’t second-guess the data. If you can’t fully trust your technique in this fashion, you’re better off looking for a new strategy.
The next important item regarding your charts is to use a time interval that is appropriate to the short-term nature of binary options. We generally recommend 3-minute charts for all options that will expire that same day, and hourly charts for any options that expire at the end of the week. As always, back test for accuracy within your technique, but there’s no reason for using a daily or weekly chart when trading binary options.
Charles Clark has been trading options for nearly 20 years and is now bringing his wealth of experience to the binary options market. To learn more about binary options, or to get started trading, visit: Binary Options Trading
