Types of Binary Trading Methods
One of the most important steps that you can take in learning to become a binary options trader is coming up with a trading method. Do most people plunge into binary trading without taking all these steps? Unfortunately yes, but you don’t have to be one of them!
There is always going to be an element of risk to trading, but you can mitigate that element by having a great plan.
What is A Binary Trading Method – Straightforward Trading Methods
The method you use to trade binary options is the things you do, or the resources you utilize to make your trades. If you are not using some sort of method you are essentially guessing. If you have a method, a binary trading method to your madness so to speak then at least when you are making trades there are concrete reasons why you are doing so. This is important because as you develop and refine your method for executing trades you can improve your win rate, and your profit.
Three main types of binary trading methods.
Fundamental analysis. This is a type of binary trading in which you allow your knowledge of economics to drive your trading decisions. People who trade using fundamentals often focus on trading financial reports and big news events. This is a form of speculation that will only be profitable to you over the long run if you become a genuine expert in your field. You know the underlying causes and effects regarding a certain asset and your knowledge of these areas allow you to predict what is going to happen to price over a given time. If you are an expert on the FX binary trading currency pair of the EUR/USD then using your in-depth knowledge of the pair will give you an advantage in predicting fundamentally what is going to happen to the currency pair and allow you to bet accordingly.
Technical analysis. With technical analysis you place technical indicators on your charts and use them to make a determination about what price is doing. There are endless ways you can combine technical indicators to try and make a binary trading decision. Some methods are very complex while others are quite simple. You can use indicators like fib lines (fibonacci lines) which can help you predict where price resistance points should line up. This is a great starting place for many learners.
Price Action – Price Pattern analysis. Price pattern analysis is similar to technical analysis in that you don’t need to build up a knowledge of economics in order to succeed (though it might help you to put a framework on what you’re doing). Price pattern analysis means looking at the patterns in price itself for indications of what price is doing. There are many recognizable and relatively reliable patterns. You might trade them by themselves or you might use technical analysis to provide further context and choose the best trades. You can analyze price patterns by learning how to understand a candle stick chart
By using a method based off of one or more of these types of analysis, you can execute consistent, reliable trades. Binary options trading is often likened to gambling, and that’s because you’re doing something risky. It’s also because many people do choose to gamble on their financial instruments. Speculation may be exciting, but losing your bankroll sure isn’t. If you decide to put the time and effort into learning how to analyze the market, you’re far more likely to succeed, maybe even for the long term.
You’ll find hundreds of systems based on each of the above methods and you can also create your own from scratch. That is the beauty of trading binary options, it is a simplified design that allows you multiple ways to effectively trade binary options for profit.
Additional Ideas For Binary Trading Methods
- Use A Signal Service – These services thrive by correctly predicting profitable binary trades. Get on their list, get notified via email or instant message when a good trade looks prominent, get the asset, the price and the direction to get in at and let the signal service do the talking for you. Today the most popular signal service is called ‘BOTS’, found at binaryoptionstradingsignals.com.
- See this list of US accepting trading websites (source).