When Should You Avoid Trading Binary Options?
Binary options trading gives you an opportunity to participate in a number of different markets. Most binary options brokers will offer you the chance to trade commodities, currencies, stocks, and indices. These markets are all open during different hours and days, which means that you have more chances to trade than you would if you were trading in only one market. That doesn’t mean you should be trading all the time though. There are certain times where trading is likely to cost you money—though there are people who excel at profiting during these times as well. As a beginner, however, you should probably steer clear.
Skip The Weekend
Avoid trading over the weekend. When a market closes and then re-opens a couple of days later, there is a lot which takes place in real life during the days when the market is closed and no one is trading. Then when everyone comes back when the market opens, you see higher volatility because those events and the general uncertainty which resulted from the time off from trading suddenly influences the prices. There is usually some instability and then a corrective period. Trading in the middle of the week helps you to avoid this kind of unpredictability.
Avoid New Releases And Other Major Events
Don’t trade during news releases and other major events—with a couple of exceptions. The first exception is if you are deliberately trading fundamentals, and you know what you’re doing. If this is your strategy for making money, obviously it’s when you should trade. The other exception is if you’ve tested your strategy without regard to events and news releases and it’s proven profitable in spite of them. If you suddenly stop trading during those times, you’ll potentially mess up your trading method. Why should you avoid trading during news releases otherwise? They result in high volatility and choppy prices. (Check out this YouTube video below for binary strategy tips)
Choppy markets overall are never good for making money. When there are a lot of whipsaws and fakeouts, most people don’t do too well. Think of these market conditions like choppy seas that are hard to sail on without damaging your vessel. Choppy conditions can result from economic instability or any number of other things. When you see them, you might try trading another financial instrument until things smooth out a bit.
Try not to confuse choppy markets with consolidating markets. Markets that are ranging (not trending) are traditionally difficult to profit from, but hardly impossible. Indeed, most markets range more often than they trend, and the trader who can profit in ranging markets is often a trader who will do well over the long term. Binary options even provides you with a unique type of trading which is perfect for profiting in these ranging times. In most markets you can only profit off of price movement. In binary options markets you can profit when price doesn’t go anywhere if your broker offers you the opportunity to place boundary trades.
Good luck, and stay alert for changes to market conditions at all times—everything is always changing.