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Binary Options Trading Strategies and Online Trading

Binary Options Trading Strategies and Online Trading

Online trading is fast becoming popular among some investors and has seen growing interest in recent times. Binary options trading is particularly popular among investors who want to invest through online trading. This growth in interest has led to the development of binary options trading strategies designed to help investors improve their chances of trading binary options successfully. But what exactly are binary options?
Binary options are special types of options in which the trader either receives a fixed, predetermined amount of compensation or he receives nothing at all. The term “binary” implies and signifies that there are only two possible outcomes that can result from the trade. If the option expires at a strike price that is below the market price of the underlying option for a call option (in the money) or at a strike price that is above the market price of the underlying asset for a put option (in the money), the trader will receive the agreed compensation for the binary option. Otherwise, he will receive nothing. Those investors who invest in binary options usually do so through online trading platforms that are unregulated for the most part. Very few binary options are traded on regulated platforms. For this reason, binary options do present a certain level of risk. However, investors can mitigate risks and protect themselves by only trading with reputable online traders. Binary options trading strategies are many but there are few popular strategies that traders like to use.

Binary Options Trading Strategies.

Generally speaking, there are two basic types of binary options trading strategies that exist. The first type of strategy is based on the concept of odds and probabilities; very similar to betting. The second type of strategy is based on using market data to analyse the market in order to make more accurate predictions. The first type of binary options trading strategy places great weight on timing as well as on the amounts that are traded. There is always a 50/50 chance that the investor will make the right choice and end up in the money. However, there are several factors that investors should take into consideration that can make it more or less likely for them to hold a particular position about a binary option. One popular binary options trading strategy that investors use is the Martingale or Grinding strategy.

The Martingale or Grinding Strategy for Trading Binary Options

With the Martingale or Grinding binary options trading strategies, the investor will invest a certain amount in a trade and will continue to double the original amount invested in each trade until he records a win. These particular binary options trading strategies are based on the premise that as long as you continue to double up the amount invested; even if you lose, as long as you keep doubling up your losses, eventually you are bound to win since your chances of winning are 50/50. Here is an example of how the Martingale strategy works:
Let’s say you invest $10 to bet that the currency will go UP within the next 15 minutes and the established payout is 70%.
Amount invested – $10
Assume that you lost this bet because the currency went DOWN, instead of UP. This means that you would lose that $10.
You bet again that the currency will go UP but this time you have to double your investment and add something extra to it. So this time you invest $26.
Let’s assume that this time you win because the currency went UP as you predicted.
So you would make back your $26 plus, the 70% payout which would give you a total of $26×1.70 = $44.20.
The total amounted invested = $10 + $26 = $36
Your profit = $44.20 – $36 = $8.20

One advantage of the Martingale or Grinding strategy is that it is simple and appropriate for beginners since it does not require much knowledge about trading. In addition, it is likely that the investor will eventually win.
On the other hand, the Martingale strategy of trading binary options usually requires a large investment to cover any potential losses. If there are a great number of consecutive losses, the investor may end up investing huge sums of money and running out of cash before a win is made. When using the Martingale or Grinding Strategy, it is best to keep your initial investment on the lower end to avoid having to make huge investments in case you lose and have to double up.

Momentum and High Probability Trading Strategies are another popular type of binary options trading strategy.

Momentum and High Probability Binary Options Trading Strategies
The Momentum and High Probability Binary Trading Options Strategies require the investor to have knowledge of how to analyse market movements using techniques such as candlestick charting, moving averages, Fibonacci retracing and so on. The investor should have the skill to spot high probability situations by analysing what is happening within that particular market. The key to being successful with this type of binary options trading strategy is being able to accurately read and interpret the signals in order to increase the chances of making a win.
Trading binary options is an exciting way to invest. However investors should be aware that while they can make substantial profits, there is also the possibility of making losses. Those who are keen on binary options trading should take the time to understand how the financial markets work so that they can improve their chances of success at binary options trading. Also, it is advisable to seek out a reputable online trading platform. If you are new at trading binary options, you could benefit by using a binary options demo which will show you the basic idea behind binary options trading.

Trend Trading Binary Options

Going with the Trend

Trend trading– As far as “tricks” in trading go, trading by following trends has to be the oldest one in the book. Following the trend is THE go-to advice experienced traders will give to anyone wanting to start trading.
Although it is good sense to do so, some traders still get confused about the way it should actually be applied. In this article we’ll go over what trading with the trend is, and how to spot trends easily.

What does Trading with the Trend mean?

Trading with the trend means exactly what you think it means: it’s spotting a trend (a long term direction in the market) and following it.
Basically you want to spot whether the market is going up or down, and place your entries according to that direction.
The general idea is that usually long term trends tend to last… well, a long time. Therefore if you were to jump into long trends at the start, you could potentially ride them until the end and make a boatload of money.
It also means you can add to your position gradually every step of the way. This obviously depends on the type of strategy you’re using, but it should be your goal to always place your trades in favor of the dominant trend in order to put the probability of winning the trade in your favour.

How to Spot the Trend?

how to spot a trend in binary options

Obviously the first issue for new traders is to actually spot the current trend. Markets can go 3 different ways: up, down or sideways. Even though there are only 3 solutions, things can get confusing so let’s define how we look for trends once and for all.
First step is to open your charts, and zoom out. You don’t want to be seeing big candles or bars. Zoom out until you can see quite a bit of data on your charts.
Now sit back, and look: where is the market heading? Think like a 5 year old. If you were to ask to a 5 year old, “Where is the market going?”, what would he say? If you have a 5 year old, ask them! Its quite easy to spot when you don’t over think it.

How to Trade the Trends in Binary Options

Trading and following the trends is probably the single best way to make money in the markets. It has always been the strategy that big investors use, and this since the very early days of market trading.
Trend trading in the traditional markets (forex, stocks, etc.) is fairly straight forward. All you need to do is spot the current trend, build a strategy that allows you to jump in it at profitable points, and apply your rules the best way you can.
In binary trading though, it can become a bit more difficult. In this article we’ll see why it’s more difficult to trade the trends in binary options.

Trend Trading in Binary Options

binary-options-trend trading

The difficult part of trading the trends with binary options is that you’re locked into a trade for a certain amount of time, with what seems to be no power.
Let’s say you were to place a long term trade in the regular forex market, following the current up trend. It would be easy for you to regularly check up on your trade and adjust your risk. You could for instance move your stop loss up, close some part of your trade to limit your risk, or even just close the trade if you feel like you’ve taken all you could get.
In binary trading, you simply can’t do that, hedging your trade if the trend goes against you is the a good way to minimize risk, You can also manage your trade for a double profit setup, but that is more suited to a non trending market situation. Once your trade has been placed, you have to wait for the expiry to kick in, however, with some platforms you have the ability to sell off your position before your expiry, at a small loss if the trade goes against you or for a profit if the trade is going your way, which is essentially  the same stop loss system regular forex traders use without all the complications.
You definitely can make money following the trend in binary, you just have to adapt to the market conditions and manage your trades accordingly.

Trend trading clock

Finding the current trend is one thing, figuring out which expiry you should take is another. Try to think in absolutes: where is the market likely to reverse or slow down, and how fast is the market moving? (volatility) If the market is moving in quick successions of high numbers of pips, you might be better off placing a short term expiry on your binary trade, If the market is moving very little and is not showing many signs of being volatile then its wiser to extent your expiry times.
There are a plethora of ways to use the trend in order to trade binary options profitably. It is one of the simplest and most reliable chart patterns and can and should be integrated in all strategies while trading. If you have any questions about using the trend to trade binary options or would like to share your story of trend trading please do so in the comments section.