Binary Option Alliance

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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.

Price Action Trading

The art of price action trading

Price action trading is an art, they say. The mystery that surrounds price action trading is appealing to young traders. There is something about the fact that some people can make money off the markets simply by looking at candles going up and down that attracts the attention.
While price action trading is indeed very profitable for a select few who have learned to trade it perfectly, it’s also a very dangerous path to go down to for complete beginners. Let’s see why that is.

funny binary option humour

What is price action trading?

It’s all in the name. Trading price action is to base trading decisions solely on price movements. A price action trader doesn’t have any indicators on his charts. The only indicator he looks at is price going up or down.
The idea behind it is that price action should actually be the only information you need to make good trading decisions. Everything can be seen in the way the price of an asset moves. Indicators are just pretty representations of things you can actually see in the movements, and often times they are lagging (ie: they give you information about the market when it’s too late, when the information isn’t relevant anymore) or simply cloud your charts and prevent you from seeing anything.

Why is price action trading an art form?

price action trading discipline

Price action trading can be compared to an art form for many reasons. First of all, it takes a long time to master. Remember, you have nothing on your charts. You need to learn to spot things happening in the market just by looking at the price movements.
Second of all, price action trading relies a lot on interpretation and experience. One experienced price action trader might spot a perfect momentum trade opportunity while another experienced price action trader might decide to sit back and wait for a rejection.
All in all, while price action trading is very attractive and intriguing, remember that it will take many hours of practicing and dedication to master.

Is price action trading in binary options possible?

Price action trading is a fairly common practice amongst experienced traders. Some of the most old school forex or stocks traders only trade price action based strategies and have been doing so for many years.
With the recent appearing of binary trading though, these traders have found a new way to profit from their wealth of experience. Is price action trading in binary options possible? The answer is a definite yes!

How to trade a price action based binary options strategy

The first thing you have to keep in mind is that binary options have many, many options available. You can trade as low as 30 second expiries and as far as one month expiries, and there are a plethora of different ways to trade (one touch, high/low, Ladder and so on).
You will have to pick one and stick with it. Build your price action strategy around the way you wish to trade and the one that makes the most sense to you.
The most common way to trade binary options is the high/low option. Basically you’re predicting that the price will go either higher or lower than the price at which you placed the option.
Given that, as we said earlier, you can place short term trades (5min/15min), price action traders will thoroughly enjoy momentum trading on these expiries.

The strategy, in a nutshell

 

This is a solid strategy, but one which requires experience and discipline. The idea is to use price action based levels (support, resistance, trend lines) and trade momentum breaks off them using short term expires on your binary trading account.
Let’s say for instance that AUD/USD is approaching a strong support area. The price finally pushes through and breaks down below the support area. This would be a perfect time to place a short term put option trade (for instance 15min expiry ). This will take advantage of the strong downwards momentum offered by the break of the support area, which should net you money as you manage your trade accordingly!
Whats your experience with price action? Do you trade price action? We would love to know;) Please leave your thoughts and comments below!

High Frequency Trading

High frequency trading on the financial markets can be an exhilarating ride but it can also be a rather expensive ride if you either do not have a plan or if your plan is very poor. When it comes to high frequency trading you need to have the right mindset because it can be one of the most profitable yet stressful forms of trading on the markets. You are likely going to have fair amount of losses but it is made up for by an even greater amount of wins.

What is High Frequency Trading?

Typically, high frequency trading is done by very powerful high speed computers that execute trades by transmitting millions of orders at lightning speed with the ability of making millions of dollars in just a few milliseconds. In fact, some of the high frequency trading algorithms used by the top high frequency traders enable them to literally look into a crystal ball just before making a trade to find out where a stock is going before they place their order and crazy thing is that it’s totally legal.

History of High Frequency Trading

high frequency trading computers

  • In 1998, USA Securities and Exchange Commission authorized electronic exchanges to integrate High Frequency Trading that could execute trades 1000 times faster than humans.

  • In 2000 High Frequency Trading accounted for fewer than 10% of equity orders.

  • In 2002, HFT( High Frequency Trading) made up 56% of the equity trades in the US market.

  • In 2011, ‘Fitnetix’ developed a microchip called “Nano trading technology” that revolutionized high speed trading and boosted HFT to a level where trades could be executed in nanoseconds.

  • In 2012, HFT made up the largest amount of equity trades. Estimated at 70% of all equity trades were high frequency trades.

  •  In 2013, It is estimated that $600 million worth of assets were traded in just a few milliseconds through the use of HFT, a record which has since been passed with the rapid development of many different high frequency trading systems.

The Different Types of High Frequency Trading Strategies

high frequency trading rigs

High speed trading has been taking investment houses by storm, capable of turning over large amounts of capital because of the computerized advantages involved. When High Frequency Trading is done with large investments, the profits can be substantial. There are many variations of high frequency trading strategies that exist and executed by programmed computers using pre-written algorithms. These algorithms are able to factor in may variable market conditions such as trend direction, pair movement and correlation, breakouts and rebounds of support and resistant levels, approach angles as many more. These same algorithms can also incorporate technical indicators such as the MACD, Stochastics and moving averages. Just about any technical indicator can be incorporated into a HFT algorithm and the most advanced traders develop, adapt and use these High Frequency Trading setups to scalp the market taking fast profits.

How People are using High Frequency Trading

high frequency trader

HFT has been around for many years now and people are jumping the queue to grab a bite from some of the best high frequency trade orders. In fact, there are so many High Frequency Trading Systems out there that it has created a lot of mixed views about HFT and the debate about the legality of it is likely to continue in the absence of concrete steps taken by the market regulators. With the right regulations in place, there would be much more transparency and less volatility. Ever seen the market behave radically without explanation? Some Big Shot Banker probably just fired up his HFTS ( high frequency trading system) and it can affect a lot of short-term investors as well are professional traders who are participating in the same market. As an individual investor or trader, rather than waiting for the regulators to bring about radical changes with regards to high-frequency trading, learn proper risk management techniques that will protect you when the market goes against you, limiting your exposure and ultimately saving your capital.

How High Frequency Trading affects the Financial Markets

high frequency algorithm

While it’s impossible to say how each and every trade placed affects the financial market or whether or not the trading world has been helped or harmed by high frequency trading, the biggest winners when it comes to trading appear to be institutional investors who are patient traders and the knowledgeable investors who trade individually, both types of investors benefit from the much higher payouts and narrower spreads that exist today. The Biggest losers are the institutional investors who have not adapted their investment and trading strategies to the modern paradigm. The most frequent losers are the gamblers, the risk takers and traders who trade without proper knowledge of the market or without a trading strategy.

Technology Used In High Frequency Trading

High frequency trading is a primary form of algorithmic trading in finance. Specifically, it is the use of sophisticated technological tools (highly configured computers) and computer algorithms to rapidly trade securities. Individual Traders can also be considered high frequency traders if they execute a large volume of trades in a short period of time.

Relation to Binary Options

binary options +high frequency trading

One of the more advanced strategies you can use while trading binary options is called the high frequency strategy. However, it is not a strategy that I would recommended you focus on if you are a new trader. Once you have more experience, the strategy can work very well and can generate a large amount of profits in a short time. In most cases this strategy is only used by professional traders who use have access to automated trading algorithms and they use these algorithms to execute multiple trades in milliseconds which is just not humanly possible.
To effectively use a high frequency trading strategy you will need to make several quick trades. In binary options, the shortest trade you can make is 30 or 60 seconds trades which are both suitable for the strategy. The strategy is fairly simple – All you will need to do is place a series of trades based on in-depth market analysis and signal identification. Access to the latest information and tools will certainty give you a profitable edge but ultimately your profitability depends on your ability to read the market.

Conclusion- Should Traders be worried?

High frequency trader loser

High frequency Trading is evolving at a rapid rate with the technological advancements of the modern world reaching new levels of growth. In the coming years we can expect high frequency trading to become more and more common and more advanced. Personally, I don’t have any beef with high frequency trading, I do have a few High Frequency Systems in my trading tool box but I prefer to have the final say in all my trades. I use them as more signal/forecast service to identify possible reversals, rebounds and breakouts and for that reason I believe high frequency trading definitely has its benefits.

What do you think about high frequency trading?
Have you experienced it?
Would you consider giving it a look?
Please leave your thoughts and comments below!

Top Tips for Binary Options Trading

Tips and Tricks for Binary Options Trading

Binary options trading is fast becoming a very popular method of investment. Unlike forex trading, binary trading offers less risk, but still offers a good return on investment. There are plenty of assets and currencies to choose from and this sort of investment offers methods easy enough for anyone to learn. There is no need to understand the whole stock market to make binary options work for you.

However, before you even think about trading binary options, its important that you  do your research. It is vital to develop a strategy that suits your trading style and temperament so are always  trading with as little risk as possible. Here are some tips to help you develop and learn the perfect strategy for your binary options trading.

Make Practical Use of the Demo Accounts

Practice pinned on noticeboard

Many Binary option brokers and companies will offer demo accounts. These are dummy accounts where you trade using monopoly money so you are not risking  any real money. Trading with a demo account is a great way to fine tune your trading strategy and its also a great way to learning about the markets and seeing how good you are at predicting  whether the price of the assets will go  assets will go up or down.  Trading with a demo account allows traders the chance to make all the mistakes, and take some of the bigger risks before hitting wall street with with their strategy.

The downside of course with trading on a dummy account is that you are not getting any real money in return. But the practice will give you the chance to develop the most profitable binary options strategy for yourself.

Listen to the Experts

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There are many people out there who have been trading on the financial markets a long time. Professional traders  will know what they are talking about and often have a lot of insight into how the market is behaving. It is quite often well worth listening to the professionals as while they want to make the money themselves, many professionals will remember what it was like when they first started trading and will want to help others get a head start.

There are great benefits to talking to the experts and asking them about their strategies. Most professional binary option traders are happy to help out their fellow traders so question them, find out why they place the calls or puts when they do, and why they choose specific time frames because  building a successful strategy is quite often much easier when its built of the backbone off an already successful strategy. Talking to the experts is a chance to find out  why specific assets are more favourable than others so you can in turn, tweak and modify your strategy accordingly.

Set a Limit

know-limit options

Setting yourself a limit  is especially important when you’re learning.  When you start out and everything is new and shiny it’s really easy to get swept up in emotions and keep trading when you’re losing. Emotionless trading is what you want to achieve so You want to develop the perfect strategy,  a proven TESTED strategy that you have confidence in so its eliminates the fear of loss. The problem that most people encounter is that they need more time to learn, constantly putting your money down on failing investments is not teaching you anything. 

It’s really important to set yourself a limit. Your limit could be on the number of trades you make or the amount that you lose. This is a much better way than to not have a limit, lose on your whole income and become a another statistic.  Trading binary options can be very addicting because of the high payouts so be sure not to adopt a gambling mindset. Set your limit and then stick to it.

Do Your Research

research_options

Learn all you can about the different types of assets that you want to trade in.  For example, I am based in Australia so I like to trade the Aussie dollar, I have studied the way the market behaves against the US Dollar for some time now and it is now my most profitable asset to trade as I know how much the market is likely to move on a  daily basis(ADR-Average daily range).

Not all Brokerages and platforms  will offer you a wide range of assets to trade from , it as always an advantage to invest with a company that offers a wide range of assets for you to trade. There are over 200 assets available with Boss Capital, my preferred brokerage platform.

Not all Programs/Services/software will offer you a wide range of options so you will want to research the different pieces of trading software on offer aswell. Make sure you know all about what they offer, which assets they trade and how well they perform before signing up or downloading them onto your computer.

Investing time in research will really help you develop a strategy and become a the most profitable binary options trader you can be. There are many golden nuggets when it comes to investing and the more you learn about the markets the more nuggets you uncover, for example you may find that there are seasonal options for specific assets, like religious events affecting the price of sugar because of a nationwide fast such as the Ramadan-  So you see it’s  important to stay on top of the news as this affects the assets and currencies.

Strategies take time to develop. When you Start out you need to take time to research binary options trading and trial your skills with demo accounts. You can learn more about a winning double profit binary options strategy here.  Once you are ready to invest your put your money, set your limit and always listen to the experts. They do know what they’re talking about.

If you have any tips or tricks to add from your own trading experience, please you are encouraged to leave a comment below.

Risk Management for Binary Options

Managing Risk is Important With Binary Optionsstrong-risk-management binary chain

Learning proper risk management plays a very important part in becoming a successful Binary Option Trader. Risk Management, which is similar to the insurance policy protecting the value your car, house, or any valuable asset to you, is an important element to any financial investment. When it comes to binary options, the risk potential that you face is limited in that you don’t lose more than your initial investment. In addition, if your trade expires out of the money, you can still receive a small percentage of your beginning investment back to your trading account with some platforms. Managing risk correctly while trading options can make the difference between profiting in your trading career and clearing all of your capital completely.

For every trader, it is very important to have a good understanding of how much risk you’re exposing yourself to if you desire to be successful in binary options. The purpose of this article is to look at the importance of effective risk management, how to control your losses and what strategies to use when managing your risk while trading binary options.

Why Managing Risk is so Important

risk_management binary options
Risk management is one of the main elements to profiting in the world of investing. Binary options traders have the knowledge of how much risk and profit potential they have before they place a trade. However, this doesn’t eliminate the risks involved with trading. Learning and applying effective risk management strategies is the how you eliminate risks while trading on the financial markets.

As a trader, you have to have know that you have the ability to lose all of your money without being cautious. risk management options
This is an easy concept to grasp, where most people struggle is when it comes to the actual application of it. Most Brokers place a lot of emphasis on the benefits of binary options while ignoring all the downfalls, which causes a lot of traders to believe that placing large risky trades with big money aims are the way to go.

What to do about Risk Management

It’s very easy for those that have a demo account to practice risk management, I do have to mention that trading on a demo account is often quite different to REAL trading, You see, after emotions and real money come into play, the game changes completely. Emotions can cause weird and wonderful thoughts to occur which affect the decision making process.

no fear trading optionsImagine placing trades with full confidence, without the fear of loss because you have a system that works. This is why managing risk with binary options is so important, so when the market moves against you, you are calm cool and collected because you have a system in place that works. My “System” is called The Successful Edge and it’s not really a system it’s a methodology taught to me over the years by a 30 year trading veteran.

Risk Management: Loss Control

One of my recommended ways to manage risk is by taking control of your losses from each trading position. First you need to understand that losing in binary options is completely normal. Don’t Panic!  All professional traders lose every now and then. Winning each trade every time is just not realistic.

Binary option platforms do not utilize the stop loss feature you have with forex and stock trading platforms. Instead, you can cover your lost trades by hedging your trade or by covering your loosing trade with a trade whose profit will cover the lost investment plus an addition to your total capital. To learn more about how to implement one of these strategies please see the Double Profit Tutorial

Bottom Line- Risk Management in a Nutshell

 

If you don’t manage risk correctly you are living on the edge of disaster.  Managing your risk profit loss binaryrisk in binary options is all about maintaining control of your trades, so until you are confident with your risk management procedure I suggest managing only a few trades at a time. The more trades you have open, the more risk you will be exposed to. Makes sense doesn’t it? Less trades lowers risk. The more control you have on risk exposure, the more flexible you can be when the occasion arises. As a trader, you should have the ability to act when an opportunity in the market arises. Directing your attention to managing risks correctly will enable you to continue trading even when things don’t go as planned. Managing your risk while trading Binary Options is very important as it can be the difference between being a professional binary options trader or another chart statistic.

 

Double Profit Tutorial

Double Profit Method.

In order to maximize your profitability with binary options, it is important to capitalize on the right market conditions. Here I would like to demonstrate a simple strategy that minimizes risk and maximizes profitability.

(If you are not familiar with option trading I suggest you first check out Option trading Explained)

The concept is quite simple, Markets move up and down- in other words-they fluctuate. To double your profits you will need to take advantage of the swings of the markets.

As you can see in the image below the price history (green and red audnzd2bars in the top section) has travelled upwards for a period of time, so when my indicators begin to signal a reversal,  (see the green arrows) I place a PUT trade with an expiry up to 1 hour (shown by the vertical white line) The horizontal white line indicates the level at which I placed the trade, which was @ 1.11031  . So what I’m predicting is that at the time of expiry (vertical while line) the price will be below the level 1.11031

The image below is  sightly more zoomed in to give you a clearer idea of what is occurring.

audnzd

 

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In this image (above) you can see the price level has increased past my trade level of 1.11031 and is at now @ 1.11041 and I am now out of the money and the fear of loss is upon me.  As I keep my emotions stable I refer to my indicators which indicate a downward move soon so I am  relaxed and ready to place a CALL trade when the market reaches a lower level than 1.11031 in order to protect my initial investment.

audnzd4

As you can see in the image above that the price did in fact move downward below my trade level of 1.11031 and I have now placed a CALL trade @ 1.11000 ( shown by the second lower horizontal white line) using the same expiry time (vertical white line) , The first prediction is saying the price level  will go down (below 1.11031) , and the second prediction is saying the price level will go up (above 1.11000)

audnzd5

As you can see, in either case I will win one of the trades.  If the price level goes down I win on my first trade. If the price level goes up- I win on my second trade- minimizing risk.  If the price level expires between 1.11031 and 1.11000 I will win both of the trades, doubling my profit.  Lets see how it plays out in the following images.

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UH OH! my first trade is out of the money. dontpanic-marvin-ltr1

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In this image it looks as if I am going to loose my first trade predicting it will expire below 1.11031, my emotions are stable and I notice the indicators signalling a downward move is about to occur .

audnzd9

looking good…

audnzd10

hold…………. hold……………………..HOLD!!!

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BA-BOOOOOOOOOM!! both trades expire IN THE MONEY  @1.11013 which is below my PUT of 1.11031 and above my CALL of 1.11000  so I bank myself double profit, rinse and repeat.

Interested in seeing more trades of mine, check out my Recent Trades

This was traded using the Interactive Option platform which provides  diverse expiry times on a wide range of assets, you can read my review on interactive option here.