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Tag: Risk Management

Swing Trading

The Perks of Swing Trading

Before we delve into the advantages swing trading can offer to a good trader, we must define exactly what swing trading is. Swing trading, in its purest form, is all about taking long term positions in a market. It’s basically the exact opposite of day trading, which is opening and closing trades within one day (or even within an hour).
Swing trading, or long term trading, offers many advantages to new and experienced traders. More often than not, new traders get bored really quickly and decide to jump into day trading because it’s obviously more exciting to be opening tons of trades every day. However, this often turns out to be a bad decision, as new traders don’t have the experience to handle such volatility and variance in the market.
This is the reason for this article! Let’s see exactly why you should be swing trading first, then maybe day trade here and there on the side.

The Advantages of Swing Trading

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As we said, swing trading is all about taking long term positions in the market. One of the big advantages of swing trading is that it’s actually long term, which means you don’t have to make quick decisions all the time like you would on a day trade.
You can start trading H4 charts and only have to update your trades every 4 hours. That gives you a ton of time to study, work, have family time and so on.
Swing trading also relies on long term trends, which tend to be more reliable than short term time frames. You can get into a long trend and ride it for many months without ever looking back.
Finally, swing trading is extremely easy to back test. You can take pretty much any strategy, plot it on a H4-D1 chart, go a few years back in time and start testing. You can rely on the results you’ll get because the charts are clear and the trends are reliable. It makes it very easy for any trader to decide if a strategy is profitable or not.

Does Swing Trading apply to Binary Options?

Swing trading has been around for many years. Some might even argue that it was the first real form of trading, as back in the days where internet didn’t exist yet (I know, scary right?) the data gathering process took much longer than now, therefore it took a while to find trades and people tended to hold positions longer.
With the age of the internet came faster access to more data, and faster execution of trades. Spreads reduced as well, which drove a ton of traders to try and beat the market for a little bit of money many times per day – hence day trading.

Swing Trading and Binary Trading

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With the recent apparition of binary trading, traders have been placing trades faster than ever. Some binary brokers offer expiries as low as 30 seconds, which literally means you could be placing trades every 30 seconds and make money.
The clash of the titans comes when you start to think about compiling swing trading with binary trading. Could it be possible to make profitable long term trades using binary options?
The answer is a quite resounding yes!
Swing trading is all about trends. Whether it is in the stock market, forex or in binaries, if you’re looking to place long term positions you have to look for the trend and adapt your position to it. Therefore it’s not unconceivable to build a strategy that revolves around finding a long term trend in H4/D1 charts and placing One Day expiries or longer on your binary trading platform.

Risks and Reward

Risk and reward swing trading
The biggest risk you’ll encounter while swing trading in the options market is boredom. Be very sure to build a strategy that you know works (hint: backtesting!) and that you trust, or you’ll quickly go back to those potentially deadly 30 second trades.
The reward however is huge. If you play the trends well, you could pile trades up and make a ton of money following the herd of traders.

 

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

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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

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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.