Binary trading provides investors with the ability to trade in a time span of one hour with the advantage of having a fixed profit percentage on their stake. Investors do not use leverage when figuring out just how much he/she wants to wager. In addition, the one hour time frame is ideal for taking advantage of breakouts which result in an increase in volume due to the increase in trading momentum. This aspect is a key component to a successful outcome.
During the hour, regardless of how much the asset moved in either direction, the investor needs to simply speculate whether the asset will move up or down. It is mind boggling to me to think of just how much leverage would be needed with a conventional Forex account to get the same profit percentage, which often reaches as high as 85%. With binary options, the risk is fixed and the reward is much higher without any leverage at all.
Let’s look at an example of how binary options work, so that you can see for yourself how easy it is. If you were place a $100 Put trade when a breakout begins using a binary options account at www.24option.com, you wouldn’t need to calculate risk, reward or leverage or even place a stop loss because as long as the USD/JPY closed at the end of the hour even a fraction of a pip below the price that you originally bought it (which was the strike price) you could profit 85%. Unbelievably, it’s as simple as that.
Binary Options Strategies and Forex Strategies - A Comparison
We all want to make money, I think most of us can agree about that. The problem is that today’s culture of instant gratification, which is magnified with the Web and social media, people do not have the patience they require to make serious money. Binary trading is no different, if you want to make profits, you need a binary options strategy.
So, now, if you have ever tradied binary options, you must be thinking, how can such a simple industry require a strategy and what is a binary options strategy anyway? Good question.
The truth is, binary trading is different than other markets such as Forex in many ways, but when it comes to a binary options strategy, you can look to the Forex market for some guidance.
The basic principles that make up a good Forex strategy can and should also be applied to a binary options strategy. Here are a few examples:
Risk VS Reward
When trading binary options, you need to decide how much capital you are able to risk losing. If you need that money to feed your family, as strong as the craving is to try and double it, it is not the kind of thing you want to do. You need to sit down and figure out what you can afford to lose and use that money to trade binary options. That is 101 of a binary options strategy.
Demo
Just like in Forex, practice makes perfect. You need to familiarize yourself with the binary trading platform and then jump in with real money.
No Emotion
You need to constantly fight the urge to overcompensate for losses or ride the wave of success for too long when trading binary options. This is an underlying principle for any binary options strategy.
Limits
Know your limits and do not pass them even by a little margin. Once you let yourself go, it is a slippery slope. Define your boundaries and stick to them no matter what.
Getting Out
Lastly, binary trading just like Forex is not for everyone and every day is not going to be your best day. If you see yourself falling, get out while you still can. Tomorrow is another day and you should always reserve the option to reach the truthful and sometimes painful conclusion that binary options trading is not for you. That is also part of a binary options strategy.