Best Way to Trade Binary Options - Binary Options Trading Strategy

How to analyse binary options?

The emergence of binary options as a form of online earning has caused some apprehension and scepticism among traders. This is due to the fact that not many people understand what binary options are. After a while a lot of information emerged that helped to figure out the best way to trade binary options.

Basically, this tool is a kind of betting, that is, if the trader understands that for a certain period of time (say, 15 minutes) the price of the selected asset will rise or fall, he can buy the corresponding option (Call or Put), which will automatically close after the expiration of the period (expiration time). If the forecast is correct, the trader gets his bet and the premium. If not, he loses his bet.

Before buying a binary option, newbies have a lot of questions - one of them is how to analyse them. Here, different types of analysis and therefore different tools can help you.

Binary options information
Binary options information

Fundamental analysis

It is also called base or fundamental analysis, because it evaluates the global and fundamental aspects that can affect the value of the selected asset. With this method, the market forecasts are based on real facts that either reinforce an already existing trend or create a new one.

The simplest example of trading with this analysis is trading according to the news, which can be found in the economic calendar.

The economic calendar is an important tool for fundamental analysis. It includes information about the macro-economic indicators of individual countries and regions, and also a time frame for news releases about their changes. The economic calendar is a must for traders who prepare a binary options trading strategy based on the news.

Technical Analysis

Technical (chart) analysis for novice traders is essential for binary options trading to get a good prediction about the future price movement based on past price trends under similar circumstances. Technical analysis is based on three basic axioms:

  • Everything is priced in. Every event that can change the movement of quotes, is immediately reflected on the price chart, whether it is a news release affecting the world economy, a political upheaval or a global epidemic.
  • The price moves along a trend (vector). This means that if there is an uptrend, for example on a daily timeframe, then even with deep pull backs in the opposite direction the price will almost always continue its movement in the direction of the trend.
  • The past repeats itself in the future. This confirms the formation of the same graphical patterns that have been classified for a long time and have been repeated for years.

Any type of graphs may be used for analysis:

  • Linear. It is recommended for short timeframes (several minutes) because it only shows the closing price of the timeframe.
  • Japanese candlesticks. A type of chart in which the body of the candle indicates the price between the opening and closing, while the shadow indicates the maximum and minimum price value during that time period.
  • Bars. A type of chart which is arranged in the same way as a candle, but has a slightly different shape.

Technical analysis of binary options with the help of indicators is also very popular.

Indicators are algorithms, developed on the basis of mathematical formulas, which fix the price movement and help to understand its direction and dynamics, defining the entry points into the market.

Experienced traders do not rely solely on indicators in trading, but use them only as auxiliary tools for further analysis.

Popular indicators for chart analysis
Popular indicators for chart analysis

For example, trend indicators show either the beginning or the end of a trend and can also generate signals for buying options. Their main task is to determine the market trend. They can be placed directly on the price chart or at the bottom of it. There are also oscillators and signal indicators. You can see them on the platform.

What is a timeframe?

Every trader who has studied the possibilities of various trading terminals knows that each of them has a panel with all timeframes available on a given platform.

A timeframe is a timeframe that allows you to look at price movements over any given timeframe.

Accordingly, if a 5 minute binary option timeframe is chosen, then the chart will plot candles or bars for every five minutes of the current time. Exactly the same construction takes place for other timeframes.

To understand which timeframe is suitable for trading, it is worth determining your trading style. The main styles are:

  • Scalping (turbo options).
  • Intraday trading.
  • Medium and long term trading.

You should study the strategies and then choose a trading period suitable for you. And on the basis of this choose a method and tools of analysis.

Trading strategies

For trading options to be profitable, you have to find an effective and successful binary options trading strategy, which is the key to success. But out of the hundreds of different methods, it is very difficult to find one that will help you make money. It will help you to choose which direction to go in.

Popular binary options trading methods
Popular binary options trading methods

News trading

We should start with the easiest to understand - the price changes based on macroeconomic indicators. Such data is shown in different sources, such as news channels, TV channels, official websites of statistics departments and financial information agencies.

The main tool for a news trader is the economic calendar. First of all it is important to choose a news item, preferably marked with 2 or 3 signs, which means that it has a strong impact on the market. And the more news that is released at the same time, the bigger the market spike will be. Such a trend is the most interesting for opening trades and making money.

Martingale trading

The martingale strategy is based on the mathematical principle of increasing the volume of a trading lot after gaining an unprofitable position in the market. This, as a result, leads to the compensation of losses of previous positions and obtaining a small, but stable income.

Simply put, a trader who receives a binary contract with a negative streak should execute the next position with the double volume of the trading lot relative to the previous one.

Scalping

Traders have known the term "scalping" since the middle of the twentieth century. It was known then as one of the ways to trade at the exchange market.  Being a kind of trading method, scalping combines many different strategies used in trading. 

This method is based on making as many trades as possible in a short period of time.

As for the duration of these transactions, there is disagreement. Some say with certainty that they should be no more than one minute, while others argue that they should be much longer, up to 5 minutes. Trades as long as 5 minutes are likely to be classified as short term, while those under 3 minutes would fit the definition.

Scalping has advantages, among which are:

  • Possibility to increase the amount of your deposit as quickly as possible;
  • There is no need to spend a whole day trading.

Trend trading

How to trade on a trend is a topic of interest to many. The best way to trade binary options often comes down to trading in line with the underlying movement. Some people don't follow this tactic and speculate against the current, hoping to guess when the price will fall or rise sharply, but predicting when a trend reversal will happen is quite difficult and requires a lot of experience and knowledge. 

Most dealers trade according to the main trend, which is clearly illustrated by live charts.

There are three possible patterns: 

  • Up trend ("bullish") - if the price is constantly rising.
  • Flying ("flat") - stands still, making small fluctuations (a rather rare situation, typical for small timeframes).
  • A bearish trend if the price is constantly falling.

If the price is rising, we are going to go up; if it is falling, we are going to go down. The chart is formed by economic phenomena happening in the world. Therefore, it is important to study the news and follow the economic calendar to find the cause-and-effect relation between the visualization of events and the news, only then will binary options trend trading be successful.

Choose your binary options strategy
Choose your binary options strategy

Remember - any binary options trading strategy is suitable for different levels of traders and different deposits. Before you start trading with one of the strategies, it is a good idea to test it out on a demo account. After testing one or more strategies for a long time, you will get an idea which of them is the most profitable and suitable for your trading technique. Then you will be able to work out your own system of working with this strategy. Remember, any strategy works differently in different market conditions, so make sure no important economic news is released during its use.

Best way to trade binary options in New Zealand

What is the best way to trade binary options in New Zealand? This is a question that you are likely to hear from many people who are new to this form of investing or are in the process of learning more about it. There is a lot to learn before you can make profitable trades. Make sure you understand the terms that are used. Get to know the platform and the terminal you will be trading on and start with a small deposit, gradually increasing the amount.

Registering on the investing platform
Registering on the investing platform

The most convenient intermediary for trading is a brokerage platform. Not only will it offer you a professional terminal, but it will also help you learn by means of video tutorials, analysis by means of charts and indicators. You can control and analyse your trades in your personal trading cabinet, set stop-loss, trade with leverage, etc.

In order to enjoy all the benefits, you must sign up with all the necessary data and email, wait for the letter confirming your registration and complete the creation of your account. You will then be able to open your choice of 2 accounts.

Demo account

With a demo account, you can familiarize yourself with the trading platforms and terminology without the risk of losing your money. When you open a demo account, virtual money is automatically deposited in the account so that you can use it to purchase options. But if you win, you can't take your money back. Everything remains virtual, and so does your loss.

Market analysis tools are available in a demo account to help you make better trading choices. Work with different trading methods without the fear of losing your capital. Thus, you will be able to choose the most suitable binary options trading strategy for you. It's very convenient, give it a try!

This is a great way to understand how trading works and to learn from your mistakes. It will allow you to get a feel for what it's like to trade on your own, without any help from anyone else.

Select the type of account for work
Select the type of account for work

Real Trading Account

Once you feel confident enough in your trading, you can open a real brokerage account. You can open a real trading account. Once you have enough confidence in your trading skills, you can open a real trading account.

As a rule, the minimum amount to make a deposit to a real account is small, which allows you to start trading without having much capital.

So, the best way to trade binary options is to have a lot of knowledge and practice all the time. Over time, you will be able to see the charts and immediately see the trend on them and place your bets. In order not to miss the moment, use a mobile app, this is especially useful for people who do not sit in one place and are constantly on the move. Good luck with your betting!

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