Today, you may find absolutely different binary option trading strategies, and each of them can promise solid profits and minimum risks. But if it was that how it’s told by strategies’ ads, there wouldn’t have been any traders who lose their money at the exchanges. Some people who come to the exchange, try to create their own strategies, and also sometimes suffer losses and fail eventually. This article will be dedicated to how to choose a option trading strategy or to create it from the very beginning, what are their types and whom can they suit.
1.Should One Create Own Strategies?
2.What Are Binary Option Trading Strategies?
3.Technical or Fundamental Analysis?
4.Using Indicators Or Not?
5.Types of Trading Systems By the Time
7.Two Signs of a “Repainted” Strategy
8.Testing a Binary Option Trading Strategy!
Surely, it would be very good for you to create your own strategy yourself, without repainting it from other traders. In this way, you will fully realize it, and why those very indicators are chosen or why those non-indicator analysis figures are used. And even if your strategy has less profitability that others, you won’t be likely to make stupid mistakes but will be able to gain most profits from the algorithm you work with. And if you choose another trader’s strategy, promising to give up to 130% profit, you won’t be supposed to make so, as you are not likely to realize it to the essence and all the laws of the system. Let alone many strategies on the Net are not correct algorithms and created to delude traders or even make money from selling them.
But one should also agree than most novices can’t create an efficient and profitable trading system, as they don’t have any experience and practical skills. And if they try to write own algorithms, they will 100% suffer losses at the first stages. Thus, I recommend young traders take a ready-made strategy, test it and start trading with it. Later, with experience, you’ll get an opportunity to adjust the strategy for you or even to create your own author’s system.
So, you will gain most profits only in case you create your won algorithm, but it doesn’t mean you can’t make money with other strategies, not yours. Multitude of successful traders have found a profitable algorithm and have been earning good via it. They don’t want to change anything there, to test a new system and reach the result they already have. But one should realize that you can’t call yourself a successful trader until you start profitable trading with your own trading algorithm, as anybody can find a profitable strategy, but only an experienced and skillful one can create their own one.
In fact, option trading strategies are almost the same as those at forex or stock exchange. Actually, trading uses the same tools, though, the system of trading differs much. Nevertheless, it doesn’t matter whether you place a bet on the chart of the quotation or buy it, because in both cases you have to predict the direction of the rate movement. The one thing able to differ is the time of forecasting, as orders with options can be less than 15 seconds long, meanwhile at forex, to gain profits, you have to hold an order open at least for 10 minutes, and even more. Otherwise, youwon’tevencoverthespread.
Thus, choosing a option trading strategy, you can pay attention to algorithms of forex or stock exchange, because methods of forecasting are almost similar.
When you trade at forex or stock exchange, you can decide which method of forecasting to choose: a technical or fundamental one. With the former, you use all kinds of indictors, mathematical algorithms, geometrical figures at the chart, etc., i.e. you actually work with the chart itself, without leaving your trading terminal. What’s to fundamental analysis, you are not interested in the chart but in political, economical and social factors which are reasons for movements of currency quotations. You watch and analyze economical news, countries and banks presidents’ speeches, updates of the official values of GDP, indices, volumes of sales, etc. Comparing all this data and analytics, you make a forecast of the further rate behavior.
What’s to options, there, most traders use technical analysis, as fundamental methods are designed for long-term trading (holding orders open for at least a week). If you trade with binary options, you’ll probably use short orders (60 seconds, 5 minutes, an hour, a day). Surely, some brokers offer to make a long-term order, but such opportunities are limited and paid via fees or spreads.
There are two kinds of technical analysis trading systems: those which use indicators and those which don't. As you can understand from the name, the former has indicators, i.e. computer programs, working by the certain algorithm. Most traders estimate entrance points and closing points with those very indicators. Indicator-systems are more popular among speculators, as they are by far easier and more comprehensive and suit pros and beginners at the exchange. What's to non-indicator strategies, they give less profits and less risks as a rule, but not everybody can use them. Their essence is if you don't have any indicators and you evaluate the market with the visual perception of the chart. You can draw different figures (rectangles, triangles, ellipses, straight lines, trend lines, etc.), but you won't engage any computer programs, as never a one non-indicator strategy admits mathematical formulas can predict movements of the rate.
You can choose any kind of trading strategies. The main point: believe in its efficiency and realize the principle of working with it. And if you can't find entrance and leaving points via a non-indicator trading system, download an indicator. You maybe won’t be that lucky to gain 100% of the initial deposit per month, but you will retrieve experience and learn to evaluate the chart visually and will be able to change for a more profitable and complexed trading strategy.
If you are going to engage serious option trading, you have to install a trading terminal. Surely, you can use those online charts you are provided with by brokers’ websites, but they are quite inconvenient. You won’t be able to use indicators, draw figures on them. Professional option traders use them only to place bets, but they build their analytics only at charts of MetaTrader terminal.
On the Net, you can find a multitude of low-quality and unprofitable trading systems. Torecognizethem, payattentiontothosesigns:
Before using any “kinda profitable” strategy, one must test it themselves. It can be done with MetaTrader’s strategy tester, on the history, and the best way is to test the system via demo-account, having worked with it for at least a month. And only if the system shows more than 70% profitable orders in the result, then you can engage it for real trading. Don’t forget that any new adjustment in the current strategy must also be tested before working with it.
As for the conclusion, I would love to add that regardless of the profitability of a option trading strategy, it will be useless unless you fully realize its essence. And you have to master not only the algorithm of trading, learn how to find entrance and leaving points, but also have to understand why that very point is the entrance, and another one is the leaving point. It’s quite difficult to comprehend a computer algorithm during trading with indicators, but one should have the basic recognition about such principle. Otherwise, you will lose money in unordinary situations, which often appear at the exchange.
Get lucky and gain much!
Best Regards, John Foster.
for binary options