Trading in the stock market is not easy, but it is not that tough what we have heard of. Yes, it requires a lot of patience & discipline. But along with that, you need a good amount of knowledge about the market and binary strategies.
Strategies comprise the most critical part, which decides whether you are going to book profit or loss. Now, many of us do not have much idea about these strategies and how to use them. We have more than 10,000 tools in the world.
Now it is difficult for us to learn each tool, and also, it is entirely ridiculous to try to understand each. Therefore, we tried to mention a very few simple and most used strategies that can help you.
Okay! But let me clear you here we are providing strategies and not tools to use. This means you have to figure it out by yourself, or we will try to make separate articles if possible on devices.
Reasons for having Binary Strategies
Strategy is not always required for binary trading; you can go with your gut depending on price movement or else. However, you will not make money with the approach. It might be possible that you will make it once or twice, but this ‘instinct’ thing fails most of the time.
So if you want to book a good amount of profit in the long run, then don’t play on instincts. Learn and understand tools and techniques to be a long-run player.
We need a trading strategy because it stops us from making emotional and irrational decisions. It helps us to make decisions on defined parameters and established processes. We have heard many times that ‘History Repeats Itself.’
This phrase also works in the stock market. Patterns do repeat, obviously not in the same manner but somewhat alike. The trading strategy ensures that your trades are based on logic and analytics.
The alternative method of instinct is hazardous for your money. That is a completely impractical way of doing things. Hence, give some time to learn something and go in the market with knowledge rather than instincts.
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Binary Trading Strategies
Now let us look into some of the trading strategies that will help you how to work. The methods provided here are fundamental, and one can use them by combining them as well. Mostly it is for beginners who are new to this and want to know basic strategies to use.
Make your target, goals, identify the amount you want to invest and ready to lose, make a clear mindset and start your work. You will understand things in a better way once you start applying them in real.
1. Trading the Trend Binary Strategies
This is the most basic strategy one can use. Understanding the trend is obviously not an easy task; it requires a bit of knowledge about the tools.
The price of an asset generally moves according to a trend, i.e., it moves up in price for some time, or it moves down in price. These price movements are never linear. Instead, they zig-zag, sometimes moving up in price and sometimes moving down, but overall moving in one general direction.
There are two types of trends: Upward Trend & Downward Trend. Upward trend denotes the movement of price above than the last close. And, the Downward trend means the movement of price is lower than the previous close.
It seems easy in theory but is quite complicated in terms of analysis. Now there are two types of analysis; First, Fundamental Analysis & Second, Technical Analysis. Which one to choose is completely your choice.
Some are comfortable with fundamentals & some with Technical. Both have their own pros and cons; we will not go in brief about them.
The most common way to trade trends is by using High / Low options. All binary options trading platforms offer this type of trade. You trade on whether an asset’s price will be higher than it is now after a set period (a high option) or lower than it is now (a standard option).
2. Pinocchio Strategy
This strategy is utilized when the asset price is expected to rise or fall drastically in the opposite direction. If the value is expected to go up, select CALL, and if it’s expected to drop, select PUT. This is best practiced on a free demo account from one of the brokers.
3. Straddle Strategy
This strategy is best applied during market volatility and just before the break of important news related to specific stock or when analysts’ predictions seem to be afloat.
This is a highly regarded strategy utilized throughout the global community of trading. This strategy is best known for presenting an ability to the trader to avoid the CALL and PUT option selection but instead putting both on a selected asset.
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4. Risk Reversal Strategy
This is the strategy used by many of the experienced binary traders throughout the world. This strategy is executed by placing CALL and PUT options simultaneously on an individual underlying asset.
This works for highly volatile shares which are continuously moving. Naturally, binary options can experience two possible outcomes and trading on a two for two opposite’s predictions over an individual asset at once guarantees that at least one will generate a positive outcome.
5. Fundamental Analysis
Fundamental analysis of a firm means evaluating the company’s basics: about the assets, its profits, losses, internal atmosphere, labor satisfaction, and many more.
This sort of internal news provides predictions about future price changes. This review helps the trader better understand the asset’s previous activity and its reaction to specific financial or economic changes.
These are the few strategies that anyone can use to start. Using robots can help you skip all these processes entirely. Robots provide you all reports by analyzing themselves; you have to decide on whether to execute it or not.
You are not even required to do so if you’re going for automated robots; they will even carry trade for you, on behalf of you.