Trading in the stock market is not easy but it is not that tough what we have heard of. Yes it definitely requires a lot of patience & discipline. But along with that you require a good amount of knowledge about the market and definitely the strategies.
Strategies comprises the most important part which decides whether you are going to book profit or loss. Now, a lot 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 completely ridiculous to try to learn each. Therefore, we tried to mention a very few of 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. Tools you have to figure out by yourself or we will try to make separate articles if possible on tools.
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 approach. Might be possible that you will make it once or twice but most of the time this ‘instinct’ thing fails.
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.
The reason why we need trading strategy is that it stops us from making emotional and irrational decisions. It helps us to make decisions on defined parameters and established strategies. 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. Trading strategy ensures that your trades are based on logic and analytics.
The alternative method of instincts is hazardous for your money. That is a completely impractical way of doing things. Hence, give some time to learn things and go in the market with knowledge and not with 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 strategies provided here are very basic and one can use by combining them as well. Mostly it is for beginners who are new into 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 a period of 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 trend: Upward Trend & Downward Trend. Upward trend denotes the movement of price above than the last close. And, the Downward trend means movement of price is lower to 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 Fundamental & 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. Basically, you trade on whether an asset’s price is going to be higher than it is now after a set period of time (a high option) or lower than it is now (a low 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 predictions of analysts seem to be afloat.
This is a highly regarded strategy utilized throughout the global community of trading. This is a strategy 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 evaluation of the basics of the company. About the assets, its profits, losses, internal atmosphere, labor satisfaction and many more.
This sort of internal news provides the predictions about the future price changes. This review helps the trader to better understand the previous activity of the asset and its reaction to certain financial or economic changes.
These are the few strategies that can be used by anyone to start. Using robots can help you skip all these processes completely. Robots provide you all reports by analysing themselves, you just have to make a decision 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.