Trading Binary Options by Using Moving Average Signals

trading professionals

Having a set strategy for trading binary options eases the trading routine for those who want to take it up as a full time career. A tried, tested and reliable strategy makes sure that the trader does not feel as though he was gambling. Good strategies are those that have survived the very diverse market conditions and still managed to let the investor make a steady stream of returns that he can rely on. Good strategies are aligned to the trend in one way or another and the use of moving averages is a good foundation to base your strategies. Here are some simple strategies based on moving averages that newbies can try out for regular profits.

Moving average crossovers

Trading the moving average crossovers is one of the most straight forward ways of having a set play-book that gives people signals for entering or exiting the market. In this strategy, an investor can pick a currency and have charts that have two or more moving averages. The common reliable moving averages are the 200, 100 and 50MA. The larger numbers are referred to as the slow moving averages while the smaller numbers are the fast moving averages. In this strategy, when the faster moving averages cross from above or below a moving average, a buy or sell signal has been made. For example, if the 50MA crosses the 200MA from above, it is your cue to sell.

The strategy is reliable in profit minting and still gives the trader a clear call or put trading signal. It is one of the few strategies that fall in the high-probability-low-risk category. Many trading systems (including auto-trading scripts) are complex upgrades of this strategy. Long term binary options traders prefer them because they always signify a shift in the momentum and give chartists early signs of where the markets are headed next.

The short term moving average crossovers more often than not occur near some psychological levels on the chart. Round figures (on currencies) have through time been known to bring about a lot of market volumes because many people buy or sell options near them. Traders can combine a mixture of the MA crossovers and the psychological levels to come up with some reliable support and resistance zones.

Moving average bounces – golden bounce

The 200-day moving average is watched by major institutional traders. The line is also respected on the shorter time-frames such as the hour and 15 minute charts. When the price action approaches it, fails to penetrate the line and retracts to the original direction, traders take that as a cue that the trend is likely to continue over a sustained period of time. People trade the bounces just like they would trade the daily pivots. To some extent, a slow moving average can act like a moving support line; giving binary options traders a one-glance means of telling if the market is bullish or bearish.

Moving averages are very reliable in organizing your trade strategies, especially if combined with the brilliant money management options that binary options trading platforms already provide.



Making Profits with Counter Trend Positions

currency trading

In binary options trading, one notable thing about the market trends is that they will keep trending up and down. The price action of a certain pair does not keep tracking to one direction forever. That occurrence is the same for currencies, metals and commodities. Theoretically, a trader can count on prices making crucial reversals at some points on the graph. If looking at trading from a trends perspective, it is possible to classify trades into two. There are traders who will try and identify the general trend of a certain pair and then place their trades with the expectation that this trend will continue (trend following). An equally respectable trading technique called counter-trend trading involves waiting for price movements that do not seem to fit in with that trend and capitalizing on them, in the hopes that the price action will correct (go back to its usual movement).

There are many different variations of the counter trend trading technique but they are mostly based on the notion that there are tops and bottoms existing within a longer-term trend and a lot of action occurs when the price is close to those levels.  In a situation where the price rises to a previous high, a trend trader expects the price to hesitate at that point but still continue making more gains after a while. A counter-trend trader may in the same case choose to sell at that historic high with the view that price normally relaxes and attempt reversals back to lower levels. They aim to gain from the temporary bearish conditions that emerge right within a bullish run.

Counter trend positions need patience

Counter trend trading suits investors with discipline, patience and know how to remain calm even when things have not yet started going according to book. It is easy to write off patience or discipline as side shows that have little to do with complex mathematical trends or a market that does not recognize an individual trader’s existence that much. The true picture of their importance can be learnt when people take regular looks of their weekly or monthly trading positions and seeing if the losers or winners have something in common.

Combining counter-trend and on-the-trend positions

Trading trends is just a matter of chancing with the odds. A trend is not guaranteed to remain valid until a precise point. Nobody can make a call that a trend change will occur at exactly noon for example. For this reason, a trend trader cannot rubbish the counter trend trader’s approach. A good trading system makes a good combination of on-the-trend positions and counter trend positions. This way, a trader will have the peace of mind that comes with knowing that he is not placing trades while counting on his prediction of the trend direction being 100% correct. There are never any certainties when trading binary options.

Swing trading is a good example of traders taking advantage of price spikes by placing counter trend positions. There are times the market can over-react to some news releases. The price action may rally suddenly due to some rumor and more realistic price levels are reached soon after. The greed or tensions that traders may have are often responsible for those unusual spikes beyond the fair value of a stock or currency. They never last long but they are a nice bet for people who like to make quick profits with lesser risk than normal trades. Counter trend trading has a reasonable payback and works well if the trader is willing to commit enough margins and is still capable of giving the price movement a good wait.


Simplifying Binary Options Trading Decisions by Following the News

man buying stocks

However much binary options trading can be rewarding, no investor wants to trade blind. Many traders have a small number of currency pairs or commodities that they monitor regularly to develop familiarity. A typical day for most traders would start with them checking the economic calendar to review some of the events that greatly affect these ‘favorites’. Crucial announcements and data releases some can also give the trader’s a rough estimate of the gains or losses some pairs can command in a day.

There are times traders choose to avoid some pairs if the prevailing market conditions are too mixed. Binary options let investors trade by choosing out of 180 or more commodities but having a smaller pool of regular options helps people master the recurrent stock or currency behaviors and look for ways to take advantage of them. This is not to say that binary options trade needs complex analysis and research before making a single trade. Binary options trading is very simplified and streamlined to the point that someone just needs to decide whether a pair’s value is going to go up or down and simply click call or put.  One point that has remained true regardless is that the person who is more informed about the day’s order of events and how they affect each commodity is likely to avoid some pitfalls that come with trading without information.

The prediction dilemma

People say that binary option trading is as simple as switching the bedroom lights on or off. Some misleading marketing videos cling to the point that people should simply press the call button if they think the value will rise and press the put button if they think that the value will drop. The topic that many avoid is that of what makes a person decide whether the value will go up or go down. The buy or sell decision is where proper charting, a little analysis and considering the events of the day comes into the picture. In reality, a little more research and caution is not too much to ask for when hard earned capital is on the table.

Some news may push the pairs to suddenly move between 50 and 100 pips at one go. That made a class of traders called breakout traders thrive. Many binary options traders would prefer short term moves and that is why their trading styles and times would be similar to breakout traders. They can both wait for the periods when there is some pending news before placing their trades. Some binary options trading systems simply require the trader to place his expected percentage payout and select the price direction. During high volatility, the traders get the benefit of being able to bet on a higher payout at one go and take advantage of the one-off opportunity.

What makes some currencies more attractive than others?

Professionals usually stick to currencies such as the US dollar, Euro, Yen, Sterling pound and the Swiss franc. These currencies are tied to the world’s major economies and in that sense, the currencies are expected to have high liquidity and there is a practical frequency to the news releases involving their economies. Beginners prefer to trade pairs that are connected to the dollar in one way or another so that all the news affecting the dollar will also determine the success of their trades. Some examples of currencies pairs that new binary options traders prefer to trade include the GBPUSD and the EURUSD. Very experienced traders are also capable of watching how the GBPUSD performs and correlate it to many other commodities and currency pairs just to manage their trades better.


Some Interesting Qualities of a Successful Binary Options Trader

stock trading

Binary option trading is increasingly gaining popularity as a full time career. Like all trades, there are people who are successful and prosperous while there are many who are on the brink of calling it quits. There are a few traits that are common with the very successful binary options traders. Traits like consistency in planning, a risk management plan and proper money management are some qualities that binary options traders have that people cannot overlook.

Risk management plans

Binary option trading is one of the simplest setups that exist in trading any financial instruments. Everyone should however note that any form of trading still exposes the investors to risks. People risk their money every time they trade because they could lose or gain their positions. Someone with sound risk management knowledge knows that all trading is risk, but the rewards come when someone structures his trades in a way that they lose little when they lose and win big when they win. People should have a certain idea of the risk to reward ratio that they would want and stick to it. Being consistent in their own set of rules for reaping profit or sustaining losses is a characteristic binary option traders should emulate.

How do you cope with losing money? Different traders react differently to losses; especially when the losses are substantial. A common mistake that many people attempt is to take larger risks in the hopes that the next win will help them recoup some of the losses from the previous trade. Other people are known to get excited once a few trades are going their way and immediately, they track back to some poor money management habits that used to make them lose money when they were learning binary options trading. It always takes a determined person to remain consistent with a trading plan that has previously worked and brought steady profits. As they gain experience, binary option traders soon learn to accept that losing money on some positions is part of the trade.

Successful binary options traders constantly look for ways to improve their skills

When a trading style is working well for them, traders will look for many ways to have their strategy improved. As you gain experience in binary options trading, keep on comparing new ideas to interpret certain market conditions. Do you adjust your payout levels when the market is flat (trading sideways)? Having binary option demo accounts even while trading real money can help people to test new ideas on their demo accounts before switching them to the real accounts. That leaves room for innovation within the trade.

Successful traders know what drives the market. They have an idea of the economic and political events that are likely to drive the market towards a sustained direction over a certain period of time. For the greater part of 2015, there were fears of some key economies exiting the Eurozone. This made the euro lose favor if closely compared to other major currencies. Binary option traders who take a longer term bet on their trades were mostly selecting contracts with safe haven commodities or currencies expected to gain against the euro.

Do you rest?

Many traders do not know that trading can take a physical and psychological toll on them. It gets even trickier now that most brokers have their platforms running on handheld devices. People end up stealing valuable time from the rest of their routine just to glance at their positions. Trading within a set schedule will help you separate charting and following trades from other personal areas of your life such as schooling, parenting and socializing.

With patience, willingness to learn and practice, many traders have gained the right experience and remained successful binary options traders. The good thing is that these are all qualities that people can adopt over time.


Is Financial Education a Prerequisite for Binary Options Trading?

binary options

Many investors who have ventured into binary options trading have wrongly been thought to have finance or banking education backgrounds. It is not unusual to see people being labeled as highly educated in the mathematical, accounting and economics fields just because they spend some hours going through their trading routine. In reality, there isn’t a well-known and accredited formal degree that is specific to the forex trading profession. Traders can however count on a number of theories and concepts that are well covered in the finance and banking disciplines such as security and portfolio analysis. Here are some views that may help you make the right call in case you are not sure if education is a pre-requisite to binary options trading.

A finance and investment background gives traders the advantage in situations where news events are anticipated and the outcomes are greatly going to affect the performance of a certain binary option pair. As an example, news about US interest rates adjustments usually affect the currencies paired to the US dollar. The EURUSD and GBPUSD are some pairs that witness sudden turns when there has been a change in the expected employment figures, inflation figures or production indexes. Traders who have good understanding of these index releases can know whether the new figures are good for the US dollar or not, aiding their decision making when studying the pair’s trend.

Very little of what binary options traders do can be taught in class

The personality and attitude of the trader is a key determinant to the success of the trade. Placing the right trades at the right time needs a trader to balance personal qualities such as foresight, patience and accepting when a trade goes wrong. Some traders quickly lose their momentum once two or three trades end up bad. To the contrary, there are some experienced traders who have an investing background and know that winning all trades is too idealistic. A stock-trading background is beneficial in such situations as people learn to make good combinations of lot sizes to make room for future trades even when one trade flops. A popular quote says “always trade as though you still want to be trading tomorrow”. An investing background encourages people not to over-commit their funds into a single trade.

Options traders learn by involvement

A person’s will to succeed in binary options trading is a great resource. The will to learn new trading strategies and stay disciplined while trading will far benefit him than any educational qualifications and capital supply. There are some traders who log into their accounts with the urge and zeal to move forward that some ordinary investors do not have. Their effort and involvement into the trade will help them make greater strides compared to people who start trading with a critical view or just to pass time in between jobs. Planning, diligently following up trading history and checking the effectiveness of a trading system and linking it to the traders set objectives.

Trading is a mixture of background and a little educational experience. The good thing is that a new trader can go on taking up those essential traits of a good trader with or without financial education by using demo accounts. There are a lot of emotional and psychological experiences that traders go through that you would never find hidden in a college lesson. Demo trading captures the emotional side of losing money and the psychological state some people go through after winning big on their first trade. A training account helps all types of traders (new and experienced) to try out the different analysis tools available to binary options traders before applying them to their real accounts.

In conclusion, some education background is beneficial but people without it are not handicapped in any trading routines. Registering a demo account and getting some hands on training is a highly recommended start for those who have been thinking about venturing into binary options trading.