Strategizing Binary Options Trade: Trending

Strategizing Binary Options Trade: Trending

Submitted by adil on Wed, 03/05/2014 - 13:38

Without following a certain strategy, it is impossible for trader in financial instruments to give learned and experienced depth to his or her trading decisions. Strategizing your trades gives you a perspective vision and enables you to look at the entire table and not just your own plate. It is better to study a given strategy and try to follow it, than dwell in to the trading arena making trial and error decisions. I m sure, not many of you can afford doing that.

Even if you do not follow a strategy explicitly and go about trading with binary options, pray notice and observe your own behavior. You will nipping and ticking different aspects, and essentially will be trying to make your own strategy. Practically in such an instance the trader is beating about the bush, and if he continues to do so, it will take him years and thousands of dollars to learn crucial basics. Therefore, every expert trader will tell the novice to do a little studying and practice in demo, before jumping in the binary options trading.

Adopting a trend following strategy may be the simplest of strategies. A binary options newbie trader should initiate his capabilities by practicing and learning this strategy. All that the trader needs to do is identify the right trend over the right period, and follow it by entering the positions determined by the trend. If trend lines follow upward patterns, enter an up binary trade. If trend lines follow a downward pattern, enter a down binary option.

From here on the newbie binary option trader should build his technical abilities and knowledge. The trader can do this by supplementing and complementing the trend patterns with other tools. The most important of these tools includes the moving averages. The derivatives of these tools are MACD or ADX. These tools help the trader in smoothening out the price noise in the market, and more clearly see the trend that has been going on.

The trader should also widen his analysis by complementing his trend study with news and events. For example, the trader should be able to observe how the price of oil moves before and after the periodic US energy data is released. Furthermore the trader should also study the resistance and support levels to assess their impact on the continue trend.

Often times, the price of an asset get consolidated in a range and no visible trend is witnessed. These are the situations the trend trader should avoid trading in. This is often where support and resistance levels converge, and the trend trader should wait until the price breaks out of the trap. However, if the support and resistance levels diverge, it is often considered a sign that the field is wide open for trends to set in, and trend trader to make some money.

However, traders should always keep in their minds that strategizing through any means do not guarantee them anything, except that their probabilities of failure are reduced.