What is a binary options strategy for? Traders use many systems and strategies to trade binary options, but few of them have thought about the question: “Who created this strategy and why?”. If we look at it, then the main part of the strategies is created for the stock market or Forex. Trading on these exchanges is very different from trading binary options, and accordingly, binary options strategies are extremely different from the strategies of other exchanges.
The difference in binary options and forex strategies
Forex trading is mistakenly equated with binary options trading, because there are many differences. Let’s take a look at the main differences that affect trading strategies and decision-making.[list style=”check”]
- The trading time or trading session is one of the highlights. In Forex trading, you can hold a deal for a working week or more, change and open trades based on price behavior. Long-term trades can be increased or decreased. In Forex, we cannot know how much we will earn, because if our transaction earns, there is no point in closing it. You can simply postpone stop losses and the trade will be in the black in any scenario. If the trade on the correction went into the red, you can hedge. In binary options trading, we cannot change the trade, we know exactly how much we will earn or lose. The operating time of a position in binary options trading is limited, so we cannot use Forex strategies that are designed for a long period.
- Types of transactions – as in the first case, binary options strategies should be suitable for a specific type of option. If we trade on NO TOUCH, our goal is that the price does not reach the level at a certain time. Therefore, we will try to find impulse movements in the market, wait for the moment for the market to change the price sharply, and definitely not touch the price. Unlike binary options, Forex is more dynamic, so strategies do not depend on the type of asset. Trading signals are received in any direction.
- Profit Limit in Binary Options – In binary options trading, we know how much we will earn. If the trade is in the black, it can change the movement in just a second, while in forex trading you can move stop losses. All these and many other differences do not allow us to blindly use Forex strategies in binary options trading. The main problem is RISK MANAGEMENT. [/list]
Binary Options Indicators
The same technical indicators are used to make decisions on binary options trading and to create binary strategies. Graphical analysis models remain as relevant as they are during Forex trading.
Basics of Binary Options Strategies
The purpose of binary options strategies depends on the system or on the trader’s approach. The goal is always to make money, but the decision-making path can be completely different. Let’s take a look at the basics of binary options strategies:
- News Trading Strategy – The purpose of the strategy is to determine the results of the news and the subsequent movement of the market. Binary strategies on the news are calculated according to history. Past performance and its impact are checked.
- Binary options strategies using technical indicators aim to determine the future direction of price movement, entry and exit of the trade.
- Mathematical strategies – these strategies resemble casinos, their essence is to get: a mathematical advantage over the market. For example, the “Increase Martingale” strategy.
Having defined the goal, we can understand and select indicators for the strategy, determine risk management and identify entry and exit points from the transaction.
Binary Options Trading Strategies
How to Create a Strategy for Binary Options
To create a binary options strategy, you need to define a goal. We all know the ultimate goal of trading: to make money. However, during the creation of a binary strategy, we must answer a few questions:
- What we want to determine – for example, the future price movement,
- How we will do it – the use of technical analysis,
- What we need to do is determine what indicators we need.
An example of creating a binary strategy for the news: we want to determine the momentum and its influence -> check the history of behavior for 6 months -> use the calendar and chart.
It is important to understand that we are not only looking for an entry signal, but also should immediately assume the movement, how much the price will change. After all, if we assumed that the change would be after 4 hours, the payouts would be greater and the risks would be less. Accordingly, we will use the classic type of option and not turbo options.
Creating a Binary Options Trading Plan
Inference
We do not advise blindly using Forex strategies in binary options trading, only after testing. If you have not defined goals or do not fully understand why you enter or close positions, the chance of losing a deposit will be high. Without knowing the basic idea of a binary strategy, a trader cannot calculate risk management. Decide what you want to achieve and how. If you know everything for sure, then start trading. Detailed trading planning will allow you to earn and avoid unnecessary losses.
Tagged with: Binary Options Academy • Binary Options Strategy
