To begin with, let us congratulate you for making it this far. Lesson 7 concludes our Advanced Course in Binary Tuts. Yes, we agree that we have not covered a few topics and skipped a few things here and there. The reason we did this was that everything we skipped actually builds up on everything we learned here. So, you can actually cover those few elements without any problems just on your own! You know, sometimes, self-learning is far better!
Our primary objective in this lesson will be to tell you how to trade binary options effectively. To put in other words, we will give you a few very important trading tips that you must always keep in mind while trading. You see, the problem here is that no one is giving you cash for trading. It is you who earned money the difficult way and if you lose your money, it is only going to affect you. Be wise!
Trade Effectively – Important Trading Tips
You know what? There is no concrete definition of effective trading. What is effective in your first trade can turn out to be a disaster for the next trade you place. No, we are not trying to scare you off but this is the naked truth of financial market. The market is unpredictable and unforgiving. So, if you really want to trade effectively, you need to analyze the market either technically or fundamentally or both. But this will never guarantee profits in all your trades. Instead, it will actually help you reduce risk and increase your probability of winning. If you really want to be a successful binary options trader, here are a few things that you must either do or avoid:
- Relying on Luck: Once or twice it is fine but relying too much on your luck will take you nowhere. You will only dig yourself a grave! No one has ever become a successful long term binary options trader simply by using luck. When you count on luck, you don’t really see the dangers that surround you. So, you never learn how to mitigate those risks. On top of this, a couple of wins using luck will only infuse greed in you and eventually a time will come when you will end up investing more than you can afford to lose and that will be the end of your trading expeditions.
- Prediction vs. Trends: Prediction refers to Fundamental analysis and trends refer to Technical analysis. You will need both of them in order to become a long term trader. Predictions are not random. They are based on market news and events. We have learned this in our detailed lesson on Fundamental analysis in our basic course. We have also learned trend identification and interpretation using our technical tools. Use both of them to become a better trader.
- Complex vs. Simplified Strategies: Application of complex or simplified strategies depend on your understanding of the strategies and your skills in technical analysis. They also depend, to some extent on your capital power. Some complex strategies will go for risk minimization while others will go for profit maximization. Those that go for profit maximization also bring along high risk. Using those high risk complex strategies must be based on your capital power and your risk appetite.
- Ineffective Trading Software: There are several trading software available in market. Many of them are more of specialized software capable of dealing with only one asset market. However, there are some others that allow you to trade even in binary options market. Some are really state-of-the-art software. But be careful! Some are simply bogus. Those that are really good are highly expensive. At Binary Tuts we strongly advocate software-free trading. Trade on your own. You are always better than a software because software can only take account of technical analysis while you can go for both technical and fundamental analysis.
- Doubling Up: Doubling Up is a money management feature. Almost all brokers provide this option where you can double up your benefits by placing an identical trade within the same expiry time should your analysis say that your will win and your prediction of market trend is holding very strong. Towards the end of the trade, your trading platform’s screen will give you an option to use this feature. All you have to do is click on the button that reads ‘Double Up’. The platform will take care of the rest. It will place an identical trade on your behalf using the same strike price, same asset and same investment amount. This new trade will expire the same time when your initial trade expires and if your prediction turns out to be correct, you will make double profits within the same time frame. It can be risky too because if somehow the market condition changes and your prediction goes wrong, your losses will be doubled as well! In order to use this properly, your analysis of the market has to be very strong and near accurate and of course, the market should not come up with any surprises!
- Price Action Trading: Price action trading refers to trading using technical analysis. Technical analysis is all about analyzing the past and present price movements to speculate the future price movements. There are many methods to do this and we have already discussed them. Price action trading is very effective (though not 100% effective) and can help you to trade pretty accurately. However, risks will always exists.
Final Words of Wisdom
In this last lesson of Advanced Course we outlined a few recommendations for trading effectively. You can use some other recommendations from experts. It is all up to you. The key is to stay informed and play safe. In the entire Advanced Course as a whole, our focus was on technical analysis and advanced trading strategies. In technical analysis we learned about Relative Strength Index, Moving Average Convergence Divergence, Fibonacci Retracement, different forms of charts and their variants. We even went to the extent of explaining Candlestick charts in details because they are extremely powerful technical analysis tool and when combined with other technical indicators, their speculative power increases manifolds. We also looked into several advanced trading strategies like Hedging, Straddle, 60 Trend, Pivot Points and Knock On. There can be many more strategies. You need to select the one that suits your trading style and capability of absorbing risks. So, now all we can say is Good Luck!