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binary options
candlestick charts
liquid markets
financial asset
time periods
amount of money
point in time
How To Trade Binary Options
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The beauty of binary options is their simplicity, which essentially amounts to picking the price above or below which you think a particular financial asset will be at a given point in time, known as the expiry. The level you choose is referred to as the strike price, and depending on the trading service you use, the timeframe can range from as little as five minutes or less up to a week or more.

While the concept of binary options is simple, executing a successful strategy is a bit more demanding, though the mechanics of purchasing a binary option are not. Your first step is to decide which market and what underlying asset you wish to trade—stocks, currency pairs, indices or commodities. Because you want to minimize your risk, the major currency pairs and indices such as the EUR/USD and E-mini Dow are probably your best bets in that they are highly liquid markets.

After picking a market and financial asset, you select a strike price along with a call option if you think the price will be higher at the end of contract’s duration, or a put option if you think the price will be lower. You will also need to decide on the amount of money you want to “invest.” Once all that is done, it is simply a matter entering your order and waiting to see the results, though there are a number of services that even allow you to close your position early if you wish.

In terms of style, scalping is an expression used for traders that hold positions for only a few minutes. Intraday trading is carried out over hours and swing trading is done over a number of days. What is most important however is that you learn to identify strong trends using charts across multiple time periods.

Candlestick charts will be an indispensible tool given that price action is the most valuable information you can use. As far as other signals are concerned, avoid those that lag behind like MACD buy/sell signals. Use only leading indicators that predict where the price may go ahead of time such as divergence, Fibonacci and pivot points.

It is extremely important that you wait until you have several reasons to enter a position before making a trade. People use the signals mentioned above as well as support, resistance and trends, but typically do so in isolation.

Ideally, you want to see as many signals as possible all at the same time. You may end up making only five to fifteen trades a week, but the result will be a very high probability trades and greater success. Make the trade in the direction of the trend, when there is a significant price pullback to a strong level of support or resistance on the chart that corresponds to your primary timeframe.

Incorporate the above steps into your strategy along with discipline, persistence and determination and you will have taken the first steps to achieving trading success.


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