The Way to Profitable Binary Options Trading

Written by: JamieHanson
Total views: 3 | Word Count: 726 | Date: Sat, 17 Jul 2010 | 0 comments

Binary options trading is very profitable. With gains of more than 75% in an hour, you can make money very quickly. However, that opportunity for gain is a double-edged sword. You may also lose money right away if you don't follow a few basic concepts. If you follow these three strategies, you will greatly improve your likelihood of success.



Do Not Over-trade

Warren Buffett once said, "There are no called strikes in the market." What The Oracle of Omaha meant was it's no problem to pass on as many opportunities as you want. You don't create loss by passing on opportunities. This particularly holds true with binary options, since new options with new strike prices and new expirations are being constantly issued.

Trading too much or jumping the gun will burn you when trading binaries. Relax and do your analysis. Don't trade on insticts or hot tips. If you miss out on a money making trade, don't worry about it because there are always fresh opportunities coming down the road. Don't be hurried to get in on an opportunity just due to the fact that think it will begin to move higher. If you ever think you're being too active, take a step back and call it a day. There will be plenty of new chances tomorrow, and you'll have a significantly clearer head to see them with.

Manage Your Trade Size

The awesome part about binary options trading is that you can earn big gains in no time at all. However, this rapid movement in value works both ways. You can also suffer high percentage losses in a short period of time. Due to this, it's extremely important that you don't enter too large of a trade in any particular option; regardless of how sure you are in the trade's odds of being profitable. Don't fall into the trap of, "betting the ranch on a sure thing". You may have a few of those trades go your way, but it's just a matter of time before one of them burns you.

Position sizing is important because no matter how good or how extensive your analysis is; even the most experienced traders will eventually end up in a tough stretch of losing trades. If you've regulated your trade sizes appropriately, you will live to trade though it until the profits start coming.

We recommend that you don't ever put more than 5% of your binary trading account into any one contract. If you start out funding your account with less than $600, you won't be able to live by this rule, because the $30 trade minimum will be more than 5% of your money. If you simply don't have $600 to start out with, that's alright, but just remember that you are putting yourself at a higher risk of running out of money if you have a few losers in a short period of time.

Use Charts Appropriately

There are several varied techniques and theories behind charting. We have found that for the majority of profitable traders, it's not the technique that used, but how it's used that determines the ultimate success or failure of the trader. If you use a charting game plan that has been tested for accuracy, it's important that you use it consistently, and don't second-guess the data. If you can't completely trust your strategy in this way, you're better off looking for a new method.

The other key point regarding your charts is to use a time interval that is appropriate to the short-term nature of binary options. We typically recommend 3-minute charts for all options that will expire that same day, and hourly charts for any contracts that expire at the end of the week. As always, back test for accuracy within your strategy, but there's no point in using a daily or weekly chart when trading binary options.

About the Author

Charles Clark has been trading options for nearly 20 years and is now bringing his wealth of experience to the binary options market. To learn more about binary options, or to get started trading, visit: Binary Options Trading

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