Trading in binary options is much simpler than trading in forex, stocks, or even futures. However, this doesn’t mean that it can be done without a proper strategy. Trading in binary options without a strategy is a shortcut to losing all your seed money. This is why you should ensure that you have a good binary options trading strategy and get a good broke such as ETX Capital. Here are some tips.
It’s very easy to get carried away with binary options trading. When you only have to decide if the prices of a stock, currency, or commodity will go up or down, it can seem very simple. This false simplicity can result in you trading with more money than is wise.
There’s only one way to get around this danger and that is to make sure that your investments are conservative in nature. Moreover, no binary options trading strategy is completely flawless. Most strategies stop working in certain situations. Unless your trading model is conservative, this can lead to massive losses.
Use Technical and Fundamental Factors Both
Binary option traders often choose strategies that depend either on technical factors or on fundamental factors. While these types of strategies do work, they aren’t as effective as strategies that take into account both, fundamental and technical factors.
Both these types of factors affect financial instruments. As a result, unless you check the daily intraday reports and fundamental news, you’ll never have the complete picture of the market.
Focus and Diversify At the Same Time
There are two ways through which you can trade in binary options. The first is to focus on one or few financial units and the other is to widen your purview to play with numerous units.
The first method will allow you to learn everything there is to know about a small set of financial instruments. However, the second method will automatically reduce your risks through diversification.
Neither method is better than the other. However, making a strategy that utilises both can be better than each of them alone. This means that you start by focusing on one or two instruments but diversify after you have relative expertise in them.
Test Before You Try
No one has so much money that they can waste it on an untested strategy. Deploying a strategy in the market without testing it can lead to significant losses. This is why you should make it a point to thoroughly test your binary options strategy before deploying it in the live market with real money.