Strategies for short-term binary options
Binary options trading is quite diverse. And if in the foreign exchange market the trading strategy depends on the peculiarities of the currency pair, for binary options another component is added, which influences the applied strategy - it is expiration date of a binary option.
Today we are going to tell you how to trade short term binary options correctly. And a little on the subject if anyone doesn't know what an expiry is and how to choose it correctly.
Why traders prefer short-term BOs
Short-term options are binary options with expiry dates ranging from 1 minute to 1 day. Why do traders choose to trade short-term options?
Both intraday trading on the currency market and short-term binary trading are very popular among traders. They even have some similarity - it is the increased trading risks, as the price movement on short time intervals is difficult to predict.
However, unlike the foreign exchange market, when trading binary options a trader knows in advance the amount of possible profit and possible loss. It is this factor, along with the possibility to make a large number of profitable transactions during the day and caused the demand for short-term binary options among traders.
In addition, if trading on higher timeframes complicates the application of classical trend and other strategies, then the tactics designed for intraday trading, scalping and pipsing in the foreign exchange marketThe strategies can be successfully used in the binary options market with almost no adaptation. The strategies are worth talking about separately.
What strategies are suitable for trading short-term binary options
What is good about short-term binary options is the fact that the whole range of tools of a currency trader is suitable for them - this includes technical analysis, indicators and trading strategies. Trends, technical levels, methods of risk and capital management, including the notorious Martingale method, are relevant to them.
For example, for trading short-term binary options are well suited channel trading strategies. Having determined the price channel, the trader buys a Call option near the lower boundary of the channel (support level) and a Put option near the upper boundary (resistance level). This method will be profitable both in flat and in a pronounced trend.
Well-proven for trading short-term BOO Technical analysis patterns and patterns Price Action. With their help, you can easily determine the price reversal points and the direction to buy a binary option. Naturally, in order to correctly identify and trade it is necessary to know their classification, the rules of formation and interpretation of trading signals.
It is worth noting that candlestick patterns can also be used when trading binary options, however, there may be a large number of false formations, as it is believed that more accurate signals candlestick analysis gives on timeframes of a day or more, which for short-term binary options is not suitable.
Don't forget about technical indicators. After all, trading strategies are built on their combinations. In addition, some indicators are suitable as a source of trading signals, as well as for analyzing price charts, identifying trends, corrective movements and price reversal points.
Total
To summarize, it should be noted that trading short-term binary options can bring quite tangible profits. However, it is necessary to remember, no matter what market you trade in and no matter what asset and trading strategy you use, trading always involves risk. This is why proper money management is very important when trading short-term binary options. If you follow the rules of money management and know how to trade short-term binary options, you can rest assured that your profit will not be long in coming.
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