As a trading beginner, there are a lot of things you need to learn before you can start making a profit on the Forex trading market. As time goes on, it will be easier to figure the finer points of investing. But at first, you need to take it one step at a time, no matter how much you want to just jump straight in. And one of the most important things you absolutely must do is choose a binary options strategy. You can review our list of tips on how to start trading binary options.
We should mention that some financial experts believe you cannot have a strategy when it comes to Forex trading. So, their plan proposal is having none at all and just invest based on other factors until you make a profit. This is inadvisable, especially in the beginning, when your trading instincts are still developing. In time, you can try this and just rely on your them, but in the beginning, it’s better if you have a clear plan.
What Is a Binary Options Strategy?
A binary options strategy determines your approach towards trading. You can be aggressive or cautious. As a beginner, it would be advisable to lean toward the latter. Though it rarely yields as much profit as the more aggressive option, it’s much safer. Opting for these strategies is a good idea until you feel more comfortable.
Why You Need a Strategy as a Beginner
As mentioned earlier, there are those who do not believe strategies are mandatory. And there are definitely experienced traders who just have a feel for the market. You can gain access to their insights via social trading platforms. But eventually, you will want to develop strategies of your own.
As a beginner, there are many things you need to learn. And most of them can only be figured out through practice. To minimize risks, it’s important to have a plan. These strategies can serve as general trading guidelines. As you start to gain more experience, you can start experimenting more and more.
Types of Binary Options Strategies
There are several types of binary options strategies that are quite popular. Remember, they have both advantages and disadvantages. It might be worth combining them, or finding specific moments when these strategies yield the best results.
The Basic Call/Put Strategy
The basic strategy when it comes to binary options trading is commonly referred to as the Call/Put or High/Low strategy. This approach is very simple to apply. And it’s important to get used to it early on since many of the most advanced techniques are just variations on this one.
Basically, when the value of a certain currency seems to be going up, you put a Call order. If the value seems to be going down, you Put. It is especially useful for quick trades when it’s easier to predict which way a currency’s value is going.
The Fundamental Analysis strategy is very well suited for traders who don’t like to rely on guesswork to predict which way the value of an asset is going. With this strategy, traders take an in-depth look at the major factors that determine the value of a specific currency, including recent political and economic events, mergers, changes in regulations, and policies. It’s a very time-consuming strategy, but can guarantee a high degree of safety, relative to other strategies.
This technique is best used by intermediate traders. It requires an in-depth understanding of market fluctuations and a strong intuition. It works in much the same way as the Call/Put strategy, but the other way around. When the value of an asset goes down, instead of Put, you place a Call order, in the hopes that its value will rise sharply before the deal ends. And the other way around. If used successfully, you stand to gain some pretty impressive profits. But at the same time, it can be extremely risky.
Live Signals and Algorithms
An increasingly popular strategy is the use of live signal providers and algorithm apps designed to predict changes in the market and notify traders of possible opportunities. These apps are very useful for beginners, as well as seasoned traders who might not have the time to monitor the market regularly. Of course, your intuition and know-how are still the most valuable tools, but these apps can make your work much easier.
It’s a common strategy used when markets are unstable. When it’s unclear which way the market will go, a trader places both a Call and a Put order on the same asset, set for different time frames. The point of this strategy is to obtain some positive results, despite the fact that one of the options will definitely lose. It minimizes loss, but it’s also not extremely profitable. Therefore, this strategy should be used sparingly. But for beginners, this strategy is ideal until they had some time to learn tells and hints that could help them predict market changes
How To Choose a Binary Options Strategy
With so many strategies to choose from, how do you select one? Well, firstly, you don’t have to choose just one. You can choose several strategies to test out until you find one that suits your style. You can also combine several of them, selecting the strong points of each to offset their disadvantages.
In fact, this is advisable, as each strategy has a series of advantages that only shine through in certain situations. Apart from the most basic Call/Put method, all of the others are designed to address specific market issues.
Depending on the contexts described earlier, you can choose a strategy that minimizes risks and gives the best results in each case. Start out by experimenting with smaller investments. And it’s always a good idea to keep yourself up to date with current financial insights and studies.
Ultimately, the most important criteria when choosing a binary options strategy is your personal preferences and trading style. Some people thrive under pressure and quickly lose interest when they have to be patient and study the market carefully. Other don’t the like the stress and the guesswork and prefer a more relaxed, calculated approach. Whatever strategy you feel most comfortable with is the right strategy for you.
Image source: 1