Investing in binary options requires various strategies to attain profits in every trade. Classic trading with binary options requires traders to choose from different kinds of assets which are stocks, currencies, commodities, and indices with basic options choices. Those choices include high/low, range/out-of-range/touch/no-touch where traders agree on the length of the option period, essentially choosing the expiry time and wait for it to end. Before, it was not possible to change a trade once it was made, but since innovation is also a part of binary options, brokers can now offer an early exit strategy which you can close the option before the expiry time.
Importance of Early Exit Strategy
Profitability is just one of the main goals in binary trading. You should also prevent losses in your investment or at least lessen them. You can avoid or reduce your losses if you close a trade early. For example, if an “out of the money” trade would result in an 85% loss, exiting the option early might result in a considerably better outcome, like a loss of only 30% - 50% vs. 80%. It will still vary in the current market condition when the option is bought back. An early exit increases trading flexibility because it gives every trader options vs. waiting for the expiry time and watching their losses grow when their investment moves opposite of the preferred direction. Another advantage is that the early exit option releases money that traders could use to buy more binary options. Despite the mentioned advantages, there are also other factors that need to be considered while using this option. Continue reading "Binary Options Early Exit Strategy" →
Facing the Reality
Bear and bull traps are part of Binary Options and there is no guarantee that they will be avoided. Experiencing traps is inevitable when you are trading in the market. These traps occur in every market and on all time frames. Dealing with this situation can be frustrating, whether you're a new trader, seasonal or an experienced one. You may think that the market will be predictable, but there can be a sudden, quick change in the trend that surprises you and makes you feel helpless at the moment. Before you think negatively, try to analyze the situation and make sure you will not let yourself be a victim without doing something.
Understanding Bear and Bull Traps
When you see a false signal that shows you a declining trend in a stock or index which has reversed and is thought to move upwards, but the security actually declines continuously, then you are caught in a bull trap. This trap usually pushes some investors to buy the stock because of a wrong impression and it will turn into a bad investment. On the other hand, if you see a false signal that shows the rising trend of a stock or index has reversed when it has not, then you are in a bear trap. This can prompt traders to be in shorts on the stock or index since they expect the underlying to decrease in value, but instead of declining, the investment stays flat or slightly recovered. Continue reading "Dealing With Bear And Bull Traps In Binary Options" →
By Nick Santiago, an Expert Technical Analysist, Chief Market Strategist, President and CEO of InTheMoneyStocks.com, and a gifted teacher in educating other on the truth of the markets.
When it comes to trading, active markets are always the best. If you have traded the markets for a considerable amount of time, you know that the best part of the trading day is within the first hour to ninety minutes. This is a time period when there is typically high volume in the market. Higher volume indicates more participation in the markets, especially by institutions. This activity allows for the key support/resistance levels found on charts to be great trading points. Continue reading "The First Hour is For Binary Options Day Traders" →
The returns an investor receives can be measured in many ways, using a number of techniques that describe the efficiency of a portfolio. Generating profitable returns is one aspect that is key to success, but the costs associated with generating those returns is an aspect of market analysis that sometime goes unnoticed. For many investors, risk adjusted returns are extremely important as excessive volatility in a portfolio can be considered problematic, which might mitigate the attractiveness of the portfolio.
In addition to strong risk management techniques, which for many traders are the use of Binary Options which have a predetermined risk reward ratio, traders need to consider the extent of the volatility associated with a specific strategy which can be evaluated by using a number of statistical metric which can help determine robustness of the risk-adjusted returns. Some of the more well-known statistical ratios are; the Sharpe Ratio, and the Information-ratio. Each of these ratios supplies an investor with a benchmark to judge the risk-adjusted returns of their portfolio. Continue reading "Applying Portfolio Efficiency, Ratio Segmentation and Management to Trading" →
Monetary policy, which is also known as interest rate policy, describes the actions or in-actions of a country’s central banks. Interest rate policy generally focuses on maximizing price stability and growth. The central bank of a country is considered the institution that controls a countries currency, money supply, and interest rates. Central banks also usually oversee the commercial banking system of their respective countries.
Each central bank has guidelines that are mandated by their legislature. For example, in the US, the central bank has a dual mandate which is to maximize price stability and employment. Other central banks, such as the European Central bank, have only one mandate which is price stability.
Central banks often spur growth and employment by reducing interest rates, making it easing for banks to lend money at reduced rates. Lower interest rates also increase liquidity, and make purchasing riskier assets a more attractive alternative than holding low interest baring government notes. Continue reading "Trading Using Monetary Policy Analysis" →