It is true that binary options trading requires very little experience, but when it comes to making a profit on a long run, finding a reliable strategy is necessary. You can start with binary options on http://top10binarysignals.com without previous experience in funding or stock market trading as the elementary need is the ability to predict the direction of a price within outlined time. It is an easy system, but if you want to become successful on a long run, you will need to develop a solid strategy.
Why Do You Need a Strategy?
There are several reasons why you desperately need a reliable strategy if you are thinking to become a professional binary options trader. First of all, you need to control the risk in the process; the best way to do it is a reliable strategy. Before you start with real trade, be sure to select a single asset as such approach will decrease risks. Choosing a single asset will help you to gain experience in a single niche, so the prediction of the direction will be much easier.
1. Basic Trend Strategy
It is most commonly used strategy by beginners, but many experienced traders use this strategy on a daily basis. A trend strategy is based on a prediction that the asset will not reach a certain value, in other words, you must find a value that will not be reached. It Is based on trend line observation and real fluctuations of the line, declining, stagnation or rising. In some sense, this strategy is very similar to usual “Call or Put” tactic, but this time, you are trying to predict the value that the price should not reach. Let us illustrate the trend strategy on a practical example, let us assume you are using silver as an asset with starting price of 660$. In next step you should decide the value that a price will not reach, let us assume – 670$ with the return of 65%. You will win a trade if the price does not reach 670$ after the indicated time.
2. Opposite Direction Strategy
Opposite direction strategy is a very simple technique used by many traders. All you have to do is to predict when the price of an asset will radically fall or rise in the reverse direction. For example, a price of silver starts to fall from 670$ to 668$ forming a long falling line. Then you need to predict the moment when the price will reverse direction and go up. This is a very reliable strategy, but you will need some experience to understand most common fluctuation patterns.
3. Unstable Value Strategy
Unstable value strategy is based on unexpected price fluctuations that generally may be predicted. This strategy is a favorite among experienced traders as it uses both trading options trying to win at least one of them. You should decide when the price will start to fall and use “Put” option, but at the same time try to predict when it will change direction and place “Call” option. This strategy will increase your chances to make a profit if at least one of the options is correct.
Binary options advanced as a widely used method of investment by the professional traders, but this method still carries a certain risk. To cut the possible lose you should understand the basic principles of binary trade and follow few important rules that will keep you from financial collapse.
1. Rule of calculated investment
The first and most important rule of safe binary trade is the rule of calculated investment. In outmoded forms of investment, putting in a large amount of money very often results in a sudden loss, to overcome such possibility try to follow the policy of investing only the amount that you are ready to lose. That doesn’t mean that you will lose your money, quite contrary you are trading with the goal of creating nice profit, but be alert and ready for occasional loses, as that is the nature of the trade. Even the most experienced binary traders must learn how to deal with long losing streaks, that is exactly where your flexible funding strategy fits in place. While you can lose some money on short terms, it’s practically impossible to lose entire bankroll as long as you are following this rule.
2. 10% rule
To maximize your returns, you must decrease yours loses. It is a simple rule, but the implementation may be a tricky one. All you have to do is to make bankroll of no more than 10% of your total funds. The best place for 90% of your money is in the bank! Do not forgot this important rule! Binary trade is the best way to monetize your investment, but you must learn the rules of the trade. Let us show this on a practical example – let us assume that you have a 100.000$ on your bank account. In that case, you can transfer 10% or 10.000$ for trading purposes and start investing small amounts. If you learn self-control and always follow this rule, you will be able to compensate negative streaks.
3. Rule of three binary pillars
There are three important issues that you must consider if you want to become a successful binary trader. The first issue or the first pillar of binary trade success is calculated risk. You must be capable of recovering if the trade goes wrong. Therefore, you should apply 10% rule and always invest a small amount of money. The second subject is the rate of investment or projected profit that you will get if your asset price prediction is correct. According to http://www.forbes.com/, in traditional trade, the rate of investment is connected with projected risk and it is around 10 – 25% of the invested amount. Binary trading has a larger rate of investment ratio – 60-90% that makes it the most profitable contemporary trading option. The third pillar of successful binary trade is a recession-proof plan that can generate significant profit.
A binary option trade is not blind investment or impulsive gambling; it requires suitable knowledge and proper market analyses. Trade without proper education may generate short-term gains, but you will need to educate yourself in details if you want to make binary trade success on a larger scale.
A lot of binary brokers do not like to hear that they are going to have to be careful when they start trading, but the truth is that care is an imperative reason in your exchange system. If you are going to be trading, you need to realize that your actions and decisions will always involve a certain risk or loss possibility.
In a moment when you place a trade, you are entering the realm of uncertainty you’ll either lose money or profit based on the result, but do not assume that binary trade is just plain gambling. Successful binary trading involves the practical use of logic and intelligence more than putting blind fate in pure luck. Therefore, the greatest task is to cut risk factors to a bare minimum. It can be done by developing a low-risk method that can neutralize negative impacts of losing strikes.
Selecting proper bankroll
Choosing the right bankroll is the crucial decision, in fact, it is the first step in successful binary trading. You will need to define the entire bank or the sum that you will upload to your trading account, but much more than that, you need to develop an efficient strategy that includes the precise amount of each bet, or how much you will put on each of your binary trades.
Calculating the risk
In binary trading the risk is a common ingredient, you cannot cut it from the process, but you can decrease the risk ratio to the smallest possible degree. One of the most important decisions that you must make is to define how much you are willing on each binary trade. Do not fall into the dangerous trap and invest large portions of total bankroll – it is sure ways to absolute loss on a long run. To cut a risk, a professional trader uses only 2 – 3% of the entire bankroll on a single bet, everything above that amount is dangerous. A common misconception is that larger bets generate larger profits, but the fact is that you should not be focused on maximizing your bets, but you should focus on minimizing loses.
The safe side of binary trading
It is very important to learn when it is necessary to stop trading; compulsive transactions can lead to dangerous results. If you are in a middle of losing streak, learn how to get out and accept your partial loss. You should predict such situations in your strategy and act according to the plan. Successful bankroll management consists of setting clear rules and goals; it is a strictly predefined mechanism that acts according to trade occurrences.
You should always test your system based on relevant info.In the first phase place the only small amount of money on each bet and define a small sum for a total deposit. It is important to truly test your system before investing the larger sum in binary trades. You always need to define precise, strict rules for your trading method and follow them until you make progress and create a steady income.