Binary Trading Strategies for Beginners
Binary options trading provides traders with the opportunity to achieve success when trading with a variety of available underlying assets.
In order to become a successful binary options trader, you need to recognize and follow a certain strategy. Not only that, you also need to understand more about the available binary options industry and which ones are used for particular trade option.
If you are new to binary options trading, it may be wise to research what are the best binary options strategies available to you.
While there are several strategies available, not all of them are suitable for beginners in South Africa and not all of them will help you to achieve your investment objectives.
So it is always a great idea to take the time to research the different strategies to ascertain which ones are more likely to be appropriate for someone who is new to binary options trading.
Binary Options Strategy South Africa
With binary options strategy South Africa, the aim is to make an educated guess about the price that you think a certain asset or asset-pair will reach within a specific time period. As the word “binary” implies, with this type of investment, there are only two possible outcomes – gain or loss.
In other words, either you will gain everything or you will lose everything based on what you had predicted about the price of that particular asset or asset-pair. The two types of binary options are call options or put options.
A call option gives you the option of buying an asset at an agreed price on or before a certain date. A put option gives you the choice of selling an asset at a particular price (strike price) on or before a certain date (expiration date).
If you believe that the price of the underlying asset is going to go up within a certain time frame, then you would invest in a call option. By so doing, you would make a profit when the price goes up because you would be able to sell that asset at a higher price than you bought it for.
On the other hand, if you believe that the price of the underlying asset will fall within a certain time frame, then you would purchase a put option which gives you the right to sell that asset at an agreed price within a given time period. Now let’s briefly discuss some of the top binary options trading strategies for beginners.
Planning Your Binary Options Trading Strategy
When you look at the financial market and you have plans to participate and trade binary options, then it requires from traders to have enough trading knowledge to know how to use specific strategies when trading with a chosen trade option, short term or long term.
Traders from can choose among many trading strategies, ranging from those that are mostly used by traders beginners or those that require certain trading skills and are intended for experienced traders.
In the industry of binary options, strategies are considered to be in top most important elements of binary options trading.
With well-chosen strategies, it is possible to maximize profit and achieve success, whether we are talking about short terms strategies or other types, offered on various trading platforms. We always advise our readers to evaluate many trading strategies and understand them in order to benefit from them in the trading process.
Binary Options Strategy That Works!
Binary Options traders are aware of the fact that binary options trading can be profitable thanks to its numerous advantages. Traders should know that they do not necessarily know all available strategies which are used in this industry.
If you have a good plan and cool head, trading binary options can be very profitable, because you don not rely on luck. Knowledge is the key element of successful trading and understanding of available strategies lead to a more profitable trading process.
It is better to know several of them and use them properly so that later on, they can profit from those strategies. In our Guide section, you can find articles that can help you decide what type of trader are you and what are the best and most popular trading strategies for traders beginners and advanced traders.
A great way for the traders to try out the platform and test several strategies is to use demo account with a chosen binary broker. With such a possibility, traders can evaluate the market and try trading with few strategies and see if they suit them in the trading process.
How to Use Technical Analysis in Binary Options Trading?
Technical analysis is often used in binary options industry primarily because it is based on financial charts. Key element of successful trading with focus on technical analysis is having more knowledge regarding binary trading signals. If traders wish to achieve high returns, they should be able to identify the market trend and stay on the right track.
Trading on technical strategy can be awarding for traders in South Africa if it is used properly. First thing is to educate yourself to have enough trading knowledge to know when to place a trade and how to use different charts in the trading process.
If you are serious about trading binary options, then you need to be quite prepared for the trade itself. It is very true that only proper preparation can help you to earn a lot of money. That is why a lot of traders depend upon the technical analysis.
This is the analysis of the asset prices in order to find out about the future movement of the market. It is not something very easy, but if you are capable to do that, then you will be able to guess better. Your prediction will translate into better earning and a more money.
There are a few type of technical analysis available for the help of the traders and you are about to discover about them.
Trend following is the type of technical analysis where the historical trend is followed to find out about the trend of the market. It is thought that if the historical movement if the market can be read properly, understanding the present market will become a lot easier. Your prediction will have more depth and more confidence.
Momentum in technical analysis is also known as the moving average convergence divergence. Under this method the price of the asset is determined by the parent of its rising and falling within a certain time period. It can be a long time or a short time. Both the ways, you will have an average reading of the market which will help you to guess about the price movement better.
Mean reversion is the type of technical analysis where the mean of an assets rather the price of an asset is identified. If you are having problem in understanding then a little explanation will make things simpler. The price of an asset is rising and falling all the time, so there is a need to find out the mean and if the price is going to settle down by that point. This one will help you to find out a strong point based on which you can guess better.
Pattern recognition is the type of technical analysis which will help you to recognize a pattern among the current trend. If a pattern can be identified, then it will become easier for the trader to make his prediction better and take more risks.
Support and resistance cannot be identifies as technical analysis, but nonetheless they are quite important. For instance, support is that level which makes sure that the price does not go under it. If somehow the price goes below this level, it will come above very soon. Resistance is the level which will ensure that the price does not go beyond this level.
So how to set up support and resistance strategy?
Traders should know that this strategy is helpful in evaluating where to enter or exit when establishing the positions. Also, in case resistant or support line breaks, it doesn’t mean it is deleted. Once crossed upside, resistance becomes support. The thing regarding this strategy is that they necessarily don’t reveal direction of asset price. However, they help traders to define important positions and right timing for Call or Put position.
How to Use Fundamental Analysis in Binary Options Trading?
Besides technical analysis, fundamental analysis is also considered to be very significant in binary options trading. It works on principle that it evaluates all important factors that can influence the price, both internal and external. Those factors include data, ranging from company information to the big global market events. Some events affect asset price more intensely than with some other underlying assets.
For traders it can be difficult to monitor and follow all the time all relevant market news in real time. It is just too much information. However, it is recommended for traders to choose an asset and focus on one and use specific trading strategies to achieve success while trading binary options.
Fundamental analysis based on natural events
A lot of underlying assets, such as corn, wheat, soya, oil etc can be at large extent exposed to market changes, influenced by different natural events, such as floods, earthquakes, hurricanes and other disasters. So in case of a flood, there will ocurre issue with wheat, let’s say. It will result with supply shortage and therefore, price of wheat will be higher than before the flood. It is pure supply and demand. Some natural events is easier to predict while other are more difficult which can finally result with a big market trends and instability of a particular asset. Back in 2001, when huge flood happened in Thailand, Japanese Yen was extremely hit with this disaster and Japan was not able to export goods to Thailand. This is an example of how natural disasters can have a large impact on a wide range of assets and change current trend without having time to prepare yourself for the upcoming events.
Fundamental analysis based on political situation
When you participate on financial market, political events can largely influence on price direction of particular asset. These political events can include war or sudden change that happened. For example, oil is affected due to tensions in Iran and that situation has increased volatility of oil commodity on the market nowadays. Changes in governments of some countries can also influence in price movement of certain asset; stock, currency, commodity or index. All these elements have to be taken in consideration before placing a trade because market situation can happen in any moment and traders should be aware of that fact. This is why advise our readers to read market news and try to predict will a particular asset be more or less affected on financial market.
Fundamental analysis based on economic data
Besides natural and economic events, release of different economic data can also influence on price movement of particular underlying asset. Different data, released from companies and governments have a wide range of importance levels for traders in binary options industry. In situation like this, traders in South Africa mostly use economic calendar to keep on track all relevant economic and financial data, that are being used in the trading process. A good quality economic calendar will provide traders a complete review of economic data release. Most significant data include GDP, unemployment and interest rate.
GDP stands for Gross Domestic Product and it is known as key indicator of economic health. GDP measures a total value of goods and services on a national level.
This is an amount, which banks pay to people, businesses or other organizations for keeping the money in the bank. Interest rates are used by central banks in order to change economic situation. As a rule applied, higher rates mean higher currency level as a rise in that country’s rate makes is more appealing and worthwhile for foreign investors to hold on a particular currency.
As on of the key indicators of fundamental analysis in binary options trading, unemployment can show exactly how good or bad and economy can be. It only requires to monitor unemployment rates to get the bigger picture of a particular economy. For example, economies who have low unemployment rate are doing very well, but their companies can face with a crisis and stop hiring people. This is seen as bad sign for this one economy. Once again, economic calendar can be of great help and will provide you the latest information on important market events. This is especially useful for traders beginners who can use economic calendar to turn their trading process in a profitable binary options trading that can assist traders to maximize profit when trading binary options. Fundamental analysis can be of great assistance during trading process.
How to Choose The Best Binary Options Strategies that Work?
As previously stated, there are different strategies, that can be performed regardless if we are talking about new traders or professional trader. Below, we will explain in more details few popular strategies, often used in beginner and advanced trading.
South Africans can use trend strategy as the starting point for trading binary options. It can be used by new traders, as well and experienced traders. Trend strategy focuses on monitoring trend line of a particular asset, their rising and declining. In case predictions are that asset price will rise and trend line is flat, it is recommended to use No Touch trade options.
This strategy is one of the most used ones in binary options trading. Pinocchio strategy is used when it is expected that asset price will fall or rise drastically in the opposite way. If predictions show that price will rise, traders can choose call option, or put option is case of price falling down. Majority of traders use this strategies when signing on demo account.
This strategy is definitely one of the most used ones, especially among pro traders. When performed properly, traders can minimize the risk and also in the same time, increase chances of maximizing profit.
South Africans can perform Reversal strategy by placing call or put option simultaneously on a specific underlying asset. This is very important for those assets with fluctuating value. It is important to determine when will an asset reach its peak. This can be done by understanding technical and fundamental analysis.
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