Formulating a Binary Option Strategy

Some people may get confused in whether binary options are a form of gambling. One of the main differences which differentiate it from a form of gambling is that in binary options you need a strategy which you will follow in order to succeed, while in mere betting the only thing you rely on is mere luck.

A complicated approach in order to devise a winning strategy is a premier problem in binary option investments and at first it will seem difficult. Now we are going to look at a few factors which you need to consider before developing a strategy which will ensure that you maximize your strengths and eventually up your gains.

Selecting Your Time Frames in Binary Options Trading

Firstly, you need to consider the trading time frame. This is arguably one of the most important factors when trading with binary options and does not play a great part when dealing with other types of trading. What makes the trading time frame important is the fact that the trading time period has to be outlined before the trade is even open.

There are many factors which will affect the selection of a time frame. It actually depends on a large number of factors. First you will need to determine what type of a trader you are. You will also need to calculate how much time do you spend daily managing your trades and when doing so are you constantly looking for opportunities.

Some people prefer a faster approach and like to see their income quicker, like using 60 second options. Alternatively, you may also enjoy a slower pace, prompting you to choose weekly or monthly options as well.

Some people also take into consideration some important economic events which may or may not affect trades, and you need to consider the fact whether you use these events in your game.

You will need to address all of the mentioned factors when making your trade parameters and when deciding in your strategy. The result is not the same for every person and depending on the mentioned factors you will be able to devise your personal strategy.

Selecting Your Trading Asset

The next step in forming a successful binary option strategy is choosing your asset. Here you need to take into account the fields where you are strong at, or where your knowledge proves to be the greatest.

You need to ask yourself whether you have a wide knowledge of a certain asset type first.

People interested in stock markets who are able to interpret earning statements will most likely have a lot of success dealing with those and certainly need to choose that as their primary asset. On the other hand, if your knowledge lies with macroeconomics you may choose commodities or even currencies (Forex) as your go to assets.

For certain assets there are some events which require of you to be able to trade during them, making you less prone of wining. This may occur during weekly inventories reports in oil or when major banks conduct their meetings, resulting in a shift with currencies. Being able to safely trade during these events will enable you to win big.

Your performance and the knowledge of these occurrences can be a great boost for your game.

Technical Analysis or Fundamental Analysis?

There are two ways of trading. Choose either the technical analysis approach of using charts, or fundamental analysis which will need that you study some economic reports.

There is also a third option available and allows you to combine the given two analysis.

People who are skilled in numbers or rather math, often choose the technical method because it allows them to read the charts quicker and with more understanding. People who like to take a more cognitive approach to the problem will often choose the fundamental analysis which will allow them to assess the economic data with ease.

On the other hand, most traders use a combination of the two strategies giving them an additional edge. Many binary option traders would wait for an economic event to create an overall bias and use the technical chart analysis to exactly in which direction the price is going to move.

When your data is supported by economic claims and valuation you have more chances of guessing correctly in which way the market is going to move and thus gain a better chance of winning.

Use Strengths When Formulating a Strategy

Formulating your trading strategy is a very difficult task, with guessing the correct future price of an asset as even more complicated. The best way to enhance your chances of guessing correctly is by breaking down the process into component parts where most of the elements will be based on your investment needs.

You will certainly use your strengths to achieve better results and play it safe by using the parts you are the most familiar with. But the best way to achieve success is to combine the strategies and be an all-around trader. This would mean that you need to combine the conservative strategy of trading with longs term trades with an extended time frame with a more aggressive approach of bidding on high risk trades. You will need to up your game and evolve as a trader to achieve success. Additionally, no matter which avenue you choose, there is an accompanying strategy that can be matched to your trading character.