Trading binary options may look very simple, but success will often depend on traders ability to recognize a trend in the currency exchange market.
Once you detect the trend it will be necessary to choose the right strategy.
You also have all kinds of tools you can use to make sure your predictions are more accurate. Through charts, you can make an analysis of price fluctuations in a more visual way, and apply them all kinds of techniques.
Step by Step – Binary Option Trade
As mentioned, trading binary options is simple. The steps to trade options are:
- Open your account with a reputable broker. If you do not already have one, take a look here and register with one that you think is best for you. Remember to choose one that is licensed and regulated.
- Make the selection of the underlying assets you prefer. Check the current trend.
- Sets the duration for the option trade (60 seconds, 15 min, 1 hour, one day or one month …).
- Enter the amount of money you want to invest.
In a few simple steps you’ll be trading binary options and starting to profit. Sounds good right? Well to get the most for your money, you need to implement multiple strategies.
In this case we will focus on a very useful yet easy strategy to implement. This is the strategy of following the trend.
Trend Following Strategies
The trend or trend following strategy’s goal is to identify and follow a particular trend. There are several indicators that show the movements of the market, and one of the most widely used are moving averages.
Determining the direction using moving averages is easy when using charts to find an entry point.
The strategy to continue the trend is widely used by all investors, for practical purposes addresses market is easier to identify. Through the observation of a graph we see the market fluctuations more clearly and determine when the trends are bullish or bearish.
Just have to opt for one direction or another and watch to confirm that your address be continuous in time. So we have time to run the operations and that at maturity the trend remains the same for initially bet.
To operate you have to consider that if the price and sailing, if that you will use, is positioned below the moving average will be before an uptrend and have to choose CALL option (purchase, the price will rise). Otherwise, if the value closes above then this implies a downward trend and have to go for a PUT option.
And what happens in cases of high volatility?
Because as you know, sometimes markets are highly volatile and very difficult task gets hit in the direction of the trend. In these cases the candles in the graphs are constantly crossing up and down, and in any case with a fixed direction. Therefore these inputs and outputs of the market that we show are basically false, so you have to be very careful.
A strategy to follow trend is not effective in these cases, so wait to trade only when the markets are calmer and whose movements more predictable. So you will have more chances of success. Anyway, if you want to try this strategy you can still do it, but I recommend you have at hand an indicator for binary options to help you detect these false market signals.
What advantages and disadvantages to this strategy?
The main advantage of this strategy is that identifying trends is relatively simple, especially when using charts.
The downside with trend following is when false signals occur during times of high market volatility, or erratic trading conditions like we saw in late 2008 and late 2015.