To give our readers an insight into successful binary options trading, we have mentioned more than twenty rules and trading tips for successfully making money in binary options trading. Anything a trading beginner should know if they want to start trading can be found in the list below.
Top five Risk Management Rules
Five percent rule: Always use a small percentage of the total capital available to you. For example, only 5 percent of it as an investment per single trade makes sense.
The Two-Option Rule: Never buy more than two options at a time, otherwise you may lose track of your risk management strategy.
Long-term Rule: Beginners should initially only trade long-term options, such as Options with a duration of at least one hour. The analysis of short-term movements and thus reliable setups is much more difficult, as fluctuations in the price are slower and lower.
Entry rules: The target price should always be chosen so that the option quickly enters the “in the money” area. For example, a call option could be bought at a relevant technical low and a put option at a relevant technical high.
Overtrading rule: Over-trading should be avoided, for example, by trading a maximum of two options a day, regardless of whether they ended up in profit or loss.
Not only does the above-mentioned rules make sure that the overall risk is reduced somewhat, but it also promotes discipline in trading, including the psychological aspect of trading.
Top ten PRO trading rules
The following rules apply to trading itself rather than to risk management, although they are not always separate. For example, the entry rule (buying calls on lows and puts on highs) can also be advantageous not only for risk-related reasons.
Technical Analysis: Beginners should, if possible, act according to technical analysis. This provides a good foundation and there are many strategies that can be tried and optimized at your discretion.
Buy call options on lows and put options on highs: This rule should be considered not only in terms of risk, but also because low prices are just more advantageous than high, if one assumes rising prices and vice versa.
Analyzing long-term charts: For short-term trading, too, you should analyze long-term charts to identify relevant technical price zones.
Selecting expiry according to the trend: The expiry of an option should be adjusted according to the trend. For example, if a trend lasts several days (many daily bars), the duration should be at least one day to avoid fluctuations within that day.
Avoid high-yield options: Trading high-yield options such as ladder options may sound lucrative, but should be avoided, as on the one hand the constraints are very unfavorable and on the other hand the technical analysis is lost, which would work against the trader.
Know the Market or Strategy: A trader should only focus on a few markets or strategies, such as, you can trade only currencies or follow trend strategies. This also serves better analysis and concentration on the essentials.
60-Second Options: Always buy 60-second options in the opposite direction after identifying a relevant resistance or support. These zones must be very reliable. Therefore, trading 60-second trades is more for experienced traders.
Reliable Broker: You should have a reliable broker so you do not fall on the lap of a black sheep because there are, unfortunately, many scam binary options sites on internet. You can tell the difference by the fact that the broker is subject to regulation by an EU authority and whether it provides a good support when it comes to withdrawals. Important: it will not do you any good if there are many contact options in the support section, but when you try them, hardly anyone can be contacted via the given medium.
Trading after Market Opening: Newbies should stop trading for at least 45 minutes after the stock market opens. The market should first show a certain direction, otherwise no reliable trends can be identified.
No Trading During News: Avoid trading while business news is being posted if you do not know what the implications are for the course. Unless you trade long-term options, in which case, this is hard to avoid. In any case, you should be well informed. Responsible brokers and related trading portals like to share their knowledge with their potential investors.
The trading of binary options always involves the risk of losing the capital invested. Especially if you are still new and inexperienced and want to devote particularly complicated strategies such as news trading. Therefore, it is important to deal with the financial instrument in advance.
Mobile trading of binary options or how it relates to profits and losses in terms of tax, traders should also have this in mind.
Mobile Trading is suitable for those who are already familiar with the price development, because the extensive technical analysis on mobile devices is only conditionally reliable. Therefore, apps are usually only used as a basic trading platform and less as an analytical platform. Trading apps work well for making short-term decisions and trading on the go.