The binary options market offers multiple trading opportunities by giving to trade. As a trader, you can either choose commodities, currency pairs, indices, or stocks.
But do you know how many assets to watch/trade in the binary options market? Generally, there is no wrong or right number. Yet you can stick to a particular limit to reduce the chances of losing a trade.
If you want to keep your trades manageable, it’s advised to keep three to five opportunities. If you are trading binary options for a while, you can increase this limit. Similarly, if you are new to the market, you can watch fewer trades.
You can continue reading this post to know different ways to watch/trade assets, choose the right asset, and know how much capital to risk on each trade.
The binary option is an all-or-nothing market. You can only win a trade if you have accurately predicted the price movement of an asset. But along with speculating the price movement, it’s also essential to know how many assets to watch and trade.
Here are three ways of doing it:
You can start the process by using a stock screener website or software. With the help of such a tool, you can quickly narrow the universe of stocks. Also, after screening the stocks, you can make a list.
You can further refine the list to around 2 to 6 stocks. This way, you can easily manage the trades. Also, you won’t miss any profitable trading opportunities as you are only watching a given number of assets.
If you wish to maximize your profitability, you must look for highly volatile stocks. Although there is a risk of losing huge money by trading highly volatile assets, you can earn a huge profit if your speculations are correct.
Additionally, you can also look for breakouts. When you trade at breakouts, you don’t miss any excellent trading opportunities.
The main point is, you should never watch more assets than what you can handle; otherwise, it will result in loss.
Another way to make more profit is by trading one asset all the time.
Whether you are familiar with stocks, currency pairs, indices, or commodities, you should choose a single kind of asset to trade all the time. If you want to gain success by using this strategy, you should research the assets you wish to trade.
Doing detailed research will also help you have a proper idea of the market condition. For example, if any commodity is showing good progress in the market, you can trade it.
When you trade one asset all the time, it’s important to know when to cut back on the trade. That’s because the trading conditions are not always the same. So, if the market is no longer favorable, you can start trading another asset with good volatility and volume.
If you don’t cut back on the trades in an unfavorable market condition, it will result in a huge loss sooner.
Before you begin the trade, you should do a detailed market analysis to understand the volatility and volume of your preferred assets.
After that, you can divide the list into two categories. The first category should have assets that you want to day trade, and the next category should include assets that you can swing trade.
Later, you can refer to this master list and pick an asset based on its performance and price. This step makes your trades manageable. Also, you can easily create trading strategies to increase your profitability.
It’s also important to choose the right asset to win a considerable payout from the trade. You can view these aspects when choosing an asset.
If you are new to the binary options trading market, you should choose an asset you are familiar with. That’s because when you know the asset, you can easily predict how it will behave in the market.
Moreover, you also have an idea of the amount you can afford to lose if the trade goes wrong. But if you are trading for a while, you can pick an asset that has high volatility.
Another factor to consider while selecting an asset is its liquidity. It shows the demand and supply of a given asset in the market. If the liquidity of a commodity is high, that means its demand is high. Similarly, if the demand is low, its liquidity will also be less.
You should trade assets that have high liquidity because they can maximize your profit.
For example, the liquidity of stocks like Facebook and Apple is more than other companies like Ventas because its supply and demand are more. Similarly, the liquidity of currency pair EUR/USD is more than USD/TRY.
It would be helpful if you choose an asset with better price action. That’s because an asset whose price is not moving will not make you any money. On the other hand, if the price of an asset is trending, that means it is profitable.
When the price increases, you can enter the trade, or you can wait for price reversal.
The last factor to consider is the economic data. You should avoid trading the stocks of a company when it’s expected to release big financial news. Similarly, you should also not trade currency pairs when the market releases economic data related to that currency.
But if you are an experienced trader, you can utilize these opportunities to trade as these situations are highly profitable.
The amount of money you can risk on each trade depends on your capacity to handle risk. If you can manage a greater risk, you can trade more. Otherwise, you should spend less money.
A general rule says that you should not trade more than 1% of the amount that you have in your account. Trading 1% means you are ready to lose this amount.
There is no correct limit or time regarding how many assets you should trade or watch. But you can always set an individual goal to manage your trades.
Watching a particular number of assets can help you identify more trading opportunities. Also, this way, you can effectively use your trading strategies for better profitability.