Through binary options trading, you can trade in different assets like stocks, indices, currencies, and commodities. Also, you can trade these assets throughout the day. In short, you can enter the market anytime you want. But this does not mean that you should do it.
When you trade at an unfavorable time, your chances of losing the trade increase. You might wonder how can this happen? Well, it happens because the binary options market is not stable throughout the day.
There are certain times when it gets impossible to predict the price movement of assets and understanding the market. So, if you trade during these uncertain times, it’s likely to cost you money.
If you want to make money by trading binary options, you should know when it’s the right time to trade and when you should avoid trading in this market.
In this guide, you will know about the perfect time to trade. Also, we have listed some tips so that you can stay ahead in the trading competition.
Tips for Getting Started with Binary Options
Whether you are a beginner or a professional trader, there are a few trading tips that you must follow. These tips make the trading work simple and help you avoid negative implications.
Here are a few tips to get started with binary options trading.
Choose a Trustworthy Broker
Through binary options brokers, you can facilitate trading. But it’s essential to choose a broker that is legally registered by some reliable authority.
If you are choosing a broker that is not registered, you are risking your money. That’s because, in the binary options trading world, scam is getting common. And the only way to keep your money safe is by trading binary options through a well-regulated broker.
When choosing a broker for trading, you must check a few things like minimum deposit amount, minimum trading amount, withdrawal and deposit method, demo account, types of assets offered, and payout rate.
Analyze the Market and Asset
After registering yourself with a trusted broker, the second step is to analyze the market. If you start trading without researching the market, it might result in a considerable loss.
That’s because the binary options market is volatile. And without having a good idea of how the market is behaving, you only make a trade to lose. So, you can do fundamental analysis, sentimental analysis, and technical analysis to understand the market’s mood.
Along with analyzing the market, you must also examine the asset to know which one you should choose for trading. If you are new, you can trade currency pairs as their volatility is much lower than other assets.
Practice on a Demo Account
Several brokers offer demo account services for traders to practice binary options trading with dummy money.
You can practice with the demo account to make yourself familiar with the basics of binary options trading. When you practice on a demo account, you learn about the call and put options, expiry time, market price, and other essential trading aspects.
Once you have gained enough experience and confidence, you can start actual trading by depositing real money.
Make an Initial Deposit
Some trading platforms do not quire any minimum deposit. However, some brokers have minimum deposit criteria. So, if the broker that you want to trade with requires a certain amount of deposit, you must do it to get access to your trading account.
When you make an initial deposit, you also have to pay a small deposit fee charged by the third-party payment method.
Start Trading with Small
A high payout might be lucrative but losing money in binary options trading is also real. So, you should start trading by investing a small amount. A small trading amount results in tiny profits, but it also means limited losses.
Once you start making successful trades and understand the fundaments of binary options trading, you can increase the trading amount.
When Should you Avoid Trading Binary Options?
There are a few situations when trading binary options is not a good idea. That’s because such conditions can make you lose huge money. Here are some of those situations.
Although you can do binary options trading throughout the day, you should avoid trading during weekends. That’s because, during the weekend, many traders stop trading. And when they return, the market becomes unstable for a while.
It also increases volatility and generates uncertain trading results. So, it’s better to take time off during the weekend and return to the market when everything is stable.
Skip Major Events and News Releases
You should also avoid trading during major events and news releases. That’s because when there is some major financial news release, it creates tension in the market. Also, sellers and buyers become indecisive.
During major events, binary options trading market ranges and not trends. And it is nearly impossible to gain profit from a market when it is ranging.
Additionally, there are two exceptions for avoiding trade during major events. The first exception is that you can trade binary options during news releases if you understand the fundaments and know what you are doing.
The second exception is when you have a well-planned and tested strategy that is proven to help gain profit despite the trading conditions.
If you fit in any of these exceptions, you should trade because skipping trade can mess up your trading strategy.
On the CHF Pairs
So many binary options brokers have taken away CHF pair from the platform. However, some trading platforms still have this currency pair. These platforms have left CHF as a trap for traders.
So, if you see CHF currency pairs like EUR/CHF or something else offered by your broker, you must stay away from it. That’s because CHF pairs are risky, and things can get nasty when you lose money in this trading.
No Clear Direction
When price trends in the binary options trading market, choppy price action occur in the market for a few hours. When this happens, there is no clear price direction.
So, it’s better to stop trading for a while till the market gets back to normal. If you trade anyway when there is no clear direction, you will end up losing.
If you notice that the price is making high highs then low lows, or if it’s making low lows then high highs, you should stay away from the market. That’s because when ranges expand, it gets tough to find an entry into the market.
Also, if you try to adapt to the market volatility and find a good entry, you might likely lose money.
Right After Winning a Trade
If you have just won a trade, you should try not to trade again. That’s because after winning the trade, we get a temporary high feeling. And we think that we will win the following trades as well.
But most of the time, traders don’t win upcoming trades. So, it is better not to chase wins in binary options trading as it can result in huge losses.
After Losing a Trade
Just like trading after winning is not profitable, trading after losing is also not profitable. When traders lose a trade, they want to compensate for the loss. Thus, they don’t follow any well-planned strategy.
Because of a lack of strategy and judgment, they lose the trade again. And this further leads to even bigger losses. That’s why it is recommended not to trade after losing one.
What is the Best Time to Trade Binary Options?
As you know about the situations when you must avoid trading binary options, it’s time to know the best time to trade binary options.
One of the best times to trade short-term binary options is when the market is trending. There is a fixed market direction in this situation, and you can easily predict the price movement. Meaning you can win the trade.
You can follow a well-planned trading strategy and analyze the market to understand how the market is performing.
When you are Calm
If you are feeling frustrated, sad, tired, or tensed, you should drop the idea of binary options trading. However, if you are feeling calm, you can trade.
Trading binary options is not a game because it requires detailed analysis and accurate calculations. And when you develop a strategy with a calm mind, you are more focused on accomplishing your goals.
Timing for Stocks
If you want to trade stocks, you must keep a close eye on the market to know when the trading stocks are in operation. Also, stocks are usually traded for 6 to 8 hours a day. That means you can trade the stocks of big companies in the given time to make more profit.
Timing for Currencies
If you want to trade currency pairs, you should wait for an active time when there is an overlap of time zones of London/New York and London/Asia.
Along with this, it’s also important to know the active time zone of local currency to understand its market volatility. For example, the Australian Dollar is least active during the London/New York time zone overlap than the Asian/London time zone overlap.
Timing for Commodities and Indices
Commodities and indices of binary options have their timing for trading. You can do a quick market analysis to understand what timing will be best for their trading.
Once you have understood the trading timing of each of these assets, you can avoid losing huge money.
Common Binary Options Trading Mistake to Avoid
Along with knowing when not to trade binary options, it’s also essential to know the common trading mistakes. You can avoid these mistakes to become a professional trader in no time.
Lack of Research
Binary options trading might seem easy because, as a trader, you simply have to predict the direction of the price movement of an asset. But without proper research, you will end up losing the entire traded amount.
When you don’t research the market, you don’t know what’s happening in the trading world. Thus, you can’t speculate the price with accuracy.
Investing More than you Afford
Investing in binary options might sound like an excellent way of making huge money. But the truth is that the binary options market is also risky. That means, when you invest huge money, you should also be ready to lose it.
Believing in Pattern
If there is one thing you need to remember about binary options, it’s that this market is highly volatile. So, if you believe a particular pattern or strategy will help you win a huge amount of money, you are wrong.
You should always develop a strategy by analyzing the market to reduce the possibility of losing money.
Often, situations won’t be favorable in the binary options trading world. But you should not panic because it will only lead to negative consequences.
Mostly, new traders panic when their trading strategy fails. And because of fear and frustration, they make risky choices. So, if you want to become a professional trader, you should master the art of remaining cold as ice.
You should always have realistic expectations from the binary options market. When you know how much you can earn from trading, you don’t establish any unrealistic expectations. And this can motivate you to perform better.
Illegal Trading Platforms
There are specific illegal platforms that lure traders by offering them excellent features. But shady platforms are only built to scam traders. Therefore, you should always choose a reliable broker to keep your money safe.
Just like any other trading, binary options trading also has certain pros and cons. That means when you are making a trade, you might win the trade, or you might lose it depending on the market conditions.
But you can always decrease the possibility of losing money by not trading in an unpleasant situation. Moreover, predicting the price movement becomes difficult when there is no clear direction or when the market price increases and decreases.
So, you should always wait for the market to become normal or spot a trend before investing your money.