ForexMinute's  Instablog

ForexMinute
Send Message
ForexMinute is a leading financial news website, providing investors with key tools to become top class traders. The ForexMinute.com team provides global investors with a huge amount of resources, such as the latest forex news, broker reviews, fundamental and technical analysis and other top... More
My company:
Forex Minute
  • Binary options trading guide – Create a strategy 0 comments
    Apr 30, 2012 11:59 AM

    Successful trading is derived from a sound trading strategy, and this requires no amplification or proof. The strategy in the trading market would cover in its ambit the time when a trader would take a certain position and for how long would the trader hold that position. Before this, the trader would already have formulated why the particular position is favorable in the financial sense. The strategy would also cater for the entry level, exit level as well as the money to be invested into the entire scheme. The strategy could be a solid one with no changes allowed or a flexible one where the trader would apply mid-course changes, depending on the situation at hand.

    One can formulate a strategy that takes multiple assets into account and this is where strategies employed in options trading are seen the most. The trader takes on multiple positions thus initiating risk for a particular view.

    Binary options analysis a key to formulating a strategy

    Whatever be the case or asset or even the number of assets that the trader is taking in, the strategy being formed has to be based on thorough analysis. The analysis would study thread bear how the particular or group of assets behave in a given time frame. The reasons for their change in behavior and how that can be predicted is to form the strategy basics. Any information that one gets on this aspect would be the building block of one's strategy and the first steps in their binary options training guide.

    How to analyze a binary options strategy

    The overall scenario in binary options trading does not depend on the amount of movement of a particular asset; rather it depends on just the direction. The return also is dependant not on the quantum of movement but just the direction of movement. In binary options trading therefore, the strategy is analyzed by the percentage of return received rather than the sum total amount of return received from the deals.

    To explain this aspect by way of an example we could take two strategies which were applied to 100 deals. The first strategy returned 55 wins and 45 losing deals. The winning deals had 1 percent returns and the losing one's cost the trader 2 percent.

    In the second strategy the numbers of wins were 45 and the losing ones were 55, but the winning deals returned 5 percent and the losses took away 1 percent.

    Anyone analyzing these two strategies in the conventional trading market would always opt for the second strategy where the number of wins were less but the amount of returns were more in the wins. In case of analyzing a binary options strategy however, it would be the first option that would be more advantageous. The percentage returned in case of a win or loss has no relevance in binary options. It is just the number of times won or number of times lost that holds relevance.

    Binary options demo account - to try out one's strategy

    It is best to open a binary options demo account at any of the number of sites where such a feature is available. One could formulate one's strategy and implement the same on such a site and test it out. The sites that one gets such features in would have live data and only the real time investment aspect would be missing.

    A good and solid strategy would help in the long run for any binary options trader. A well contemplated strategy is one of the key factors for a successful binary options trader.

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Back To ForexMinute's Instablog HomePage »

Instablogs are blogs which are instantly set up and networked within the Seeking Alpha community. Instablog posts are not selected, edited or screened by Seeking Alpha editors, in contrast to contributors' articles.

Comments (0)
Track new comments
Be the first to comment
Full index of posts »
Latest Followers

StockTalks

More »
Instablogs are Seeking Alpha's free blogging platform customized for finance, with instant set up and exposure to millions of readers interested in the financial markets. Publish your own instablog in minutes.