Category Archives: Getting Started

Advantages of Using a Forex Robot

Forex

A Forex robot provides binary options traders with the opportunity to make money with very little effort on their part. The robot handles all an investor’s Forex transactions while they are occupied with other matters or even when they do nothing at all. The point of using a robot is to ensure that you have complete control of all your trades while you are left free to focus your attention on other matters. Robots take out the guess work when it comes to market analysis so you no longer have to make your trading predictions simply on a gut feeling.

How the Forex Robot Works

The Forex Robot completes automated transactions on your behalf based on its analysis of current trends related to your limits. It searches for the most profitable exchanges available and – using the parameters you have established – completes these exchanges. Although there are definite advantages to using Forex Robots for trading, it should only form a part of the overall trading strategy. The right robot, when properly used, can significantly pad your bottom line.

The Robot Never Sleeps
The Forex markets are open to trade 24 hours a day, 7 days a week. You, on the other hand, cannot sit at your computer trading indefinitely. However, this does not mean that you should miss out on a profitable trade because you have other matters to attend to. Instead, the Forex Robot is always on and available to do exactly what you ask of it at any time, day or night. All you need to do is set up your trading parameters and the Robot uses them to place trades on your behalf. It will do all the number comparisons and carry out the necessary analysis in order to accurately reach a solution and to make a trade.

Accurate Monitoring Of Large Numbers of Trades and Multiple Accounts
If you have placed a large number of trades or have several active trading accounts, following the performance of all of your positions can be a headache. With a quality automated trading system, you are able to place a large number of trades and to utilize different strategies without having to personally monitor all the movements in the market constantly. Monitoring and trading in multiple accounts is also made much simpler by using a Robot than handling them manually.

Eliminate the Influence of Emotion
One of the most important advantages to automated trading using a Forex Robot is that, unlike humans, software does not make any decisions influenced by emotions or on the spur of the moment. People are prone to make sudden, impulsive decisions based on fear, rumor, stress or panic. An automated system only acts within the parameters that have been provided and only takes the risks allowed by your limitations and based only on facts, calculations and compiled data.
Although it is not advisable to have a robot execute all of your trading, it can help you become a better trader. While you gain the basics of the market, a Forex Robot will take those basics, amplify them and use them to potentially increase your profits.

7 Steps to a Successful Investment Journey

Successful Investment Journey

Becoming a successful investor in any trading venture does not happen in a day or even a fortnight. It takes a lot of time and a great deal of patience. To succeed in binary options trading, a series of steps has to take place. The steps are rather like a guide of what to expect along the way and how best to emerge a victor with profits in your pocket.

1. The Basics
A successful investing journey is like any other journey and it has to start somewhere. Before investing, a trader should at least define parameters like: The duration expected for the investment to last, the investment amount, the asset to trade, the type of trade option etc. Most importantly, a trader should evaluate the long term gains associated with the investment. If the investment conflicts with the set goals, the trader must abandon that particular investment and look for another venture.

2. Research
At this juncture, the investing procedure is at its incubation. A trader should fully utilize the available resources to research for ideas that can be utilized in the investment process. He/she can access resources which are available both offline and online such as price charts and graphs, eBooks, trading videos and more. The reason for the research is because ever investment has two aspects: the financial aspect and the qualitative aspect. Ignoring any one dimension of the investment can prove to be disastrous in the long run.

3. Self-Evaluation
In this step, a potential investor is supposed evaluate himself to see if he has what it takes to be a part of an investment venture. For instance, in binary options, a trader should determine whether he can handle the risks of trading as well as the losses. If the self-evaluation turns out to be negative, then it is time to abandon the investment idea until the trader is emotionally ready.

4. Choosing a credible trading adviser or broker
No one can make it alone in trading. The main reason for choosing a financial adviser is because a trader can’t exist in a vacuum, in that; there will be a lot of competition from other investors. A financial/trading adviser provides resources and vital information on managing the investment in question. In binary options trading, choosing a broker is the most important step since it determines the percentage returns on the investment and it provides access to the trading platform, among other many variables.

5. Finding the right strategy
Finding a suitable way to approach your investments is not only important but very crucial. A trader should evaluate the strategies in the market and if he/she finds none, he /she should improvise. However, a trader should not rely on only one approach, but should have various options in case the first one fails and is not suitable for the market conditions.

6. Exercise trade discipline
It is not a surprise to see a trader being overwhelmed by emotions and ending up making a fatal mistake. The emotions are usually derived from an investment success or a loss on the investment. Discipline simply means that an investor is entitled to stick to his investing “manifesto” to avoid making drastic decisions. Money management is a vital part of trading successfully.

7. Adapting to changing environments
This is the last basic step for any investment. An investor should be able to adapt to changing market environments to ensure his/her investments stay on track. An investor should allow space for learning new tricks or strategies in order to survive in this dynamic world of trading.

Last Word
To invest is not really a problem, but to make an investment a success is the real challenge. An investor should always keep his/her eyes on the prize and should not be distracted off his/her track. In order for an investment to be successful, a lot of input and patience is of utmost importance.

A Concise Guide to Pair Trading

Pair Trading

Pair trading is a market neutral strategy that enables a trader to profit from virtually any market condition – both trending and non-trending. This strategy involves the simultaneous matching of a long position with a short position in a pair of highly correlated instruments such as two stocks, currencies or commodities. Pair traders monitor the price performance of two historically correlated instruments. When the correlation between the two instruments temporarily weakens – one moves up while the other moves down – a trader shorts the outperforming asset and goes long on the underperforming one, betting that the “spread” between the two would converge over time. In pair trading, profit is realized from the difference in price change between the two instruments, rather than from the direction in which each asset moves. Hence, a profit can be achieved if the long position goes up more than the short, or the short position goes down more than the long.

How to Find Pair Trading Candidates?
• The first step is to identify a pair of instruments whose prices have the propensity to move together with good liquidity. Most binary options brokers offer a variety of pairs to trade in.
• Next, we need to determine the level of correlation between the two assets. Most trading platforms have technical indicators that can automatically plot the degree of correlation on the price charts.
• If the assets’ price movements are indeed correlated, we need to ascertain if the relationship is mean reverting, i.e. when prices diverge, do they revert to the statistical mean. This can be established by calculating the pair’s price ratio, which is defined as the price of one instrument divided by the price of the other. The price ratio should generally come out to be roughly the same number, within a very small range.
• Finally, look for events that trigger weakness in correlation between the two instruments. Examples include Federal Reserve announcements or major geopolitical turmoil.

A Simple Example

Lowe’s Companies, Inc. (NYSE:LOW) and The Home Depot, Inc. (NYSE:HD) operate in the same business segment, and are two highly correlated stocks, as depicted by the following chart. When the price ratio fell to three standard deviations below the statistical mean, we buy Lowe shares at $29.50 and short sell Home Depot t at $38.99. A month later, we exited the position when the ratio returned to mean, by selling Lowe at $26.50 and covering the short position in Home Depot at $31.80. Our Lowe long trade ended with a 10.1% loss, but the Home Depot short yielded an 18.5% gain, resulting in a nice net profit of 8.4% in little over a month’s time.

Guide to Pair Trading

Guide to Pair Trading

Advantages of Pair Trading
Pair trading has several advantages, some of which are listed below.
1. Market Neutral Strategy: The most attractive feature of pair trading is the ability to profit irrespective of the current state of the market. Since this strategy does not depend on market direction, trades can successfully be executed during uptrends, downtrends, or sideways movements.
2. The Risk is Controlled: Because a long position is always simultaneously matched with a short position, a pair trade automatically creates a hedge, which helps in controlling the market risk.
3. Shields from Adverse Directional Movement: In pairs trading, since the second instrument acts as a hedge against the first, directional risk is removed. Profit depends exclusively on the difference in price change between the two instruments.
4. Smaller Drawdowns: Managing drawdowns is an essential part of any profitable trading strategy. Pair strategies generally involve smaller net drawdowns because losses from a losing position are always tempered by gains from the winning position.

Final Thoughts
Successful pair trading requires well-researched strategies, based on accurate historical modelling. Binary options traders should be able to identify truly correlated pairs, locate high-probability trading setups, and use proper position sizing techniques to reap the maximum benefits.

Common Binary Options Complaints

Common Binary Options Complaints

Binary options trading cannot be described as a perfect trading safe haven. Some brokers are often accused of scamming unknowing users or if correctly put, of enticing new traders and later swindling them of their investments. Most of these scam brokers tend to offer mouth watering bonuses on sign up which are simply irresistible. The most common complaints leveled against binary options trading are as described below.

Scam Brokers
Most of the complaints around binary options submitted via online platforms and print media are usually as a result of scam brokers. Some traders have even reported total loss of their investment capital whereas some have reported only partial losses as a result of scam brokers. Scam brokers tend to create trading platforms with a very short life span. After the end of the stipulated operational time frame, the broker pulls down the website, resulting in losses amounting to hundreds of thousands of dollars. Unsuspecting investors are subject to total loss in case a broker winds up their trading activities with an intention to steal the investments. It is always advisable to first check a trading platform’s lifespan and legitimacy before signing up with the broker.

Manipulated Trading Software
A trader may decide to use an automated trading system in order to increase his/her profit margins. An automated trading system acts on behalf of a trader and can be linked with a signal provider to generate trades. These trading systems are usually made up of code and hence they are prone to manipulation. Some brokers have been accused of manipulating their trading software’s code hence they keep generating loosing trades on behalf of their investors. This kind of bias in an automated trading system can lead to disastrous losses on the side of the trader while maximizing returns on the behalf of the broker. Although this can sometimes be a genuine claim, it can sometimes be farfetched especially when the investor does not know how an automated trading system works. If the trading parameters are not correctly specified by an investor, the trading system will make trades based on these parameters.

Identity Theft
Some brokers have been accused of identity theft by requesting “too much” personal information from its traders. Although this complaint is not common with most brokers, this is a genuine reason for concern. A malicious broker can set up a trading platform simply to steal vital information like email addresses, passwords, credit card information among other personal information, which can later be used to compromise a trader’s bank account. The most common complaint drawn on brokers is that they request a lot of information when a trader notifies them about a withdrawal. Some traders have even complained that particular brokers have even requested a picture ID and in extreme cases, their social security numbers.

Complicated Withdrawal Procedures or No Withdrawal At All
This is the most common complaint in binary options trading. Traders usually complain of unwarranted withdrawing procedures as compared to the depositing procedures. Other traders complain of not being able to withdraw at all. They usually complain that when they send a request to withdraw, they don’t receive any communication from the broker and if they do, they receive a bonus which is of the same amount as the withdrawal which makes it hard to complete the withdrawal process.

Last Words
Most of the complaints mentioned above are usually leveled against specific brokers and hence caution should be exercised when choosing a broker. It is always advisable to avoid trading with a blacklisted broker to avoid regrets in the long run.

Financial Concepts

Financial Concepts

Binary options trading is one of the easiest and the most profitable ventures. This is because a trader simply bets on the direction that the price of an asset will move, either up or down, rather than buying the asset in question. Technically, anyone can participate in binary options trading but knowledge of the concepts used in this type of trading is a must in order to enhance trading success. As you explore this trading industry, you will come across a variety of financial concepts so let us look at some of the main ones.

Important Financial Concepts

The main concepts used in binary options trading include:

Expiry time -This is the time at which a trading contract is set to expire. Expiry times usually vary with the asset being traded and a trader’s preference and can be as short as 30 seconds right up to one year.

Stock – This refers to a specific company’s stock which is available for trade on the stock markets and the binary options trading platforms. Examples include Google, Facebook, etc.
Type of asset -This refers to which trading category an asset falls into. The most common types of assets available with most brokers are Indices, commodities, currencies and stocks.

Asset value -This refers to an asset’s underlying price or value at any given time.

Commodities – As listed above, commodities is a type of an asset. It mostly consists of physical items such as gold, oil, sugar, wheat and more. The prices of these items are usually determined by economic factors.

Futures – Refers to contracts of a class of indirect insecurities which are purchased or sold at a later set time.

Boundary or Range Option -This type of trade option allows a trader to specify if the expiry price of a certain asset will fall in/out of the specific price range given. This option is usually composed of the upper and lower limits.

Call Option -This refers to one of the choices provided during a binary option trade .If a trader predicts that the price of an asset will increase in the specified expiry time, he/she buys the Call option.

Put option – If a trader predicts that the price of the underlying price will decline in the given duration of the trade, he/she buys the Put option.

High/low option -This kind of an option allows a trader to specify if he/she expects the price of the underlying asset to be higher or lower the target price. This is a very popular trade option on the binary options trading platforms

Touch/No Touch option -This choice of an option allows a trader to specify if the price of the underlying asset will at one time touch/not touch a set price ceiling during the life of the trade.

Early Closure -This refers to a situation where a trader actually ends a trade before the selected expiry time. A portion of the original investment amount is forfeited.

Expiry Price -This refers to the price of an asset at the expiry time of the trade. This is what really matters in a binary option trade as it is this result that determines if a trade has ended in the money or out of the money.

Investment – This is the amount of money used by the trader to buy an option. Simply, this is the amount that a trader is willing to risk on a given trade.

In the money – If a specific trade ends as predicted by the trader, the trade is said to end in the money and the trader receives the payout agreed upon.

Out of the money – If the initial prediction of the trader turns out to be incorrect, the trade is said to end out of the money. In such a situation, a trader is set to lose his/her investment.
Payout –T his is the expected returns at the end of a trade. This is specified before a trader buys the option. This usually varies from one broker to another or from one type of asset to another.

Final Word
As far as binary options are considered, the concepts above are the main requirements before participating in any trade. Take the time to learn the basics so you can trade accurately and effectively.

Binary Options – How Many Assets to Trade?

Binary options Assets

In binary options trading, there are multiple types of assets on offer.  While trading, you don’t take actual ownership of any asset, and profit by correctly forecasting the direction of its price movement. There are four main types of tradable assets, each with its own inherent characteristics.

Forex Pairs

Currency pairs are the most popular asset type. A Forex pair is made up of two currencies, whose values are traded against each other. Currency values fluctuate against each other based on exchange rates, which in simple terms, is the rate at which one country’s currency may convert into another. The primary factors that influence this rate are balance of payment, inflation and interest rate. Major pairs include EUR/USD, GBP/USD, USD/CHF and USD/JPY. Trading opportunities are always available, especially during key economic events.

Commodities

Commodities may broadly be classified into three categories – agricultural commodities like wheat or coffee; energy commodities like crude oil or natural gas; and metals like gold, silver and copper. Agricultural commodities are primarily affected by natural factors like floods and droughts. Energy commodities become volatile during periods of war, natural disaster and other events which affect their supply. An ideal time to trade energy-based commodities is when the US Department of Energy releases figures for crude oil as well as natural gas on a weekly basis every Thursday.

Stocks

Stock binary options offer a simple and exciting way to trade the shorter time-frames. Most stocks are traded on their local stock exchanges Monday to Friday. For example, Facebook Inc (NASDAQ:FB) can be traded during weekdays from 9 am to 4 pm New York time, while Barclays PLC (LON:BARC) will be available weekdays from 9 am to 4 pm GMT. The performance of an individual stock varies due to factors such as earnings reports, acquisition announcements, analyst upgrades/downgrades etc.

Indices

Index binary options provide a unique way to trade the broader market direction. Rather than following individual stocks, these instruments track the price change of an entire equity market. Leading indices include the S&P 500, FTSE 100, Nikkei, Hang Seng and ASX 200.

How Many Assets to Trade?

Since there are so many different assets to choose from, deciding on how many to trade is a purely individual decision. Select assets you are most knowledgeable about, and whose price movements you can confidently predict. However, limiting the number to not more than 5 will help avoid confusion and an information overload. It is important to select at least one core asset, with good volatility, to monitor all the time. By doing so, you will develop a “feel” for that asset and its price movements. The downside to trading one asset is that conditions aren’t always ideal, so you will need to know when to cut back on trades. Another popular approach among intra-day traders is to use a screener. Each night, after the end of the trading session, you can use a screener to shortlist assets that show potential. While screening assets, traders typically look for price breakout/breakdown candidates.

Conclusion

There is no hard and fast rule on the number of binary assets you should trade. You may opt to trade one asset all the time, or you may decide to watch a number of assets each day. The key is to keep it manageable. Strike a balance between having enough opportunities to profit, and not overwhelming yourself with too many alternatives to trade.

 

 

 

Two Goals for New Binary Traders

Two Goals for New Binary Traders

For traders who are just getting started with trading, it is important to look into what goals will best represent your interests. While, ultimately, the end result is always the same, as all traders should aim for consistent profits, there are many different ways to achieve them. Different goals may apply to different people, especially in accordance to what their practices and personalities are like in terms of risk and financial management. Consider these two main goals for new binary traders, and think about how they can make a difference in your investing future.

Goals can be identified by either learning or performance. There should always be differentiation between these two because one simply cannot ignore either one. If you plan on learning and working with a volatile market so as to better understand it, you will not experience good performance until after you have learned what you are doing. In a similar way, if you are only striving for performance, you will usually want to stick with a strategy that works, and you will have less room for experimentation and learning because you will be focused on long term profits more. Understanding that these two cannot work with each other, yet that they ultimately lead to the same thing, is an important part of establishing yourself as a successful trader. Remember that no matter what your goal is, you will want to engage in it in a relatively relaxed and safe environment, one that relates to both the field of learning and performance. Take it slow and open up to the market. It is much better to focus on implementing strategies for beginning traders, rather than judging by performance.

Both of these types of goals can be successfully maintained with the right type of consistency and consideration, especially by traders who find that they can work in a certain environment better than another. This means that the trader should always think about their overall progress before they implement any single goal in their minds. Learning goals will always lead to better performance, while performance goals can allow individuals to engage in better learning once they have establish a comfortable pattern. Patience is absolutely crucial in any market scenario, and individuals are strongly encouraged to get started at a simple pace, as some beginning options may work better for their unique needs than others.

By keeping these two goals for new binary traders in mind, you will be able to effectively profit in the long term, while enjoying your trades at the pace that you set. Remember to always proceed with your personal comfort in mind, as not all trades will be immediately right for beginning traders. Trade with the long term in mind at first, and then see how you can proceed through higher volatilities and shorter term trades for larger and quicker profits.

Effectively Trading around News Time

Trading-binary-options-news

For many beginning traders, one of the most useful things that needs to be learned is how to work with a variety of indicators in innovative ways. While there are many traders who rely on gut feelings to get them through a trade, they will never be met with success as consistently as those who take the time to analyze every facet of a trend or movement. Working with indicators means looking into hard facts that can help you feel more confident about your trading decisions, ensuring that you enjoy a more consistent return on your regular investments.

One of the most important indicators that you can use to trade is based on economic and political news and events. Trading around news time means looking into a variety of different factors as they develop, and effect the active market, no matter the exact asset being traded. It can be an extremely effective strategy to maximize on, especially if you are an active trader who is interested in working with faster paced indicators.

One of the best advantages of working with currencies is that the forex market is constantly open. This means that traders will always have a twenty four hour window where they can engage in just about any trades they want in accordance to how thee view indicators and beneficial trading situations. One of the most important catalysts in determining short term movements in the market is economic data as it pertains to global news. With so many different assets available in terms of currencies and their relationships between each other, individuals will need to have a strong grasp of current news events in order to make the most of their trades.

As a general estimate, roughly seven articles of data are constantly being released every day, surrounding approximately eight major currencies and the countries that relate to them. This means that individuals will always have a variety of sources to look into as they diversify their currency trades, ensuring higher and more stable payoffs in the long run, especially in regards to pairs and combinations of currencies. Individuals will be able to analyze what they need to in any active market, and look into how comfortable they are with trading for the short term or for the long term

Trading around news time means taking advantage of stories as they relate to developments in a country’s economic and political standing, and seeing what other countries will be affected. While it may not seem like a very consistent thing to think about, the truth is that no matter what events occur, almost the entire world is affected, and numerous different economies rely on each other in accordance to different relationships. Learning how to effectively trade with the news will allow you to observe those relationships and use them to strengthen the value of your trades.

Trade Binary Options on the Go

Trade Binary Options on the Go

With the way that people are always on the move these days, it has become necessary to be able to trade binary options on the go. This way, investors who are traveling can make their trades while in the airport, on the bus, or anywhere else. They are not held back by location, forced to go into the office if they want to go to work and make some money. They can earn while they travel, which gives them a lot of freedom.

This is especially nice for part-time investors who just want to finance a trip while they take it. For example, perhaps you’re thinking about going to Europe for a month or two, and you know that you are going to be traveling around the entire time. You’re only going to stop in a major city for a few days before you move on so that you can see everything. Being able to trade while you’re there means that you can earn money to spend on your trip, just making trades on your down time.

The Prime Market Times

Another advantage of trading on the go, using apps for smart phones, tablets and laptops, is that you can hit the prime trading hours, no matter where you are. There is the most movement and volatility in the mornings, when the major trading centers – New York and London – open up for the day. If you’re on a trip, you might not have access to a computer when the New York markets open, but that’s still when you want to trade because of all of that movement.

Instead of just missing out on this prime time, you can pull out your smart phone and make trades that way. If you get into the office later in the day, you can just transition over to online trading. The smart phone apps allow you to be in control of your trades and your money, and that is one of the keys to success when you are an investor. You have to be able to take advantage of everything that the market has to offer.

Connectivity

When deciding which apps to use for your trading, one thing to think about is connectivity. Are you going to be able to run the app with just the cell phone service alone? Do you need something more powerful, like a local wifi connection? If you do not need wifi, how large is your data plan, and can it really support trading over your phone for as long as you need? It is important to ask all of these questions so that you can work everything out before you download the app.

A Mobile World

When you look at the business world, you’ll see that mobile devices have changed the way that people work. With the ability to trade binary options on the go, they have now altered investing in the same way.

Forex Round Number Strategy

Forex Round Number Strategy

Forex round numbers are psychological support-resistance zones. Traders instinctively place orders and stops around these levels. However, simply because a currency pair is at a round number doesn’t mean it will pause there. Our job as traders is to closely monitor price action around these levels, as very often, prices, instead of pausing, reverses direction immediately.

The Hierarchy of Forex Round Numbers

When it comes to Forex round numbers, there is a clear hierarchy.

  • Parity: The strongest round numbers. Parity occurs when two currencies are evenly matched at 1.0000.This level is hugely significant and can take months to be breached.
  • The thousands: The next in line are round numbers to one decimal place like 1.3000, 1.4000 etc.
  • The hundreds: Round numbers to two decimal places, such as 1.3300, 1.3400, are seen almost every day. Though they appear regularly, they still act as crucial levels of support or resistance.
  • The fifties:Finally, the weakest round number is the fifties, such as 1.3350, 1.3450 and so on.

Why do Round Numbers Work?

Traders are naturally attracted to the simplicity of round numbers. As such, many will place their stop losses just above resistance at a round number, or just below support at a round number. When prices reach the round numbers, a large number of these stop-loss orders get executed, leading to a sudden increase in demand or supply. These stops massively alter order-flow and change the direction of prices.

A Simple Forex Strategy

Underlying Asset: Any currency pair

Chart Type: Candlestick

Time-frame: Any

Rules for long position:

  1. The prices approach round number support.
  2. We wait for a break of a few pips below the round number, and enter on a close above the support.

Rules for short position

  1. The prices approach round number resistance.
  2. We wait for a break of a few pips above the round number, and enter on a close below the resistance.

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The chart above depicts AUD/USD’s struggle to break the “parity” level. Twice the currency pair traded for a short while above the level, only to sell-off significantly.

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In the above screenshot of EUR/USD, the encircled portions indicate the rejection from the very big round number of 1.3000. Prices broke-through the level, but failed to gather momentum, eventually declining to find support at 1.2900, another important round number.

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In our final chart of EUR/USD, notice how each time price approached 1.3000, it bounced right back above it.

Take the time to educate yourself around round numbers before you jump in. Once you get the hang of it, it can boost your binary options trading accuracy.

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