Category Archives: Getting Started

4 Tips for Trading Stocks

tips for trading

Investing in the stock or commodity markets can be challenging because prices can rise or fall suddenly. According to an article published by MarketWatch, market volatility is one of the biggest risks faced by every trader. In fact, most seasoned traders usually pay close attention to the CBOE Volatility Index (VIX). With that in mind, here are four tips for trading stocks:

Go for Long-Term Investments

Although there are many traders who make short-term investments, long-term plays are more sensible. This is because most short-term investments tend to be based on rumors, fears, speculation, and unsubstantiated news. These factors cause the volatility or “fear” index to rise significantly, which translates to increased likelihood of losing money. Over the long term, you are likely to make money because fundamentals such as earnings determine a stock’s price.

Identify an Investment Strategy and Stick with It

To succeed as a trader, you have to choose an investment strategy and stick with it. A good example is the Oracle of Omaha, Warren Buffet, who has parlayed his “value investing” strategy into a fortune worth billions of dollars. During the dotcom era, he resisted calls to invest in tech companies. The dotcom bust vindicated his view and investment approach. Mr. Buffet also once compared financial derivatives, which played in a big role in the subprime mortgage crisis, to weapons of mass destruction.

Expect Losses                            

Expect a few losses along the way because it is virtually impossible to avoid losses. In fact, professional traders know this fact and take steps to minimize their losses. The rule of thumb is to use limit orders when buying or selling assets. Limit orders allow you to buy stocks or commodities slightly above the market price. Keith Ross, CEO of alternative trading system developer PDG Enterprises Inc., recommends this approach because it allows one to buy into instead of against a trend.

Enter Into Trading Positions at the Right Time

Successful traders know when to enter into trading positions. The best time of the day to execute a trade is between 1pm and 2:30pm EST. At this time, most of the people in the US have gone to work including the entire West Coast. In addition, traders and investors have had time to digest economic news and government statistics usually released in the morning. Another good time to enter into trading positions is around the 18th through the 22nd of the every month. During this period, cash flows from large investors such as pension funds tend to be at the lowest. As a result, prices also fall. Finally, markets tend to fall during the months of September and October. If you buy stocks during this period, sell in April or early May when markets tend to be high.

Overall, to succeed as a trader, you should go for long-term investments, enter into trading positions at the right time, identify an investment strategy and stick with it, and expect occasional losses.

Binary Option Types

Binary Option Types

Today, everything is happening online, and even new investors can access different online trading platforms to increase their wealth. One of the reasons why there is a binary options boom is the fact that the minimum initial capital required is very low when compared to traditional forex trading. With as little as $10, a trader can start trading in binary options, and this allows traders from every caliber to start making deals immediately after depositing money in their accounts. In addition, the mechanics involved in trading binary options are straightforward, and anyone with an internet connection and basic computer knowledge can understand and start using one of the different option types.

There are different types of binary options, and this can be a little confusing to new investors and indeed some experienced investors. Traders should choose the option that most suits their trading needs. Seasoned traders apply different methods depending on the current market conditions; how they expect the markets to react due to trends, external forces, results, announcements, and other factors. Choosing the right options type is as important as choosing the right broker because it determines the type of investment and the amount of trading profits.

Digital Option

Also called the Call/Put option or the Up/Down option, it is the most common options type. Traders place a Call if they believe that the price will close above the entry price on the expiration of the contract and a Put if they believe the price will close below the entry price. Traders should simply determine whether the digital option will close at a lower or higher rate than the active entry rate.

Different expiration periods are applicable including 60 seconds, fifteen minutes, one hour, end of the day, and more. Once a trader commits to a trade, the system automatically monitors his or her trade and terminates at the appointed time without the trader having to log into the system. However, traders can monitor the status of ongoing trades.

Touch Option

The touch binary option has a number of varieties including double touch, touch, and no touch. Rather than traders predicting whether the values of the underlying securities will decrease or increase, they simply predict the level it will touch or not touch. The level can be either higher or lower than the current market price of the asset.

Traders can only purchase touch options at the weekend when markets are closed. The markets trade during the week, and when an asset passes or touches a specific level at 1700GMT on Monday, the trader receives a payout. If a trader is out of the money, the trade will proceed in the same manner until the expiration of the platform on Friday, continuously checking to see whether the price has touched a level required for a win. This gives traders five days and five chances to hit the target.

60 Second Binary Option

This type of option expires in 60 seconds and is becoming more popular. The main advantage of this method of trading is that if the price of an asset is steadily moving in one direction, traders can take full advantage by performing a number of successful transactions to increase their profits. This platform is ideal for traders who can react quickly to sudden market movements.

Boundary Option

The boundary option, sometimes called the tunnel option or range option, is similar to the touch option; however, this option has only two defined levels. Traders need the asset to stay inside the predefined upper and lower levels to receive a payout.

Finally, most binary options brokers allow their clients to design their own option types using an option builder. Traders can choose the assets they want to trade in, the price direction, expiry time, investment, and the desired profit to loss ratio

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.

Your Binary Options Trading Scorebook

Binary Options Trading Scorebook

Whilst many people find the relative simplicity of binary options trading to be one of its largest draws, it is not true to say that it is quite as simple as it may at first seem. Of course, this type of trading is very easy to get started in—anyone can go from having had absolutely no experience of financial trading in any form to having made profit on binary options trades within mere minutes and a few mouse clicks—, but it is not so easy to master it. The difference between the novice and the professional trader comes down to one thing: consistency. That is your ability to predict the market accurately and often. Whilst you can make money without a consistent approach to binary options trading, the serious profit comes from ensuring that you are only trading to win. An important step in that learning-curve is record-keeping, and that’s where the trading scorebook comes into play.

Why use a Trading Scorebook?

It is important to keep a complete record of all your binary trading activity.  The primary objective of this exercise is to monitor the performance of your trading strategy. When constructed properly, a trading diary can be a device for both learning and goal-setting. Consistently maintaining a record of your trades is time-consuming and will test your will-power, but that effort on your part is crucial for your long-term success in binary options trading.

Few tools have proven as useful to traders as a trading diary, because one can learn much more from reviewing his own trades, than from reading a good book or attending a seminar. Since every trader is different, each will have his own preference for maintaining a trade record. A large number of traders still prefer a physical book where they note down their trades, along with the reasons why they got into it. Another very simple way to keep a tab of your trades is to use a calculation program like “Excel” or “Open Office Calc”.

How do I get started with a Trading Scorebook?

It couldn’t be a lot easier, as much of the work has been done for you! Paul Applegarth has provided a tool which is ready to go and which you can use to keep track of all of your trading. It comes in the form of an Excel document which you can download for absolutely no charge.

Traders can use it to calculate their potential wins and losses before they enter into a trade. Also, there are separate sections for monitoring the monthly trade results of the various underlying assets. The excel sheet contains a very useful tax calculator that helps you figure out your net profits after deducting the various taxes that are levied on financial transactions.

It is strongly advised that you start using one of these tools as soon as possible, as it will be far more time-consuming to go back and fill in all of your previous trades after the fact than it is to fill them out as you go. The data is invaluable.

Binary Options Success Story – How I Turned $150 into $15k in 10 Months

make money with binary options

I happened to stumble upon binary options quite by chance. A couple of years ago, my brother went through a phase where he fancied himself as a bit of a financial trader. He bought all sorts of books, attended numerous seminars and was hooked on to Bloomberg news day and night. How I Turned $150 into $15k in 10 Months. He was a pretty average kind of a trader; lacked discipline and got easily carried away. Anyway, he didn’t lose an awful lot of money, but didn’t make much either. When he finally decided to quit, he had $150 left in his account. It was at this point that I asked him if I could try my hand at binary options trading. Being the bully that he always has been, he quickly dismissed my prospects of succeeding as an online day trader. How could the kid brother grasp the myriad complexities of the world’s financial markets better than the much smarter big brother?

Well, to cut the long story short, I ended up proving Steve wrong. In the following 6 months, I had taken that $150 to $1,400; nothing spectacular I guess; but considering that I was completely new to the field, I think I did a fair job. The learning curve was steep, and I suffered quite a few loss making trades. During the first few months, I had stressed too much on strategy, without realizing that controlling ones emotions was as important, if not more, to succeeding in day trading. And once I recognized that, the returns zoomed. From months 6 to 10, I took the trading balance from $1400 to $15,500! You can imagine how much this annoyed my brother, but I guess, deep down, even he was actually proud of me.

The key to my success was identifying one very specific trading technique that suited my temperament. From the very beginning, without even knowing what support and resistance lines were, I had instinctively begun drawing them on the asset price charts. I realized that I had this natural flair for identifying points from which prices often seemed to reverse. Basically, after drawing these lines, I would monitor them over the course of the next hour to see how the underlying asset performed in relation to them. Only when I was satisfied about the validity of these lines, would I enter into a trade. Though I did not have any favourite underlying assets, I always used to look for markets with greater volatility; the higher the volatility, the more opportunities there were to lock in profitable trades. Initially, I didn’t use any technical indicators because I found them too cluttering. Although later, I noticed that Stochastic was quite complementary to my style of range trading. Using it in conjunction with my own trading strategy, helped me avoid quite a few loss making trades.

Trading binary options can be highly rewarding. However, to profit in the long-run, besides a robust strategy and sound risk management, one needs a reliable broker, who is fair and transparent in his dealings. Since the number of binary options brokers has increased exponentially, choosing a broker can become a rather difficult job.  I was lucky that my brother did one thing right, and opted for 24Option. 24Option is among the most popular binary brokers around, with a wide variety of trading assets, available on a simple yet intuitive trading platform that responds immediately to your orders. Everything you need to start trading is right in front of you. I found their early closure tool particularly useful, because, on a number of occasions, when the markets were about to change direction, I was able to redeem my profits immediately without having to wait for the option expiry. Payouts are among the best in the industry, ranging from 70% to 85%.And the best part for a new trader like me was the vast amounts of educative tools that were available. I made my small fortune trading at 24Option. And I thank my brother for making that choice for me!

 

Understanding the Uses and Limits of Volatility

Entendiendo el uso de los límites de volatilidad

All investors should always focus on the promise of high returns, through different strategies depending entirely on how comfortable they are with their options. Some investors may be more comfortable with the larger prospect of risk, while other traders will consider investing over longer periods of time in order to generate a consistent profit. No matter whatever, however, the trader should always focus on comfortable levels of risk, especially when working with volatility. The uses and limits of volatility are important factors to take into consideration before and after every trade, especially for new traders who are just beginning to work with their environments. While risk is often understood in a general sense, volatility can be understood in a risk and reward type of relationship, where the higher the risk is, the better the payout can be. As such, in order for investors to understand what options will provide them with the largest room for profit, they must learn about the risk involved in such trades.

 

Understanding the Uses and Limits of Volatility

Understanding the Uses and Limits of Volatility

There are many different types of volatility that traders need to stay on top of when they analyze the market. Regular volatility is one such example, and unlike implied volatility, a type that concerns option pricing theory, regular volatility focuses on a backward analysis. It can be understood in technical terms as the annualized standard deviation from previous historical returns. This type of analyses focuses on previous trends in order to draw relevant conclusions into current ones.

As such, traditional risk frameworks will usually rely on most standard deviations because they assume that returns will conform to ordinary bell shaped distribution patterns. This can allow traders to work with useful guidelines that can help them plan ahead for their trades. Paying attention to the trails left by the graphs can help determine the appropriate course of the commodities, and while they can be indicative of good, potential leads, they are not without their faults. Most traditional models treat all sections of uncertainty as certain risks. This can cause a variety of problems in immediate sections where the map is not direct or symmetrical. Investors may find that they will worry about their losses at the left of the average, without thinking about their gains to the right.

The uses and limits of volatility are typically defined by how much planning the trader plans on doing and whether or not they are comfortable in moving with certain directions. Analyses that focus too heavily on any single indicator or movement may often provide unreliable returns, especially in the long term, where market movements can easily become sporadic and difficult to work with. Patience is one of the most important things that all traders need to have in order to work with sudden volatility in the market, as planning the right calls at the right times will require them to carefully monitor movements.

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