When to Trade Binary Options

Binary options are contracts that allow investors to invest with stocks or currencies within a certain time frame. A binary option can be described as a bet on the direction & magnitude of a Forex ( or any financial ) asset’s price movement within a short period of time, this can be hours or day(s). The underlying asset can be a Forex currency pair, stock, indices, or commodities. A binary call will pay off if the asset’s price rises above the options’ target price at the time of option expiration. A binary put will require the asset price to go down/fall below the target price. You will receive a fixed amount as the payoff, 85% profit based on your contract investment.

For success in Binary Options trading it is vital to know when to trade binary options, but when to buy a binary option and when to step out of the binary trading position can be difficult to know. Smart traders act rapidly when they sense financial market will show strong bullish or bearish marketing trends. Intuition is crucial with binary options but knowledge is the most important tool. For instance; major markets are usually open at different times all through the day. Which market is open will directly affect the volatility, liquidity, and forex pairs.

For example, the EUR-USD is most volatile and liquid during the New York and London sessions, more so during the ‚” overlap” period when New York and London are both tradings. The USD-JPY basically has the most volatility when Tokyo first opens, & when New York opens-man hours later. Currencies typically see increased liquidity whenever one or more markets which actively use or trade with that currency are open-for-business. In case your strategy is based on volatility or you are using a trending strategy, you should focus on the times of day when the price moves are largest.

A simple clock to see when stock markets open, close, and overlap.

Understanding the basics, in regards to hours and market sessions, can significantly aid in determining which strategies to exercise & when. No matter the time frame you intend to trade on, you need to have a checklist that will help you determine the type of market environment you’re trading in.

A successful investment can lead to payouts in less than an hour, even as little as 60 seconds. But, losses too can occur rather quickly, since they’ll also occur within just that same period of time. With binary options trading, however, the traders who purchase a particular contract can lose only the fixed price, unlike Forex trading and meaning there’s less risk.

One great technique whenever trading binary options is using Forex software whenever you are trading currencies. The software analyzes the data and will try to provide the most accurate assessment of the open marketplace. The software will minimize the complexity of graphs and charts that traders usually have to comprehend in order to trade successfully.

Another technique when you are trading binary options is looking at the mean price-of particular options. Whenever the options are below the mean price, a speculator can predict that the binary option will gradually return back to its’ mean & investment decisions may be made/determined based on this.

A trick when investing in a binary option is studying the momentum of the options. If the options seem to be consistently moving in 1 direction (bullish or bearish trends), an investor can sell or buy based on the momentum.

Those who study the history of particular options can notice trends. Investors can predict whether or not a trend will continue. For instance, if a stock always tends to go up at a particular time of the day/month/year, an investor may try to buy the option around that particular time so as to take advantage of the increasing stock price.