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Introduction To Binary Options Strategies
Strategy is one of the most important factors in successful binary options trading. It is the framework from which you base your trade decisions, including your money management rules, and how you go about making money from the market.
A good strategy for trading binary options in South Africa will simplify much of the decision making about where and when to trade. With timing being the key to everything where trading is concerned, the less guesswork there is around entry and exit points, the better. Particularly for less-experienced traders.
A repeatable strategy will always highlight the trading opportunities, where otherwise, the majority of those openings would be missed. Strategies encourage discipline, aid money management and provide the clearest predictor for positive expectation. While traders can profit from binary options without a strategy, it will be exponentially harder.
It is important to note that there is no single perfect strategy for every trader and no single perfect strategy that will work for a trader every single time.
READ: WHY DERIV IS THE BEST BROKER FOR SOUTH AFRICANS
A trading strategy could define that you trade only big currency pairs between 8 and 12 in the morning, that you use a 15-minute price chart, and that you invest when a 10 period moving average and the Money Flow Index (MFI) both indicate the same direction – for example, the moving average has to point up, and the MFI has to be in an oversold area or vice versa.
The great advantage of such a definite strategy is that it makes your trading repeatable – you always make the same decisions in the same situations.
How To Get The Most Out Of Your Binary Options Strategies
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Test The Binary Options Strategy Extensively First
You should test the binary options strategy on a demo account for at least 50 trades before you trade it live. This will help you understand how the strategy works. You will also get to appreciate its weaknesses.
Keep a journal detailing the setups that you practice the strategy on. This will help you fine-tune the strategy or dump it altogether. Doing this is a lot of work but it will definitely save you money in the markets.
If you do not have the discipline to test a strategy before going live with it you will definitely lose a lot of money in the markets. You will try several binary options strategies but you will still continue to lose money.
Read: Comprehensive Guide To Trading Synthetic Indices in 2021
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Follow The Strategy Religiously
You should follow the strategy religiously to get the most out of it. Don't take shortcuts or trade ‘half-backed setups. If any one condition of the strategy is not met you should not take the trade. Use the right indicators, timeframes, underlying assets etc.
The ‘best' strategy in the world will not work for you if you do not follow it to the letter.
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Practice Risk Management
Binary options, just like forex trading, have an element of risk involved. You could lose all or most of your money in an instant if you are careless or greedy. As such, the concept of risk management is one that every binary options trader should take very seriously. Take this into account when using any binary options strategies.
The generally accepted risk management rule adopted universally by professional traders is that no more than 5% of the account size should be exposed to the market at any given point in time. This simply means is that if you have a $1000 binary options account, you should not have more than $50 in the market at any given time. Trading anything more than this is extremely risky, especially as binary options is an “all or none” type of market.
See some of the binary options strategies that you can use below.
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