The specificity of binary options in its style of performance and terminology is similar to casino bets. Therefore, a beginner, when entering this market, is not looking for conscious knowledge, scrupulously selecting trading instruments, but simply tries to “poke” the arrows up or down, setting the amount by which he acquires binary options, the simplicity of the platform allows you to quickly understand the functionality of trading settings. Is this tactic justified?
It is not known, but we would like to object for at least two reasons. The first reason is that the market and binary options are not casinos but instruments. Do we need the adrenaline of uncertainty? Find an online casino on the Internet. The second stems from the first. The market gives the tools in your hands, drawing an analogy with a shovel: do not dig in different places in the unsuccessful search for treasure, you should learn to cultivate a garden, plant and harvest.
Beginners are inspired by the fairy tales of “win-win strategies”, but without trading experience, you must understand that the market price reacts to any event instantly, the events themselves are unpredictable, even if you are familiar with indicators such as hanging man pattern and others. All natural disasters, decisions of governments and presidents, etc. cannot be predicted. There is no psychic show that predicts the value of some or other market assets. But there are many analysts who believe what they can do. However, this is another topic.
Tactics and strategy
Do not worry about the availability of the strategy, the trading results will vary. In addition to the strategy, there is a tactic, if the right approach to help improve the trader’s trading results or worse. A strategy is a set of general entry and exit rules. It is easy to use, to a certain extent, standard market situations from the category “Generally”.
For example, as a rule, quotes of a market asset that opened with a price gap predict the return of the price to this area. In the slang of traders this is called “gap closure”. Gap gives a signal to open a position in the opposite direction. Tactic allows you to determine a specific entry point and time to hold a position. Significant events can make the formed gap irrecoverable. Traders usually rush to get rid of the asset after a negative event, preferring to invest in cash. Tactic takes into account the peculiarities of the formation of a gap, analyzes the reasons that caused the gap, assesses the strength of their impact on the market, putting filters to enter the position.
Money management as an integral part of the tactics
Money management is the control of losses, determination of the amount of funds allocated for a deal, designed to help to survive a series of loss-making deals, staying “afloat”, waiting for the profit, restoring the deposit, consumed from past losses. Binary options, by their nature, have a built-in money management. Before the start of a deal, a trader knows about the loss of option value in case of negative developments. The whole essence of binary options money management is to determine the number of losing trades in a row when applying a certain type of strategy. For this sequence of losses, a reserve is allocated from the total amount of the deposit that is twice as big as the expected losses (more, but not less).
What happens if you do not do it? The market will “take” all your funds. Psychologically, the situation will be aggravated by the fact that you are aware of the possibility of such a situation and that you have a solution to avoid it. In doing so, it is very important to learn as much as possible about binary options strategies, so that you can choose the most interesting strategies during the trading process.