The financial markets evolve a
little every year. Each year, there are new global economic
developments, new treaties, new resolutions, new agreements that
widely affect the markets. To remain consistently successful with
online trading for many years, at the start of each year or before
the year begins, it is very wise to revise the trading strategies
and adjust them according to the new advancements.
Preparing for the next
year:
As a trader, when you are preparing
to start trading in a new year, you must seek accurate answers of
some very vital queries for example,
How the next year is going to
be?
Will the next year be good for
traders or not?
Which is the most influential
development that will affect the financial markets all the
year?
There are some important aspects of
binary option trading that separates experienced traders from the
novices. One such aspect is the trading time. Not every time is
good for trading, but most new traders are unaware of this
detail.
The best
times:
Most traders know the four asset
classes available for trading: stocks, commodities, currencies and
indices. Almost all online trading platforms attract traders by
claiming:
The trader can trade on multiple
assets simultaneously
The trading is available 24/7 to
every trader
These attractions are actually
real, but most new traders get the wrong idea from them. If a
platform is offering services 24/7, that doesn’t mean the trader
should trade whenever he wants.
Trading, though risky, is very much
rewarding. It demands hard work along with discipline. Throughout
the process, only the breakouts can give you tough challenges. In
this sense if you have a proper understanding of the process, you
can net profit out of them.
Understanding breakouts will make
you ready to handle them. The moment an underlying price of a
commodity or forex runs out of its lines of support and resistance,
it is time for breakout to happen. After breaking a level of
support of resistance, the stock makes it way in the same way. It
doesn’t stop unless it finds another trading range. So when a line
of support is broken, you should sell the stock short.
To really take benefit from binary
option trading, you should have very good management skills. You
must be able to manage your routines, schedules, your personal and
professional life, your bank and trading accounts, trading
strategies and most importantly, you must know how to manage the
risks involved in trading binary options.
Do you know in which category you
fall as a trading risk manager? Find out now.
Types of
behaviors:
Binary option traders mainly fall
into three categories.
In the
first part of this article, we reviewed the basic principle
behind the Knock-on Effect strategy. Some preferable asset
combinations were also analyzed to see how this strategy can be
beneficial to every binary option trader. In this we will review
the challenges this strategy offers to the traders, its limits and
how much you can expect improvement in your trading results by
implementing knock-off strategy.
The challenges in
implementing Knock-on Effect strategy:
Also known as market pull strategy,
this strategy may seem to be the fast track to success in binary
option trading. But the fact is, the trader must acquire a lot of
knowledge and information about the assets he plans to trade with
this strategy if he wants to actually increase the number of
winning trades.
In this article, a very unique
strategy will be discussed that significantly increases the
probability of making more profits in binary option trading. The
strategy is known as the knock-on effect strategy, commonly called
the market pull strategy by binary option traders.
The underlying
concept:
This strategy is based upon the
fact that the price variations in one option causes price
variations in another option. It is therefore, very important to
understand how different assets are interrelated, and which asset
combination is the best to use with this strategy.
In the
last part of the tutorial, we will discuss volatility, what
stock traders should know about it and how to find the perfect
high-volatile stock that will guarantee increased profit
margins.
The concept of
volatility:
Every trader wants to know:
“How to decide whether one asset is more volatile than some
other?” The interesting fact is, it is very easy to know. The
stock whose price movement goes up and down by $5 when its price is
$50, is more volatile as compared to the stock whose daily high and
daily low price varies by $5 when its price is $150. It means when
deciding how much a stock is volatile, the trader must correlate
the price fluctuations with the stock’s base price.
One of the main advantages of
knock-out options is that it cuts down the expense of hedging.
Lower cost is needed in order to purchase this option. As a result,
a trader has a hefty percentage payout if the option ends in money.
Otherwise the trader faces minute loss in case it does not work
out.
Types of knock-out
options:
There are two
types:
Up-and-out---Through a particular point of price,
the underlying asset’s price lifts up for it so that it may get
knocked out.
Down-and-out---This is totally opposite. The
underlying asset’s price slides down through a particular point of
price so that it may get knocked out.
Day trading volatility Exchange
traded funds can prove very attractive at times. But there are
moments when people should keep distance from volatility ETFs.
Volatility ETFs have an inverse relationship with major market
indices such as S&P 500. With the rise in S&P 500,
volatility ETFs will face a decline. With the fall in S&P 500,
volatility ETFs will see a rise. As trends develop in market
indexes, volatility ETFs too has development of trends. Since their
relationship is inverse, a great uptrend in S&P 500 shows that
there is a downtrend in volatility ETFs, and vice versa. Big moves
that occur in volatility ETFs at reversal points of major market
can be exploited by day traders.
Choice of Volatility ETF
does matter
Day traders may choose from a
number of volatility ETFs. It can be an inverse volatility ETF. An
inverse volatility ETF moves in the direction of major market
indexes. In this regard, simple and high volume is considered to be
the best choice for day trading.
Technical Indicators to Trade Volatile Assets Pt. 2
In the
first part of the tutorial, a technical indicator was analyzed
to see how it could increase profits by trading volatile stocks. In
this part, we will review how another indicator can be used to make
more money by trading volatile assets.
Stochastic
Oscillator:
It is another very effective
indicator to trade the most volatile stocks. It is applied to a
ranging stock, a stock that doesn’t follow any trend. This strategy
takes into account the fact that every volatile stock price usually
settles within a range before moving in a particular direction.
Register For...
Free Trade Alerts
Education
1-on-1 Support
eToro Copytrader Tips