Binary Options Long Term Strategy
Meta: A long term binary options strategy can help traders pick out quality trades as well as ease the pressures of active trading.
Many new traders usually develop and use short term trading strategies in the binary options market. The reason for this is simple: the binary options market is open 24 hours a day and there are endless trading opportunities that arise throughout the day. Short term traders seek to exploit as many trading opportunities as possible. While short term trading is definitely appealing, it is also very risky because the more trades you place in the market, the more your risk exposure increases. For this reason, experts usually advise new traders to adopt a long term strategy for trading financial assets in the binary options market. After gaining more experience, a trader can then move to apply short term trading strategies to their trading activities.
The Best Binary Options Long Term Strategy
Financial markets are usually fractal in nature. This means that, to trade long term, traders can use the same short term strategies but apply them on a higher chart timeframe. There are, therefore, many strategies to trade binary options long term. Nonetheless, the best of them is the end of day strategy.
How the End of Day Strategy Works
End of day trading involves analyzing and placing trades in the binary options market when the New York trading session has ended. After the New York market closes (2100hrs GMT), the Tokyo market opens an hour later. End of day strategy, therefore, involves placing trades when the Asian market is open.
Due to decreased market activity, most binary options assets usually experience low volatility during the Asian market. The ‘calm’ price movement allows traders the opportunity to effectively analyze the previous day’s price action and try to predict the next day’s price behavior. Performing analysis when the markets are calm is more effective than when the markets are volatile and the asset price is making choppy movements.
After performing the requisite market analysis, the idea is to place trade orders while the market is calm and to take advantage of the next day’s volatility which kicks in when the London market opens at 0800hrs GMT. Using the end of day strategy, traders usually place trades that have expiry times of more than 24 hours. Such contracts are available in platforms such as Banc De Binary, a leading binary options broker.
The Advantages of End of Day Strategy
The end of day strategy helps traders to perform thorough analysis without the fear of losing out on a trading opportunity. Unlike short term trading, which mostly occurs in the active trading hours, traders do not have to worry that spending time performing analysis can render their trading idea irrelevant by the time they place the order in the market.
Trading the end of day strategy also allows traders to practice in trade management effectively. After placing their trades during the Asian market, end of day traders can spend their time during the active hours managing their open trades effectively to minimize their risks and to enhance their profitability. Traders on platforms such as Banc De Binary can use innovative features such as Early Close, Rollover and Double Up for this purpose. These risk management tools enable a trader to reduce the risk of trading while securing the returns. Banc De Binary also offers a comprehensive education and market analysis center which has a wealth of trading information which can be used for trading the end of day strategy.
The end of day strategy is also less time consuming. Traders only need less than an hour a day to perform their analysis and to place quality high probability trades in the market. This is unlike short term trading which requires traders to spend hours in front of their screens endlessly searching for trading opportunities during the active hours. End of day traders who have other day time obligations can also easily schedule their trading activity around their daily routine.
End of day trading also helps traders to ease the emotional pressures of binary options trading. It is well documented that emotions are the main reason why most traders fail in the market. Trading when markets are calm can shield traders from committing costly emotional trading mistakes such as overtrading, revenge trading as well as placing trades before all strategy criteria are met.
How to Trade the End of Day Strategy Effectively
The end of day strategy involves trading off higher timeframes such as the 4-hour, daily and weekly charts. Therefore, no matter the type of analysis used, to trade the end of day strategy efficiently, traders need to:
Identify a Trading Signal
Traders should first scan their favorite assets to determine which ones meet the criteria set by their trading plan. Since the markets are calm during the Asian trading session, this can be done within 30 minutes. If after 30 minutes, a trader cannot find a clear trading signal, then probably there is none and there is no reason to trade that day. Traders should completely avoid prejudging the market and wait for a solid signal so as to consider trading. Should you find a trading signal, remember that Banc De Binary offers the Long Term trade option on their trading platform so once you have pinpointed the asset to trade; this can be done on the broker’s site.
Mark out Key Levels
Key levels such as Pivot Points, Fibonacci retracements or even previous support and resistance levels are known to carry more weight if they are plotted on higher chart timeframes. Traders should mark out these levels on their charts and watch out how the selected asset price reacted to them in the previous day’s active trading sessions. Traders can place orders in the market, expecting these levels to provide solid support or resistance to current prices. Additionally, traders who trade Touch options can use these levels as price targets if current prices are close to them.
Determine the Prevailing Market Conditions
After identifying a trade signal and marking out key levels in the market, traders should determine the prevailing market conditions. That is, is the market trending or ranging? Traders need to evaluate whether a trading signal remains valid in the context of the prevailing market condition. If it does, the trade can be executed.
Adopting a long term strategy, such as the end of day strategy, can help traders enhance their trading activity and also minimize to their trading risks. Should you wish to test your skills before trading in a live environment, feel free to use a demo trading account provided by some brokers such as Banc De Binary.
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