The flow of decisions in Binary Option Trade you should know about!

Binary options trading is very simple and easy, all you need to do is decide which direction the asset will move, up or down. Your main concern when trading binary options is not to risk too much money on each trade.

Unfortunately, many traders start trading binary options without thinking about the risks they are taking – only thinking about the potential rewards. If you want to be successful in binary trading, you should consider the maximum percentage of your total trading money that you should risk on each trade. Your ability to limit your losses is just as important (if not more important) as your success in managing winning trades.

Some brokers will allow several variations on the trade types. These may include:

‘Close Now’ and ‘Extend’. Note that both features require you to pay a fixed fee when implementing them. Close Now – this feature allows you to sell your option before the expiry time. This allows you to close the option before the expiry time if it does not go according to plan. Roll Over – allows you to extend the expiry time to increase your chances of making a profit.

Determining the Amount to Invest

Binary options brokers have low minimums so you can be flexible in determining the amount you can invest. The amount you allocate to a trade should be determined by your risk management plan (more on this when we discuss risk management later).

Binary brokers have low minimums, allowing you to start with a small amount. With most brokers, you can start trading with as little as $20. If you are familiar with stock market trading, you probably know that you need a fair amount of initial investment capital, brokerage, commissions, etc. So, the possibility of starting trading with as little as $20 as well as the flexibility to choose your investment amount is certainly an advantage.

Binary options are short-term investment instruments by definition. The time frames available can range from one minute to a week, depending on the trading platform. So, which time frame should you choose? The problem with choosing a small time-frame like a minute, or 5 minutes is that you may experience a lot of “noise” which is the result of hedge funds, scalpers, and automated trading. You may think that you are observing an emerging trend only to realize that it was just a short manipulation move and the trend is over by the time you entered the market. Therefore, I recommend that you use at least a 15-minute time frame. This is small enough for you to catch good moves, but large enough to eliminate noise in the market and properly show the “true trend”.

For starters, you need to learn how to read charts. Charts are your most important weapon in prevailing the Binary Options war – …okay, perhaps I am being a piece melodramatic here. But seriously, charts are an essential resource for any serious binary trader every valid strategy involves reading and analyzing the markets.

Analysis allows you to predict the future direction of an asset by finding patterns in its past price movements, and after all, that is what we need to win binary trading. Don’t be intimidated by charts, they are not that difficult to read and understand. Strategies which can be primarily based totally on studying and reading charts are a part of the technical evaluation area. Technical analysis follows a simple set of rules that are freely available on several websites. Fortunately, the simplest rules for charting tend to be the most reliable. In the next chapter, we will discuss some strategies that you can apply to your trading.