Binary Options: Blitz game of Forex

What if you could maximize your profits in a shorter time? Lets say Make in 2 hours what you normally make in 2 days. Would that be more your style of trading?

What is binary options?

Binary options is still Forex trading but at small time intervals and only 2 options to choose from as the name binary suggests. Traders only tell whether a currency pair will go up or down in a given time and if they are correct then they will gain a huge profit.
Binary Options is to Forex what 20twenty is to cricket. It is the short, high stakes, blitz version that has extremely high risk and extremely high rewards. Most binary options brokers offer profit margin upwards of 60% returns on initial trade cost. So for instance a trader can make $60 and upwards on every $100 traded provided they get each trade correct.

How to benefit from binary options

Binary options can seem risky for the person who doesn't know how to trade it. Risk in trading is only increased by limited knowledge. Knowledge gives an advantage and is the best tool to use. With that said reducing your risk in trading binary options includes increasing your knowledge of it and how to trade it.
Although binary options is a faster version of Forex trading there are strategies to employ when trading. One such strategy is the Martingale strategy that has proven to work over and over again. it involves double each trade till you get the winning one to cover any previous losing trades. This strategy is actually from the betting world has proven to be effective trading binary options. It can be tweaked to your trading style and risk appetite. Lets say you use 5$ for your first trade, if you lose then you place the second trade for $10 and keep doubling till you win. This method is fast and doesn't require a lot of technical analysis to place a trade.

For traders who don't believe in the martingale strategy, trading binary options can be done in a similar way as day/swing trading. Traders can use indicators and expert advisors (trading robots) to maximize their trading profits.Some bots can be risky while others can give huge returns in a short time. It is recommended to test trading robots on a demo account before using your live cash.

Another benefit from Binary options is that opening an account requires less capital or rather less minimum opening Balance than opening a standard trading account with a low leverage. With this advantage most broker platforms allows you to open trade with a minimum of $1.

Difference in trading styles

Based on the rush of trading Binary options versus Day/Swing trading it will require a different approach to each trading options. Binary options happens quickly, both winning and losing and as such you should prepare for both sides. Your trading style should reflect your trading timeframe, entity being traded and your risk management.

There's a contrast in trading styles with binary options as opposed to day/swing trading. Binary options strategies can be a lot less analytical as well as they require you to make trading choices quickly. When you open a trade you exactly what time it will end in contrast to day trading where you set a stop loss or take profit.

Your trading style should make an attempt to limit emotional trading as this will damage your win-loss ratio. Emotions should be eliminated from trading if possible. Always use numbers to drive your trading career. Practice until you are comfortable before you go live, make all the mistakes in your demo account or atleast most of them, test all strategies and see which one you are more.

What can be traded

The majority of Binary Options brokers provide all the Major currency pairs along with some precious metals. Other brokers will also provide some currency crosses as well as some exotic currencies.

  Major Currency Pairs

EUR/USD: The euro and the U.S. dollar.
USD/JPY: The U.S. dollar and the Japanese yen.
GBP/USD: The British pound sterling and the U.S. dollar.
USD/CHF: The U.S. dollar and the Swiss franc.

Set daily goals

As in everything else that you do you should trading goals when trading binary options as well. A couple of my trading friends have set daily trading targets to work towards. This way you can control your trading so that it doesn't drown out the rest for your life.

The good thing about setting goals is that you know exactly what you are working towards which is most important. With Binary options you can start with small goals let say $30 per day and increase it as your trading career, strategy and confidence increases. After some time you will be making in 2 hours what you would make in 2 days.

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Leveraging for profit

What is Leverage?

Leveraging is putting down collaterals to hold a place that is larger in value. This collateral is known as margin. To simply put, leverage gives traders the ability to purchase quantities of currency without having the equivalent in money. Leveraging allow traders to have a larger exposure on the market for a small amount of money. This type of trading is used to yield higher returns on a small initial deposit that could not have been possible if the currency was bought physically. While it yields higher returns, it could also result in higher losses. This dual nature of leveraging is mostly due to the fact that the higher the leverage on the deposit amount the greater the risk. Leveraging is also called the two-edged sword so it should always be used with caution.
Leveraging is done in ratios known as leverage ratio. Some of these typical ratios are 50:1, 100:1, 200:1, 400:1 and 500:1. What this means is that for dollars invested in the account, the broker should enter trades that allows for a profit of 50 or 100 times the money for 50:1 or 100:1 leverage. The ratios are equivalent to margins and are expressed in percentage. The margin comes from dividing the ratios and multiplying it by 100 (ex. 1/50*100=2%). These margins are generally set by the broker and establishes the base line amount necessary in the account before trading is initiated.  It is important to note that if the leveraging ratio changes so does the margin present on the account.

How to leverage

Though leveraging appears very simple from the outside it is actually very complex mostly on the broker side. For the broker who has the task of setting leverage ratios, it involves the broker looking at all the assets and the capital they accumulatively generate in order for the company to meet its financial obligations. This is then wagered against the potential earnings that can be produce by each account. These accounts made by the broker assist investors in determining the kind of leverage that they want on their money.

The accounts generally starts from a mini account that is low risk/low leverage and as such comes with a minimal profit per pip, it extends to accounts such as super max where the risk is high and the potential profit is even greater. However brokers always ensure that the account maintains the margin required for trading.

On the investor side it is less complicated as all that is required is for the investor to do is choose from the broker’s pre-existing account types base on the leverage that is wanted on their money and the risk they want to take on. However it gets a bit complicated as different accounts will have a variety of investment options and investors have to choose the one that best suits their needs.

What to leverage?

There are a number of things that can be leveraged by a trader to make their account more profitable. Each trade should choose their method of leverage carefully base on their risk appetite. A number of different leverage methods can be combined so as to spread or reduce the risk.

  Broker leverage

As discussed previously a trader uses broker leverage by selecting a specific account. Each broker has different types of accounts that provides different leverage and margins. By selecting a specific account you can open your account with the minimum ain't specific by the broker. It is always recommended to have a risk management plan and also to recognize that when leverage changes, risk changes.

  Signals

Traders can also leverage trading signals. A huge amount of signal sources exist and it is up to you as the trader to use one that is in line with your trading plan.
Trading signals can be subscribed to from within metatrader, from their signals website or from another ingredient source such as bkforex.

  Mentor/Other Traders

Traders can also leverage other traders to enhance there trading game. Having mentor means having someone with more experience than you do to assist you in becoming more profitable. A mentor will be able to spot more opportunities than you or be able to recommend more high probability trades. A mentor doesn't necessarily have to be someone you speak with everyday, it could be that you subscribe to a service such as that provided by csquared trading or follow someone from their YouTube postings.

You can also leverage the ability of other traders through social trading or becoming part of an association. An amazing social trading platform that allows you to copy other traders is etoro. With this platform you can benefit from the profitability of other traders without even placing a single trade.


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Mid-Year Check: Are You Meeting Your Trading Goals?

Courtesy of Babypips.com

Can you believe it’s July?! With half of the year behind us, it’s time to look back on the trading goals that you made at the beginning of the year and see if you need to make changes to your goals, trading processes, or strategies. Here are some tips to get you started!

1. Review your trading performance.

You’ll need information before you can make any changes, so whip out that trading journal that you painstakingly kept through the year. What, don’t have one? Shame on you, but there’s no better time than now to start one at MeetPips.com!

If you’re a good trader and you do have one, look back on your 2016 trading goals. Based on your stats, do you think you’re on track to meet them? Which processes can you improve on?

Are you doing your best to consistently execute your entire trading process (market analysis, strategy & risk management practices , review and adjustment processes, etc.)? What trading psychology issues prevented you from realizing your goals? Give yourself a pat on the back if none of the 5 common newbie mistakes made it to on your list.

2. Identify the factors that influenced your trades.

Once you have identified the factors that you can improve on, identify the ones that influenced your trades but weren’t in your control. Look back on the economic themes that popped up in the first half of the year and how the market interpreted them.

How long do you think did each of these themes drive price action? Do you think they’ll still matter in H2 2016? Did volatility increase or decrease, and what’s expected of volatility for H2? Ask questions like these and more to figure out how you need to adapt going forward.

3. Make realistic adjustments for the second half of the year.

Based on what you learned about yourself from your trading journal and what you know about how the market priced in this year’s economic themes, you can now make adjustments to your trading goals, strategies, and risk/trade management practices for the rest of the year.

Ask yourself if you need tweak your existing goals and your trade management techniques. Do you need to look at different statistics this time? How about a different strategy altogether if market behavior has changed? If you’re thinking of changing your trading system, make sure that it has a good chance of working well in the different economic scenarios that could pop up in the coming months.

Keeping trading resolutions is always challenging after January. But remember that you made them for a reason. With a little reminder and a few adjustments, you’ll get right back on track to the goal of becoming a consistently profitable currency trader or investor.

Read more: http://www.babypips.com/blogs/pipsychology/mid-year-trading-goals.html#ixzz4DaVUAjV9

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