When it comes to binary options it is not a gamble. It is important to have good knowledge, take a good attitude and learn skills to be consistently successful. Knowledge in binary options comes in several forms. We will take a look at a few below:
Knowledge of Macro Events
It is important to understand the impact that macro events have on binary options. For example, hurricane Sandy had a massive effect on the markets. Most traders opted to stay out of the trade during the process of the storm. There was simply too much uncertainty involved. Macro events tend to be in the form of negative events unfortunately. The Twin Towers disaster is one of the most significant in the history of finance. Understanding the impact of macro events will ensure that a trader diversifies their portfolio and limits their exposure at any one time.
Knowledge of Asset Related Releases
Understanding both the asset being traded and the information that is released relating to that asset is crucial to trade success (at least for longer trades). In dynamic of the USD currency pairing with other currencies reports such as the Non Farm Pay Roll Report can cause volatility. Having the knowledge of when important reports are released, and what impact they will have, is crucial to trading certain assets.
Knowledge of Technical Analysis
Understanding support, resistance, bearish signals, bullish signals, reversals, candlestick patterns and historical price data for assets will inform trade decisions. Some trades are carried over a very short period of time, for example 15 minutes, and technical analysis will be the main research for the trader. At the least the knowledge of technical analysis tools, and specific knowledge about the technical behavior of prices, may confirm or disconfirm the hypothesis that a certain price movement is going to happen.
Knowledge of How to Trade
A trader must of course understand put, call, touch/ no touch and range trade options. They must have an effective strategy and they must know what the best trading platforms are. Then they must know how to actually physically make the trade. Thankfully for beginners it is perhaps easier to trade on binary options than any other vehicle. There is a very narrow learning curve in this area.
Knowledge is power. In binary options a trader must know what is going to happen related to an asset, why traders are taking their current positions, and how the prices are likely to move. They can then use a trading platform to place a successful trade. Without knowledge one is merely gambling on binary options. By using the massive amount of information at our disposal it is possible to make consistently good trading decisions.
About the author: Eleonora Marchetti is an expert on financial markets specializing in foreign exchange and trading in binary options. An honorary graduate of the SDA Bocconi School of Management in Italy, she provides consultation services to various economic powerhouses, including the globally renowned binary options trading firm, Banc De Binary.