Importance of Asset Selection & Pricing In A Binary Option Trade
There is no type of asset price movement that binary options traders cannot profit from. With that being said, the most profitable type of price movement is always going to be a steady up or down movement. Not only is this type of movement easy to spot on price charts, it can also continue on for a time, creating multiple profit opportunities. This is where the saying “The Trend is Your Friend” comes from, and it is even more true with binary options trading than with probably any other type of trading.
There is no binary option asset that is immune to trending. However, there are some popular assets which receive a higher level of attention from investors and are therefore likely to trend more often. The ingredients needed for a trend are supply and demand, along with strong investor sentiment. If investors are generally feeling indifferent towards an asset, you can expect sideways (flat) price movement until some event changes investor sentiment.
For novice binary options traders, nothing is better than a price trend, and we rarely recommend “betting” against the trend unless and until you really feel you know what you’re doing. Steady price movement in a single direction produces the easiest profit opportunities of all. The key is to simply be able to identify the price movement. This is quite easy using a basic binary options chart that uses basic lines, bars charts, or candlestick charts (our personal favorite) to track the movement of the asset price. When the line is generally moving up or down for a time, that is considered a binary option trend. These periods are a trader’s best friend. The amount of time that this price movement may last will depend on just how strong the market sentiment actually is.
What action should be taken when a trend is noted? There are several possibilities. Many traders now like to make use of Sixty-Second binary options trading, as this super-short expiry time can allow for a number of profitable binary options trades to be completed in a short amount of time. These are not the only option though, as price movement characteristics vary. Sometimes a trends will only last for a few minutes (From Turbo Options to Hourlies). Other times you’ll want to consider the longer term price movement to see if the price has been steadily climbing or falling over a period of week or month (daily or weekly options).
Pullbacks during a trend are normal (and can be a great time to enter the trade). These are times during which the asset price will try to move back towards its average or median price. These movements can cause problems when using the aforementioned Sixty-Second binary options broker trades. To work around this, observe the price movement for several minutes to see just how many times it pulls back. If this is occurring frequently, yet the trend is still generally in place, consider longer expiry times such as 15 or 30 minutes. A one-hour expiry may be a good choice under these conditions as well.
There simply is nothing more powerful than a price trend when it comes to profiting from binary options trading. It makes no difference what your experience level is or what type of assets you prefer, you should nearly always be entering into trades when you can be fairly confident in the continuation of the trend. Obviously, some opportunities will be missed from time to time, but so long as you closely monitor market news you’ll know just where to look for the best opportunities.
Good luck and Trade Smart out there folks!