Day trading binary options
What is Day Trading?
Stock trading is gaining momentum, and more and more people are interested in investing and trading. But not everyone is prepared to buy shares for the long term, but almost everyone can try their hand at short-term trading. In this case, people choose a binary option. It is a contract whose terms and conditions are stipulated in advance. The trader will make a profit if the terms of the contract are fulfilled before the expiry of the set period. Binary options can be traded on many assets (stocks, commodities, currencies, indices and even the weather).
A binary option is a type of financial instrument, where you win a fixed amount of money or get nothing if you lose.
The most important reason the binary options market exists is that dealers can use this method to enter the market and make a profit, quite simply. Just make a bet. You can do this with different types of options, here are the most popular ones:
- Up/Down options or call/put options. These are the most popular binary options. All you have to do is to predict if the price will go up or down for a given expiry time.
- One Touch and No Touch Options. In this kind, they make a prediction that the price will touch a certain point during the expiry time. All we need is a single touch. Nothing else is needed. The opposite situation is the "No Touch" option. All we need is for the price not to reach a certain level.
- "Boundary" or "Range" options. The name speaks for itself. When the option expires, the price should close within the selected range.The opposite of "Out of Range" - the price should move out of the range you entered.
- Stairs, also known as 'stepped options' provide more options in terms of trades. The trader for his part predicts how many levels the price will pass. The percentage of the profit received is divided depending on what level of value is reached.
- Pair options. A type of binary option where one asset must score more points than the other. Let's assume we have chosen stock 1 and 2. If you guessed that stock 1 will rise in value more than stock 2 at the time of expiration, then the trade is successful. If 2 turns out to be faster than 2, then the trade is unsuccessful.
These are a few basic types of options, analysts advise starting with the simplest ones and then move on to the complex ones, learning and delving into the subject at the same time.
Traders trade binary options with a wide variety of expiry times. Brokers offer trading ranging from 30 seconds to several months. But not every option is of interest. But there are variants that most strategies are adjusted to:
- 1-5 minutes. Turbo options are a particular method of short-term trading. And such traders are called scalpers. But this method of trading is the most risky because during short-term trades the market is flooded with trading noise, which gives false signals.
- Expiration time 15 minutes to the end of the day is also popular. If you are a beginner, and you are not attracted to long term trades, then this option will work for you. There is much less noise than in turbo options, and you can trade a few times a day. This type of trading is often referred to as intraday trading.
- Binary traders do not use periods of a few days or more, though this method is less risky than trading with a period of a minute to an hour.
Binary options day trading has become a staple of binary options trading for thousands of traders, who not infrequently add various elements to it, customizing it to their needs.
Intraday trading is considered to be less risky as it takes place on higher time frames. The signals are more accurate and the indicators are working clearly. Important news is released at this time, which increases the volatility of the market. To avoid losing capital, you should also read the economic calendar, and then buy an option. So, day trading binary options work well with both fundamental and technical analysis.
The knowledge you need when day trading binary options includes information on basic trading procedures and tools, information on the companies whose stocks you plan to trade (financial indicators, reports and charts). It is recommended for a beginner to do your "homework":
- make a list of the stocks you wish to trade;
- obtain all possible information about the companies whose shares you have chosen;
- keep yourself informed, not only about the companies on your list, but also about the market in general (regularly check financial publications, visit reputable financial websites).
Always remember that: An informed decision is the best decision.
Technical analysis for binary options day trading
Technical analysis for day trading binary options is an important tool for traders who want to take advantage of volatile market conditions to make money. This strategy can make a lot of money, but it also involves a lot of risk.
Technical analysis includes graphical analysis and indicator analysis.
Graphical analysis is the analysis of price charts by drawing different lines to predict future price movements. Chart analysis is the earliest analysis since the advent of the American stock market. There is a large variety of charts for trading binary options, let us look at the most well known ones:
- Line charts are time based and are constructed by comparing the closing prices of assets over a selected time period. For example, a 30-minute line chart will relate the closing prices of an asset every 30 minutes.
- Bars or stick graphs. Bar charts are also popular with traders around the world. Each bar on the chart shows how the price changes over time. They show open, close, maximum, and minimum prices over a certain time frame.
- Japanese candlesticks are the most popular chart type for traders. They are able to show much more comprehensive price information for traders. Along with closing and opening prices, candlesticks also show highs and lows over a period of time. There is also an aesthetic factor - candlesticks are visually appealing and can help traders perform even better technical analysis of their favourite assets in day trading binary options. Candlesticks are pretty much the standard used by most binary options platforms.
Various indicators are also an important part of technical analysis:
- Simple Moving Averages. The SMA is a measure of price change over a period of time. Moving averages determine the average price movement over a certain period of time and are ideal for trend detection.
- MACD is considered to be the best binary options signal indicator for selecting entry and exit trading points. It is able to signal a change from short-term to long-term trends, overbought/oversold, convergence/divergence. As a powerful oscillator, it will help you know which direction the price line is going to move in, its strength and the possibility of reversal.
- RSI is an indicator which enables a dealer to analyse the strength of a trend and predict the reversal points of the trend. It is an oscillator, which means it reacts quickly to changing prices and is suitable for short-term trading. Many strategies are based on it.
- Bollinger Bands. It is successfully used in the creation of various trading strategies and on its own. It is an algorithm based on a fairly complex equation. It draws a fairly wide channel on the chart with clear boundaries and a central line. In this case, the walls of the channel are normally sliding. The centre line is used to display the average value of the chosen currency pair, resource or stock over a certain period of time, while the channel walls display the price deviation from the average value.
This is an example of the most common mathematical signals, every broker will offer you dozens of different indicators, starting with the ones that are easy to understand and as simple as possible.
You can use several indicators at once for more successful day trading in binary options. Each one will eliminate false signals from the other and give you a more accurate picture.
You should not dive into the market blindly and understand everything on your own. Sometimes it is impossible. In these situations, indicators can help you understand the market and steer you in the right direction. Also, price movements are mainly influenced by the news or events, which happen on the market. You can use this information to predict future price movements. It is important for you to be able to interpret the data to develop a good trading strategy.
How to start day trading binary options in the UAE?
You may be looking for advice on how to start day trading binary options in the UAE. The first thing you need to do is to create your personal account on the trading platform. It is very easy to do, and it will take you literally a few minutes. You will have to give some details and then the system will allow you to open an account of your choice. You can choose between a real and a demo account.
The platform is a really handy place to make trades, because it's not just a terminal, but a lot of extra features.
Such as a functional mobile application that allows you to follow the market anywhere, news and relevant data, charts and indicators, video tutorials, articles on topics that interest you and much more, join the huge team of traders and investors already now!
After you have registered, the first thing you can do is to open a virtual account. It doesn't bind you to anything, but it gives you play money with which you can buy assets. Most punters have used this method to learn their strategy, and how to read and interpret the charts and signals. It can be tricky at first, and you can easily get it wrong. With a demo account, you are not afraid of making mistakes. You just learn.
To really get started with binary options day trading in the UAE, you can open a live account. In this case, you will have to make a deposit into the account and start buying. You will be able to discuss trading with traders in live chat and use all tools on the trading terminal. You can start with a small amount and gradually increase your bets as you sign up with an agent.
You will be able to place orders, place trades and keep track of the results.This way, you will be able to place a trade and determine whether it succeeded. Feel free to change your strategy if necessary.
Another thing to keep in mind regarding binary options trading is that you should only make trades when you are confident that you will make the right trade. Also, be sure to take some time and study the market before you place any bets.