Day trading binary options
What is Day Trading?
In 2008, a new method of options trading called binary options trading was registered. This method is used by large financial institutions and individuals for various purposes. But this trading is also good for people who are quite new to trading or for those who want to better understand how options work and who want to take advantage of market volatility.
Unlike classic options trades, "binary" contracts have a strictly fixed profit if the trader correctly foresees the movement of the asset, as well as a fixed loss, which is the cost of the option.
In practice, it looks as follows, the trader enters into a contract to increase/decrease the price of the asset relative to the initial one. If on expiration the price is really below/above the original value, he gets rewarded with up to 60-90% of the deal's value, depending on the terms of the option. If his prediction is not met, the bet amount is burned out completely.
All binary options are fundamentally the same: you specify a CALL or PUT option - whether the price will go up or down. This is where it all started. All other types are based on the rules of a classic option.
There are also more complicated contracts, such as "One Touch". Here, the main task of the trader is to determine whether the price touches a certain level or not.
"One Touch" is when the broker offers the trader a ladder or network of levels with varying returns. Moreover, the further one or the other level is located, the higher the yield.
“Range" option. This is an option where investors use channel trading where the price of the asset must stay in or out of the given channel to lock in a profit depending on the terms of the order.
Pair options. Quickly gained popularity, despite the fact that it is quite complicated in the analysis. This type implies that a trader opens trades in two assets at once. So, to make a profit here, it is necessary to analyse not one but two different assets. And it is not just to predict the possible future price movement, but to determine which asset will change in price more.
Technical analysis for binary options day trading
In simple terms, the expiry level: this is the time at which the contract is executed, (the time when the bet is in effect). At the end of this time, the outcome of the prediction is checked and the outcome of the transaction is determined: in plus or minus.
On the basis of the expiry time, there is a distinction between the following types of options:
- Short term (turbo options) - from 30 seconds to 5 minutes. Traders who participate in short-term options and make the maximum number of deals during the trading session are called scalpers, and the commerce operation is called scalping.
- Intraday trading. The time of contract execution is from 5 minutes to several hours.
- Long term options last from one day to a year. It requires experience and detailed knowledge of market analysis methodology.
So the golden mean is day trading binary options. Their advantage is that in this case you can use not only charts using strategies, but also observe the dynamics in a wider range of changes. The stability of the operations is related to the possibility to anticipate more accurately the situation, because you have more time to analyze the market situation and to see the signal of your chosen strategy more accurately. With such an expiry time the trader gets help from the platform's tools: indicators, charts, analysis strategies, world news. When all data is taken into consideration, the forecast is the most accurate, and it allows maximizing the profit.
The idea of day trading binary options is quite simple. The trader opens a trading position and then closes it during the same day.
For successful day trading binary options, it is better to have volatility in the market. Price volatility is an intraday trader's friend. You should therefore choose assets, which are currently fluctuating fast enough. Economic news releases can lead to dramatic price movements. They should be constantly monitored, using the most significant moments in trade.
The main reference point is also the price charts. You should be able to analyse them to determine the points of entering and closing of positions. All methods available in commerce are used for the analysis. They include finding graphical figures, using indicators, working with support and resistance lines.
Technical analysis for binary options day trading
Binary options technical analysis is defined as the use of timelines to predict models and price trends in the markets. It involves using mathematical algorithms to identify trading opportunities and make informed decisions about the best time to enter or exit a trading position. For example, the candlestick chart is an extremely popular tool for binary options day trading.
Each candlestick consists of the following elements, representing the change in the value of an asset over a period of time:
- Opening - the first recorded trading price of the asset for the period.
- Maximum - the highest recorded price for the period.
- Minimum - the lowest recorded price for the period.
- Closing - the last recorded price for a given period.
The "Japanese Candlestick" chart is a type of financial chart that displays price movements of an asset for a given period of time. As the name suggests, it consists of candlesticks, each of which represents an equal period of time. It can be almost any period - from a few seconds to several years.
A candlestick chart is a fundamental tool for any trader or investor. It not only visualizes price fluctuations of one or another asset, but also provides necessary flexibility for analysis of data at different timeframes.
A trend is a price movement in one direction over a long period of time.
Trend lines are also very useful detector for technical analysis. A trend line gives traders an indication of the direction of the market. These lines are drawn using simple data such as volume and price, or using more complex detectors. There are many ways to draw a trend line using various indicators.
It is difficult to predict the direction and movement of the market in the near future. This is why it is so important to use various technical indicators for binary options day trading.
Trend signs and oscillators are informative signals for trading. The most popular signals are the moving averages, RSI, MACD, Stochastic, Bollinger Bands and RSI. You should try to learn more about these signals in order to choose the one that best meets your needs.
Often, traders use combinations of several indicators. In fact, there are many indicators for technical analysis - tens of thousands - and new ones keep appearing. It is a very difficult task to keep track of them all and to study them thoroughly, so it is worth to focus on the major indicators, in the hope that they will be taken as a basis for creation of new "assistants".
How to start day trading binary options in Malaysia?
If you are wondering how to start day trading binary options in Malaysia and other countries, then you have probably heard about online platforms. Brokers offer traders trading tools while on the platform. These include calculators and trend lines, which can be extremely helpful in determining the ideal time to enter and exit trades. Some of the more advanced tools used in commerce on the platform can also serve as automated forecasting systems, which can accurately predict future trends and allow traders to make decisions using accurate data.
In order to take full advantage of the platform, you need to complete a simple, free registration, enter some personal information and come up with a secure password.
After that, you can see that many useful tools are available to you. Namely, a professional mobile app, chats with traders, video training, news, the best indicators for day trading binary options and much more.
There are also 2 account options available to you. The first, is a virtual demo account, which gives you the same basic functions as a traditional trading account, but allows you to make free trades using fake currencies instead of real currencies. You can make as many transactions as you like in this low-risk environment, without worrying about the outcome of each transaction. In this way, you can practice your commerce methods without risking any money. You don't have to think about whether you're going to lose or win any money when you trade. All you have to do is focus on accurately predicting the direction of the market.
You can access the platform either through the internet while sitting at your computer, or by trading on your mobile phone.
Once you are skilled at making accurate price forecasts, you can trade and make a profit on your real trading betting account. In this case, you need to make a small deposit into your personal account to start trading. The terminal gives you the ability to enter and exit the market many times in a day, and your account helps you analyse your profits and change your strategy if needed.
Trading binary options is easy if you have a lot of experience. Intraday trading in binary options or other assets requires the investor to follow both the algorithm and the existing rules. It is advisable to make a list or arsenal of your best performing assets. This will reduce the time you spend searching for the right tool, moreover you will know the best asset to use at any given moment. Do not forget about money management. Remember, investing more than 5% of the capital on your balance in 1 transaction is a high risk. For a beginner, the percentage is reduced to 2-3%, and gradually increased.