Binary Options Strategy
Strategy is present in all financial markets. Some is deliberate and premeditated, and some is accidental and not mediated by careful thought. But the most important strategy you or I will ever actually use in practice is called ‘Risk Management’ strategy.
Binary Options Risk Management Strategy
No matter whether you are a novice or a veteran at this business, and irrespective of how much capital you have ready in your binary options trading account, maintaining a strict personal financial risk management strategy will be the master key to your success.
As a rule, I always limit the amount of money I invest on any single binary option to no more than 5% to 10% of my capital reserve. For example, if I have $1000 in my Stern Options account, I will only use $50 to $100 on each trade. That means I can place 20 x $50 or 10 x $100 trades. There are two ways to think about how I benefit with this approach. Firstly, and because I know it is impossible to win a hundred percent of the trades I place, this risk management strategy means I am limiting my exposure to the amount of money I will inevitably lose. Secondly, it maximizes my chances to place more trades and recoup those inevitable losses.
It is important not be too self-confident about how accurate we believe our market predictions are going to be. Risk management is a sensible strategy for protecting your capital. Stern Options’ taught me this principle when I first began to use their trading platform. It is one of the first things that the experts teach in the training materials they provide in Stern’s free-to-use online trading academy. Stern Options’ account holders can access this trading school at any time on their website.
Binary Options Trading on Events Strategy
The second key to a winning formula in binary options investing, concerns how much attention we attach to news. Events in the news have direct and indirect effects on the markets, and therefore on the movement of market prices for the stocks, currencies and commodities we are interested. It follows, that forces of supply and demand shape prices. If we could predict those forces, we would be able to plan more successfully on which particular assets to place trades. But not even computers are that clever, and so we can only expect that our price predictions will be as accurate as the information or news available to us allows us to be.
Consider the example of a high tech producer such as Microsoft for instance. When Microsoft issues a new generation of software, all computer users have to buy it, and that means Microsoft will make more profits. This in turn means the price of Microsoft shares on the stock market will rise. We know that when Microsoft will publish it annual accounts, it is sure that on that day in particular there will be an effect on the share price. It will rise on that day. But if we know on which day Microsoft will actually be releasing the new software product, we can also look at their share price movement on that day. In effect, there are two definite dates when we can identify events in the news which are certain to shape Microsoft price movement in the market. But what if we could have foreknowledge of not only the date but also the time of day these two news events will happen? Surely then our ability to predict price movements accurately will be better!
Stern Options Economic Calendar
In the screen-shot shown below which is taken from Stern’s website, you can see the economic calendar for Tuesday 31st of January 2017. In the ‘Date’ column you can see specific hours and minutes when events will happen. Beside these, you can see the flag and the currency for the country where the event is happening. The ‘Message’ column contains a brief title for the event. To the right of this, you can see stars with different shaded area representing the possible importance or ‘Impact’ of the event. To the right of this, you can see the ‘Previous’, ‘Forecast’, and ‘Actual’ figures involved.
The economic calendar enables you to plan your strategy with the advantage of news that is likely to affect price movements. Stern will also send you email alerts called ‘Trading Signals’ with more detailed advice relating to events in the calendar. You can also make an arrangement for your personal account manager to call you and tell you what the experts are predicting to follow on particular events in the calendar.
The most important strategy you will ever use with binary options is a ‘Risk Management Strategy’. As a Stern Options account holder, you have 24/7 access to a comprehensive online calendar of events which gives you an ability to predict price movements. This is absolutely invaluable for your binary options trading plans because some knowledge of events before they happen can make the difference between losing or making profits, as well as, missing-out on or making-the-most of those events.