Day trading binary options
What is Day Trading?
Commerce in financial markets is no longer something outlandish and unusual for most people. Trading is active commerce in the market, characterized by a large number of transactions made over a certain period of time. Trading is divided into several categories according to the degree of commerce activity. So, scalping involves the conclusion of many transactions per hour, or even per minute. When binary options day trading , the trader does not carry over trades to the next day. And medium-term trading involves making only a few transactions a day, or even a week. In this case, the position can be held for up to several weeks.
The attention of traders who trade on the Forex market or on stock exchanges is often attracted by binary options. Binary options are a popular financial instrument for making a profit on your money investment. It is often said that commerce binary options is comparable to a "wager" rate, so everything is very simple. Yes, but there are a lot of important nuances that should be taken into account in order for your trades to be profitable: choose the right type of binary option, the expiration period and not make the most common mistakes.
A binary option is a contract based on the fulfilment of a certain condition at a certain time. And which has only two options for profitability: either a fixed percentage of profit, or a loss.
The mechanism for trading binary options has become more complex over time. And now there are several types of stock exchange transactions for the sale of options. Let's see the most popular ones:
- Classic binary option, or Call / Put. When buying an option, your task in the process is to correctly indicate the direction of the market movement on the selected interval - the expiration time.
- One Touch or One Touch When you buy a one touch option, you set a stop price. If during the exercise of the option at least once the price reaches this value, then the option won, and you are entitled to the payment of the agreed amount. The fact that during the expiration time the price may decrease again (or vice versa increase) does not affect the fact and amount of payments.
- Options No Touch under the terms of the transaction - the exact opposite of the previous type. They are considered winning if you have correctly specified the price of the asset, which will not be reached during the auction.
- Options "border". The possible range of changes in value is determined, and the trader must determine if the price will go beyond it. It is recommended to use it when the market is flat.
- Binary Options Ladder. The deal is similar to one touch. The broker sets several levels of value change. The more the price changes, the higher the contract payout will be. The client chooses one of the levels himself, and if the chart reaches it, the option is closed in his favour. Etc.
The choice of the type of binary options depends on the asset, expiration time, the chosen strategy, the amount of capital, and the emotional stress of a person.
All of the above types of options can be traded both intraday and for several weeks or even months. But daily trading binary options are very popular.
In fact, intraday trading with binary options is buying and selling financial instruments on the same day, without going to the next day.
It is a dynamic form of investment. Although this is a high risk investment strategy, it can prove to be very profitable if properly managed. Day traders can use a variety of methods.
One of the methods of such commerce is turbo options (60 seconds). The terms of performance of the contract are the same as in the above / below options. The main feature is an ultra-short expiration time of 60 seconds. Such deals are loved by beginners, as this is the fastest way to make money. And this is an obvious plus of these options. The main disadvantage is that it is more difficult to predict the movement of the chart.
A common strategy used by day traders is known as the buy and hold strategy. This buy and hold strategy means that the trader buys an investment that is overvalued at the start of the trading day and will hold that security until the end of the trading day, hoping to make a profit.
Many people use leverage, which includes the use of margin, also known as cash advances. The more trades are made, the higher the potential profit.
There are many types of short-term trades. Many dealers are skilled in day trading and use support and resistance as a buying method. Commerce signals and charts are also useful in this type of trading. Being able to learn as much as possible about each type of trade will benefit any day trader and help them become more successful.
Technical analysis for binary options day trading
Technical analysis is a great method to trade options and stocks. Technical analysis uses charts, indicators, to identify possible price trends. As we mentioned earlier, day traders also use technical analysis techniques. One of the technical analysis methods is called trend tracking. The main postulate of technical analysis states that in the absence of a significant stimulus, the price with a high degree of probability of creatures will move along the trend.
Technical analysts believe that prices always follow trends and in order to trade successfully, traders must trade in the direction of the trend.
It is important for successful traders to know price movement patterns, as the ability to understand price movement patterns can help them know when it is about to move and when it will slow down or reverse. It is necessary to use certain tools when conducting technical analysis. Technically, the methods of technical analysis can be divided into the following:
- Graphical (classic) analysis. A standard live price chart is used to identify price fluctuations.
- Indicator (mathematical, algorithmic) analysis. Price changes are predicted using numerous technical indicators based on various mathematical functions.
- Volume analysis. The movement of prices in the market is determined on the basis of studying the volumes of transactions tied to a specific period.
- Candlestick analysis. Price fluctuations are predicted based on the movement of Japanese candlesticks on the chart.
Indicator analysis, in turn, is the most popular because it contains a lot of useful signals.
Here are the most popular algorithms used in binary options.
Stochastic indicator. With this tool, you can determine the direction of the trend and predict its reversal. There are two lines on the chart of the program, which most of the time move between the levels of 20% (below is the oversold area) and 80% (above is the overbought area).
The RSI oscillator displays the moments of the trend reversal and at the same time determines the strength of the price movement. On the chart of the indicator, there is a curved line that most of the time moves between the levels of 30% and 70%. The signal to buy a UP option takes place in the following situations:
- the RSI line dropped into the oversold zone, that is, below the 30% level;
- the next price decrease during a downtrend was not confirmed by the corresponding movement of the indicator curve (divergence);
- the RSI line goes up, staying in the area of the 50 mark;
- the price reversal downward is refuted by the behaviour of the oscillator line (a reverse divergence has formed).
A signal to purchase a DOWN option takes place in the following situations:
- the RSI line rose to the overbought zone (above the 70% level);
- the next price rise in an uptrend was not confirmed by the corresponding movement of the indicator line;
- the RSI line goes down, staying in the area of the 50 mark;
- the price reversal upward is refuted by the behaviour of the oscillator curve.
ADX indicator. It can be used to determine:
- the presence of a price trend (trend);
- optimal moment for opening buy orders;
- optimal moment for opening sell orders;
- the moment when you need to fix the profit.
If the ADX indicator rises, then this indicates that there is a trend in the market.
These are just a few of the popular binary options day trading signals in Hong Kong.
You should also practice using signals. It is useful to train with virtual accounts. This way, you will be able to analyse how your strategies and signals are working. Of course, just because a strategy or technique works does not mean that it will always be successful. It is impossible to accurately predict the price movement in day trading binary options. Traders will only have the experience and time to make sure their strategy is effective.
How to start day trading binary options in Hong Kong?
Commerce binary options in Hong Kong is becoming more and more relevant among traders as it offers many options and simple trading methods. Options can be traded using a variety of instruments. If you open the demo version, then you will have a chance to get a real idea of day trading binary options. To get started, go through the online registration, it will not take much of your time. Please be careful when filling in your data when registering a trading account.
Options trading is a good way to diversify your portfolio.
Day trading binary options can be carried out online and includes buying and selling with the prospect of significant profits. When you open a demo account to trade, you can gain insight into the market without risking your money. You will use virtual money, and you will not be able to withdraw profit from it. But you get a lot of experience.
Then, when you learn how to read indicators and charts, and decide on your strategy, you can open a live account. You will need to make a deposit into your current account and start commerce in the software. It was created for you by professionals and has a user-friendly and intuitive interface. The platform also offers you training in the form of video tutorials, a mobile application, live chats with traders and always up-to-date news. Use it, you will succeed!
Almost all existing analysis and transaction tools are suitable for intraday trading.
Traders independently adjust their work, adjusting to the specifics of short-term work. The main advantage of intraday trading is the profit recorded at the end of the day. Compared to the volume of positions taken off, the profit can be very large. All trades are closed at the end of the day, so the trader has the opportunity to carefully analyse his work. Due to the absence of large drawdowns, capital management is much easier. The trader always knows how much he will earn or lose during the trading day, so he can easily calculate the optimal volumes of his trades. Good luck!