b Why Should You Require Trading Pattern For Binary Option? - IQ OPTION™ Guide | Ultimate Trading

Why Should You Require Trading Pattern For Binary Option?





Types of Binary Options Trading Pattern:-

Binary options strategies are all different, but they have three common elements:

1. Creation of a signal and getting an indication of how to trade this signal.

2. How much you should trade

3. Improving your strategy

The precise strategy can vary on each step, so there are a huge number of possibilities. The most important part of developing a successful strategy is understanding as much as possible about each element. This will be covered in the next section, starting with the creation of signals.


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Point 1 - Creation of Signals

A signal is basically an indication that the price of an asset is about to move in a particular direction. of course, prices of assets move all the time. What you need is something that predicts that move before it happens. That is what a signal does.

There are two ways that signals are created. The first is to use news events, and the second is to use technical analysis.
Generating signals from news events is probably the most common approach, particularly for new or inexperienced binary options traders. It involves looking at what is happening in the news, such as an announcement by a company, an industry announcement, and the release of government inflation figures. In many simple cases, positive news means prices are likely to rise while negative news is likely to lead to a fall in prices.

The starting point for making this strategy work is knowing what news events to expect and when. This is why you will find economic calendars on most good binary options trading platforms. If you know that a company's earnings report is due in two day's time you can plan your analysis and trading activities around this.

The best platforms will also tell you what to expect from the news event. For example, it is helpful to know that a company's earnings report is due in two days' time, but it is even more helpful if you also know what the market expects to see in that report. You can then make decisions in advance of that report in an attempt to predict its contents and the subsequent market movements. You can also make decisions after it is published based on market expectations and reactions.




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There are positives to a news events approach to trading. In particular, it is easy to understand and learn. There are disadvantages to the approach too. The biggest problem is unpredictable markets. For example, a company might release an earnings statement that shows an increase in profits. This is a positive news event that you would expect on first reading to cause the market to react positively. However, within the report there might be additional information that spooks the market, such as profits not being as high as expected. This could means the market moves less than you anticipated and, in some cases, can even move in the wrong direction - prices falling even thorough the news event is categorised as positive.


Also Read- "Why Should You Require Trading Pattern For Binary Option?"



It is also difficult to predict how long a movement will last and how far it will go. If you go back to the example of the company earnings report, it is a positive report so prices in the company's shares are likely to rise; but how only will the rising price situation last and when will the prices max out? These questions are unknowns.

Trading based on technical analysis offers an alternative. It is a strategy that seeks to predict the movement of asset prices regardless of what is happening in the wilder market.

Essentially, the process involves looking at how the price of a particular asset moved in the past. From this, it is possible to establish patterns that can be used to predict price movements in the future.

It sounds complicated, but our brains are used to do this on a daily basis. A good example is when you meet a new person. If that person gteets you warmly, you are likely to predict positive things for the relationship. On the other hand, if the person is unfriendly, you might anticipate difficulties in the relationship. You come to these conclusions based on your experiences in the past of meeting people and forming relationships.



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Technical analysis does something similar. It looks at the current conditions of an asset and decides, based on past experience, if the price will remain largely unchanged or if it will rise or fall.

Once you get into the technical concepts and terms, it does, of course, get a bit more complicated . However, the overall concept is the same as the day-to-day task of making a prediction on future outcomes based on past events.

Now for the big question - should you use a news event approach to trading or a technical analysis approach? This comes down to a number of factors, and the answer will be different for everyone. The best advice is to try both to see which you are most comfortable with and which generates the most profits. Of course, you are probably not in a position to test strategies with your hard-earned money. Luckily there is another option - using a demo account. Most of the reputable binary options trading platforms on the market offer a demo account facility. This allows you to trade binary options with virtual money rather than real money. You can't make any profits with a demo account, Buy you will not lose any real money either. What you can do is test strategies and trading styles without any risk.

One final point to remember when looking at signals and strategies is to focus on the short-term. There are investment strategies that aim to predict the price movement of the asset over a long period of time, such as 10 years. This type of information is of no use in binary options trading. Instead, you need to know if a price is going to move over the next couple of minutes, the next hour, the next day. A prediction of the price in 10 years' time is not relevant.

To archive that you need Short-term signals and short-term strategies.



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Point 2 - How Much You Should Trade

This is essentially a money management strategy. They vary in complexity and level of success, starting with a strategy that involves investing the same amount on each trade. Two other common strategies are the supernova strategy and the percentage- based strategy. For long term success, the latter is the best option.

Investing the same amount of money on each trade is just like having no strategy at all. Its is the riskiest strategy, as it does not take into account either your overall level of profitability or the amount of money you have in your account. Both of these are essential factors, and ignoring them can result in quickly depleted balances.

Let's look at the other two common strategies now, starting with the supernova  money management strategy.


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The core concept of the Super nova strategy is to recover losses as soon as possible. This means investing larger amounts of money in trades following a losing trade. For example, you could have a set value of money that you trade, which you then double when you have loss. If that trade wins, them you are back in profits again rather than being somewhere around break even.


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Problems with strategy occur when you go on a losing streak with multiple losing trades in a row. Each losing trade in a Super strategy involves an increase in the investment on the following trade. This quickly adds up. For example, imagine you went on 10-trade losing steak. That is a lot, but it is not an unrealistic or unreasonable situation. On a 10-trade losing steak, your 11th trade in order to stay with Super system. There are not many budgets that could withstand that sort of increase, even if the value of the original trade was low.

The question comes down to how accurate your predictions are and whether you can prevent or minimize losing steaks. It is always important to remember that nothing in binary options trading is a sure thing. Even traders that you are certain will be successful can end up as looses. Losing steaks are inevitable, regardless of how good a trader you are. It is simply impossible to be right enough times to prevent them. Therefore, the most people, a Super money management system is a risky option.

A percentage-based system is less risky, so it is usually the preferred choice for most traders, particularly those who are new to binary options trading. The concept is fairly simple - the amount invested on a trade is based on your account balance. If you lose a trade, your account balance will fall, so the amount of money invested on the next trade decreases. If, on the other hand, you win trade, the amount of money invested on the next trade increases because your account balance has increased.

This strategy helps to keep your balance intact so you can realize steady profits over time.

The question then comes down to what percentage of your balance do you want to invest. As a guide, a trader who is comfortable with risk might choose a number somewhere around five percent, whereas a trader who doesn't like risk would select a value somewhere around two percent.

Let's look at an example, assuming you invest five percent of your balance. If your account balance was $500, your trades would be $25. If your balance decreased to $300, your trades would each be $40.


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Point 3 - Improving Your Strategy

 One of the best ways to improve your trading strategy is to analyse your performance using a diary. This is a simple but highly effective concept. It involves keeping a diary where you note every trade that make. You can then look for patterns and trends to see what is working and what isn't.


This is a particularly effective approach if you are a new trader and are still trying to establish a profitable strategy. A common approach in this scenario is to place traders using both technical analysis and news events signals. A diary will help you keep those traders separate so you can judge which performed better. For example, you might find you are getting double the profits from traders you make based on technical analysis. However, you know from experience that you spend more time on news events signals than you do on technical analysis. The information in your diary would indicate that you should consider a change of approach.

Basically, it is all about knowing what trades are workings and which one are not. The only way to do that is by keeping a record, so a trading diary is a highly effective tool.

A trading diary also lets you focus on the details to fine tune your overall trading strategy\. After all, you will get to a point where you are seeking one or two percentage point increase in your profitability. This is simply not possible to do in a sustained way if you don't keep good records. On the other hand, doing it successfully could result in hundreds or even thousands in additional profits.

Remember to use your trading diary to check all parts of your trading approach, not just the trading strategy. This includes how you manage money and how you decide on the value of each trade. It also includes looking at the best assets for your trading approach and style.

You can then go into even deeper detail. For example, you can look at the best days of the week or the best times of the day. This information might lead you to adjust your approach. You also look at things like which brokers work best for any much more.


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There are many things that a trading diary will tell you. One of the problems is trying to work on too many of them at the same time. if you do that you won't know which changes are having a positive effect and which are not. The easy way to fix this is by focusing on single changes, analyzing their impact, and then moving on. Again, your trading diary  crucial to this process.

If you don't keep a trading diary at the moment, start as soon as possible. It will become an indespensible tool.