Trading, though risky, is very much
rewarding. It demands hard work along with discipline. Throughout
the process, only the breakouts can give you tough challenges. In
this sense if you have a proper understanding of the process, you
can net profit out of them.
Understanding breakouts will make
you ready to handle them. The moment an underlying price of a
commodity or forex runs out of its lines of support and resistance,
it is time for breakout to happen. After breaking a level of
support of resistance, the stock makes it way in the same way. It
doesn’t stop unless it finds another trading range. So when a line
of support is broken, you should sell the stock short.
To really take benefit from binary
option trading, you should have very good management skills. You
must be able to manage your routines, schedules, your personal and
professional life, your bank and trading accounts, trading
strategies and most importantly, you must know how to manage the
risks involved in trading binary options.
Do you know in which category you
fall as a trading risk manager? Find out now.
Binary option traders mainly fall
into three categories.
first part of this article, we reviewed the basic principle
behind the Knock-on Effect strategy. Some preferable asset
combinations were also analyzed to see how this strategy can be
beneficial to every binary option trader. In this we will review
the challenges this strategy offers to the traders, its limits and
how much you can expect improvement in your trading results by
implementing knock-off strategy.
The challenges in
implementing Knock-on Effect strategy:
Also known as market pull strategy,
this strategy may seem to be the fast track to success in binary
option trading. But the fact is, the trader must acquire a lot of
knowledge and information about the assets he plans to trade with
this strategy if he wants to actually increase the number of
In this article, a very unique
strategy will be discussed that significantly increases the
probability of making more profits in binary option trading. The
strategy is known as the knock-on effect strategy, commonly called
the market pull strategy by binary option traders.
This strategy is based upon the
fact that the price variations in one option causes price
variations in another option. It is therefore, very important to
understand how different assets are interrelated, and which asset
combination is the best to use with this strategy.
last part of the tutorial, we will discuss volatility, what
stock traders should know about it and how to find the perfect
high-volatile stock that will guarantee increased profit
The concept of
Every trader wants to know:
“How to decide whether one asset is more volatile than some
other?” The interesting fact is, it is very easy to know. The
stock whose price movement goes up and down by $5 when its price is
$50, is more volatile as compared to the stock whose daily high and
daily low price varies by $5 when its price is $150. It means when
deciding how much a stock is volatile, the trader must correlate
the price fluctuations with the stock’s base price.
One of the main advantages of
knock-out options is that it cuts down the expense of hedging.
Lower cost is needed in order to purchase this option. As a result,
a trader has a hefty percentage payout if the option ends in money.
Otherwise the trader faces minute loss in case it does not work
Types of knock-out
There are two
Up-and-out---Through a particular point of price,
the underlying asset’s price lifts up for it so that it may get
Down-and-out---This is totally opposite. The
underlying asset’s price slides down through a particular point of
price so that it may get knocked out.
If you have decided to trade in
binary options, you should learn about the advantages as well as
disadvantages to be faced in the long run. Given below are few of
the pros and cons.
Pros of Trade Binary
You can trade from anywhere in the
world. All you need is a tablet or mobile phone.
Get a quick pay off! You can have
above 70% on your capital in a very short interval of time. This
high payoff is a very attractive advantage of binary options
Binary options trading is very
simple and easy. If a trader has experience in the stock market or
forex market, he will not hesitate to move to binary options. Its
simplicity makes it fascinating.
You will have a wide range of
companies. You may choose from them to trade.
You don’t need a huge capital for
trading in binary options. You may start from what you have in your
account, and trade in a vast market. This is a good reason for the
popularity of binary options among traders.
There are no fees or commissions.
The spreads that are contained within the payoff/rebate structure
bear all the costs.
Another advantage is that brokers
are offering advanced features for traders who have the most
experience. As your experience grows in the trade, there come more
chances for you to make success in the field.
Day trading volatility Exchange
traded funds can prove very attractive at times. But there are
moments when people should keep distance from volatility ETFs.
Volatility ETFs have an inverse relationship with major market
indices such as S&P 500. With the rise in S&P 500,
volatility ETFs will face a decline. With the fall in S&P 500,
volatility ETFs will see a rise. As trends develop in market
indexes, volatility ETFs too has development of trends. Since their
relationship is inverse, a great uptrend in S&P 500 shows that
there is a downtrend in volatility ETFs, and vice versa. Big moves
that occur in volatility ETFs at reversal points of major market
can be exploited by day traders.
Choice of Volatility ETF
Day traders may choose from a
number of volatility ETFs. It can be an inverse volatility ETF. An
inverse volatility ETF moves in the direction of major market
indexes. In this regard, simple and high volume is considered to be
the best choice for day trading.
Technical Indicators to Trade Volatile Assets Pt. 2
first part of the tutorial, a technical indicator was analyzed
to see how it could increase profits by trading volatile stocks. In
this part, we will review how another indicator can be used to make
more money by trading volatile assets.
It is another very effective
indicator to trade the most volatile stocks. It is applied to a
ranging stock, a stock that doesn’t follow any trend. This strategy
takes into account the fact that every volatile stock price usually
settles within a range before moving in a particular direction.
In the first part of the tutorial,
an indicator that can help gain profit returns by trading high
volatility stocks will be reviewed.
This indicator adds three bands on
the stock chart in the upper, lower and middle portions surrounding
the price action. This indicator provides best results in a very
trending market, either when the price is experiencing higher highs
and higher lows during an uptrend, or when the price is making
lower highs and lower lows when following a downtrend.