Tailoring Strategies According to Trading Hours
Low Risk Trading
Do you only think about winning when you trade? This could be a wrong way of thinking. When you trade binary options, instead of thinking about how to win, it is more important that you think about how to reduce risks.
The reason is simple. While you reduce the risks, you are able to maintain profits. Binary options are also called all-or-nothing options and the risks are said to be pre-determined. In fact, this is not entirely true. The risks change in accordance with trading hours and market hours.
It is better to trade binary options during periods of low risks. Even though using analytical tools and tactics are important for traders to forecast price movements, these kinds of tools can be difficult for novice traders to master. Thus, at first, it would be better for a trader to learn when the best time is to trade binary options.
Forex Market Hours
The foreign exchange market is driven by people. In order words, as people buy and sell currencies, the exchange rates go up and down. Since the foreign exchange market is driven by people, there are peak hours and off-peak hours.
So, when is the peak hour and when is the off-peak hour? There are several global foreign exchange markets: New York, London, Tokyo, Hong Kong, and Sydney. Traders thus can trade virtually 24 hours a day.
Among these global foreign exchange markets, there are three major markets: London, New York, and Tokyo. When these three markets are open, a lot of investors will trade and it will generate a high volume of trading, which leads to the most volatility.
The timetable for each market is shown as above. The New York and London markets have a high volume of trading every day. In particular, when both markets are open and there are overlap hours, it will be the most active trading hours.
Compared with the off-peak hours, the peak hours can lead to greater changes in price movements. When you trade binary options, if you can spot such trading periods and market trends, you are able to minimize risks.
The Three Important Things Novice Traders Should Know in Order to Increase Winning Percentage
Ⅰ) Do Not Trade Range
Basically, a novice trader should not carry out range trading, because it can be a high-risk trade when price fluctuations are small. In range trading, there is a possibility that the price would go up or go down afterwards. For traders who are not yet familiar with trading, it can take a lot of risks. If a trader has gained some experiences, he could consider this type of trading. However, for novice traders, it would be better for them to trade by predicting the price directions.
Ⅱ) Place a Position Until the Last Minute
In binary options, when you place a position, no matter how many minutes prior to the start of the trade, the payout rate for this trade will not change and it is pre-determined. It is thus better to place a position until the last minute. Except for 60 Seconds options, this Last-Minute strategy is useful for almost all other types of binary options. Traders can follow the trend and use this strategy when they trade binary options.
When a trader uses the Last-Minute strategy and follows the trend to place a position, it is possible to reduce the risk of losses. This is because that, if a trader placed a position until the last minute, it is less likely that the opposite market direction would occur. It is necessary to remember that this strategy should not be used when the market is very volatile and there are large fluctuations.
Ⅲ) Capture Long Term Price Movements
Many of the novice traders would make a mistake, that is, they only look at short-term trends. Basically, binary options are short-term trading options. However, there is a case that, when one looks at the price movement in the short term, it shows that it is a downtrend, and when one looks at the long term movements, it shows that it is a uptrend. Therefore, when you place trades, it is necessary to capture the long term price movements to make a judgment on whether it is an uptrend or downtrend.
That is to say, it is impossible that the price continues to rise or continues to fall. The trend moves up and down repeatedly. If a trader only look at the short-term movements, it is likely to make a wrong judgment.
Why Should Novice Traders Carry Out Trend Trading?
Novice traders can take less risk to place trades during periods of high market volatility. Why? This is because that the market tends to move in one direction. Of course, there are floor and ceiling levels. Basically, when it is an uptrend, the price would move in an upward curve, when it is a downtrend, the price would move in an downward curve.
The above figure shows that the price movements have turned range into trend. If a trader can spot the changes in the price movements and place a position by following the trend, he can take the chance and it will turn out to be an excellent strategy. On the contrary, if a trader placed a position during the period of range when it is difficult to predict whether it will go up or down, there is a high possibility that he will lose. Therefore, during periods of low market volatility, if a trader could refrain from trading, he could reduce risks.
Of course, there are strategies that traders can use to place trades during periods of low market volatility. For novice traders, at first, it would be difficult for them to take appropriate strategies according to circumstances. Thus, as a basic strategy, when one places a position, it would be better to follow the trend and pay attention to the floor and ceiling levels.