Peak Trading Hours

Knowing when to trade can be just as powerful as knowing what to trade. This is especially true when you are looking at binary options. Historically, assets are at their most active in terms of volume when their markets first open up and when they are getting ready to close down for the day. With binary options being widely available on a 24 hour basis, there is quite a bit of temptation to trade whenever is convenient for you, but you will find that by focusing on certain hours of the day, you can put a fine focus on your trading day and even end up spending less time in front of your computer, too. This can be very advantageous and can completely change how you trade, and can even make you more of a profit. You can still make money during the slower hours, but this requires a more intensive time commitment on your behalf. Ideally, you will want to make as much money with as little effort as possible.

Trading Around the ClockThe tricky thing is that each set of assets has their own timeframe, and even then, some assets have multiple timeframes where they are most heavily exchanged. For example, things are pretty straightforward if you are trading U.S. based stocks. Markets open at a certain time (9:30 AM EST), and close at a certain time (4:00 PM EST). Stocks tend to be at their most active in the half hour after the New York Stock Exchange opens, and a half hour before they shut down for the day. Oftentimes, you will even see that the price patterns can be extremely predictable, especially if relevant news comes out during off hours. To combat this, many binary options brokers do not have stocks available during the first half hour of the day, but this should not be treated as a major inconvenience. Prices fluctuate all day and even though they might not move as much after 10:00 AM, they can still be predicted with a degree of certainty. The above information can also be applied to the indices that are comprised of stocks.

Things like currencies and commodities might not seem like they can be traded in this manner, but with a careful eye, you will find that this is actually not true. Currencies move most during certain hours. Let’s look at an example.

Assume you want to trade the Japanese yen in relation to the U.S. dollar. The JPY/USD pair can be traded 24 hours a day, but if you actually watch trading volume, you will see a recurring theme. The yen will be at its most active during the Japanese trading day. If you are looking at trading the yen/dollar pair, you need to know that the Tokyo market is open from 7:00 PM EST until 3:00 AM EST. You will also see that currencies fit into the same pattern as stocks. Forex trading is at its highest volume when markets first open. So if you want to trade the yen binary options, it only makes sense that you are at your computer from 7:00 to 8:00 or so.

Trading the Japanese YenTrading with a binary options demo account can give you some real time experience when it comes to figuring out when markets are at their most active. High volume means more movement, and this can be very valuable to the binary options trader, especially when assets are moving in a predictable pattern. If you’re new to this timing technique, using a demo account to find a good rhythm will allow you to make more money, and spend a lot less time while doing so.

Understanding Your Risk before Making a Trade

Binary options trading has become one of the foremost strategies for people looking to make money in the Forex market. As with all financial market tactics, there is considerable risk involved in making a trade as well. Yet, you should also keep in mind that the trade you make could prove to be highly lucrative and you could make a killing. One of the ways in which you can manage the risk inherent in trading is to understand it before you actually make a trade.

First and foremost, you have to understand the risk already present in the market before you even consider making a trade. When trading Forex or any other commodity for that matter, you need to be wary of the constant fluctuations in price. Market volatility is a defining characteristic of the Forex market, whether you are trading binary options or not. Thus, the overall environment is quite unpredictable and you cannot be sure as to how the price of an asset would move in the future.

Understand the RisksThe price could remain steady, rise or fall. If you haven’t taken the right position, you will lose out on the trade. But, you shouldn’t be discouraged by this. This is the risk faced by every trader in the market. You are not the only one at risk of losing your money so put this at the back of your mind for now. Coming to the main point, you need to be careful of the risk in an individual trade you make. Firstly, you need to get an idea of the nature of binary trades.

As the name suggests, binary options trading can only lead to one of two outcomes. Either you are going to win or you are going to lose. There is no middle of the road you can expect to achieve. So, if you get it right, you will win but if you don’t, you lose. It is as simple as that. This simplicity actually increases the risk you face. You have absolutely no cushion or buffer to protect you in case the price of the asset moves in the direction opposite to what you had been thinking.

Secondly, the way the binary options are measured also poses certain risk for a trader. Usually, options measurement is rounded off to two decimal places. This is not the case with binary trading. Here, you will find most of the options being listed to four or even five decimal places. This means that even the slightest of changes in any of factors determining the price of the underlying asset could lead you to losing the money you have invested in the trade.

Thirdly, the profit margins are fixed which also means that you have prior knowledge of the amount of money you can make or lose on a trade. There is no way you are going to make more money than the profit margin listed for a particular binary option. The risk in this case is that the price of the underlying asset may rise at the last moment. It would reduce your profit margin, as the percentage you are going to receive is fixed. Any changes in price would affect the amount you end up earning as profit.

These are some of the risks associated with making a trade with binary options in the Forex or any other market. Make sure you keep these in mind so you can prevent them from eating into your profit and limiting the amount of money you make. Risk is part and parcel of being a trader. You need to learn to control it or else it could dent your confidence significantly.