Current market activity must be taken into account with each and every binary options trade. Asset prices are always changing, and it is your task to determine which direction the price will move next. Once you’ve made this determination, the next move is to purchase a Put or Call contract based upon your forecast. Put is used for downward price movement, while Call is used for upward price movement. As simple as this sounds, there is much more to consider before entering into trades.
Whenever asset prices are moving higher, the prevailing market condition is known as bullish. When prices are dropping, the prevailing market condition is known as bearish. When bullish conditions are in place, buying is taking place more often than selling. This works to increase the value of assets. When bearish conditions dominate, selling it taking place more often than buying, thus decreasing asset values. Either condition can provide you with a profit so long as you’re able to identify them.
Call positions and bullish market conditions typically go together, while Put positions typically pair with bearish conditions. However, expiry times play a crucial role in whether or not these pairings are going to be correct. Even though bullish or bearish conditions may be dominating at the time a binary options trade is entered into, there is no guarantee that the same conditions will be in place when the expiry time concludes. This is one of the many reasons why short-term contracts are often preferred by traders.
There are a number of excellent strategies that can be used along with this basic trade type. The simplest and most effective is trend trading. Asset price trends take place whenever investors feel strongly about the asset. Positive sentiment can send the price steadily upward, while negative sentiment can send the price steadily downward. While this is taking place, price movement forecasting is going to be an easy task for a period of time, but do be prepared to exit the market when the trend comes to an end.
Note that long-term trends typically yield the most overall amount of profit, but trades such as 60 Seconds can be used to cash in on short-term trends. As the name says, these trades last only one minute from start to finish. Since there is no limit on the number of positions that can be purchased, a high trade volume can be achieved. Due to the fact that all asset prices will eventually retract to their median range, it may be possible to trade the price reversal once the initial trend concludes.
The Put or Call trade is not overly complex, but current and future market conditions must be accounted for if your forecasts are to be accurate. Novice traders can use basic price charts to determine what the past and current price movement are, but at some point should shift to more advanced charting options that provide more details. Will the price of your selected asset be higher or lower than the strike price at the time of expiry? If you are able to make the correct selection more often than not, you’ll earn money from binary options trading.