Everybody is looking for an edge over the market. This makes finding a good one extra hard, and opens the door for scammers, gurus and just about anyone with a computer to start offering signals and strategies “guaranteed” to make you rich at the push of a button. The problem with most of these is that their number one goal is to make money off of you, my trading brothers and sisters. The only way to truly gain an edge on the market is to educate yourself, learn to make good trades and do your trading well. Now, along with that, there are some tips and tricks I can offer to help get an edge social trading.
The Geek’s Tips For Getting An Edge On Binary Options Trading
1 – Charts – Charts are what trading is all about. Everything you need to make a good trade is represented on the charts in the price action. Most brokers have only the rudest of charts, simple little windows with about an hour of data represented by a squiggly line. There are no tools and no clear insight into trend, support, resistance or market health.
The best thing you can do for yourself is to NOT use the charts provided by your broker unless they are far superior to what I have just described. To get an edge over the market you need to be using advanced charts like what you can get with MT4, Java Charts and a number of other top charting packages. There are a couple of brokers including Binary.com and Tradorax that do provide better charts.
2 – Japanese Candle Sticks Candle sticks are one of the most advanced forms of charting, I highly recommend learning to read them if you truly want to get an edge on the market. Candle sticks turn simple price information into a clear picture depicting the battle between the bulls and the bears. They bring complex price patterns into sharp focus and provide some of the strongest signals in the trading world. All it takes is one look at this style of chart and you can easily see what I mean. The down days are black, the up days are white and when a significant event happens in the market it is easy to see. Candle stick signals can be as simple as one over large candle, or as complex as a series of candles and how they interact with each other. A few of the most commonly traded signals include Harami, Doji, Dragon Fly, Hanging Man, Piercing Patterns and Engulfing Candles.
3 – Know The Fundamentals The charts can tell you everything you need to know but reading the charts can be a challenge. If we assume that all knowledge is known by the market, and represented on the charts by price action, it is the fundamentals that are driving price action. Having an understanding of what fundamentals are, and their health relative to current market action, is a great way to gain an edge over the average trader.
Any indicator or system can and will provide signals in either direction regardless of trend and fundamentals. Understanding the fundamentals can help to weed out the false and/or lower probability signals. Fundamentals include central bank policy, economic data, earnings trends and any other information dictating market conditions. If fundamentals are improving, bull trades may be better, if fundamentals are deteriorating bear trades may be better. News websites, government agencies, earnings reports and other traders are among the top sources for this information. Bonus tip: if an announcement is due out, wait until after it is released before entering a trade.
4 – Trade Signals, Not Feelings Trading is all about signals and I don’t mean the bunk signals offered up by any Tom, Dick or Harry. To get an edge on the market you must use strategy be it based on price action, indicators or a combination of both. The strategy should include clearly defined rules for entry, and you should follow them. Trading on hunches, feelings or intuition may work once in a while but for long term success a structured method of entry is best. When your strategy provides a signal trade on it, it’s that simple. Keep track of which signals profited and which ones didn’t, as you build up some data and experience you can adjust your strategy to include new rules and insights you gain into the market. The hardest part about trading signals is being patient. It takes time for them to develop, they don’t happen all the time. Investoo.com has a great series of binary options videos and indicators designed to help newbies get a grip on identifying signals.
5 – Learn To Trade The News If Fundamentals provide the foundation of market movements it is news that determines market movement on a day to day basis. Learning how news affects the market, and what to do when good or bad news is released, is yet another way to get an edge on the market. Think about it like this; fundamentals are positive and improving leading to an up trend in the market but some bad news has prices down. Does this mean the market is reversing? No, most likely not. Most likely this near-term bad news has provided lower prices and a good entry for bullish positions. The same is true in reverse; if fundamentals are poor or deteriorating, leading to a down trend, one day of positive news can provide excellent entry into bearish positions. Like with signals, it takes patience because market moving news doesn’t always happen every day.