Day trading binary options
What is Day Trading?
You might be interested in learning about binary options and how they work. The easiest way to explain it is to say that an option is a contract between two parties, i.e. someone who wants to buy an asset and someone who is prepared to sell it at a certain price. There are many kinds of options, and one of them is known as a binary option. Here is some basic information about binary options.
A binary option is also a kind of contract, the terms of which are stipulated in advance. The trader will make a profit if the agreed terms are met by the end of the specified time.
Binary options contract can be concluded for various assets (stocks, commodities, currencies and indices).
You can create an unlimited number of trades during the day. Many traders do, which is why day trading binary options is very popular.
There are 2 main options in total: Call and Put. The first one is a put option. The trader opens it in case the price is predicted to go up. The Put option is the opposite. It is entered into when the value of the asset is expected to go down. Apart from the basic options, there are other options. They are much less popular than the first ones, as they are a bit more difficult to use. So, these options include:
- One touch. There is a certain range in which the price moves. The trader has to predict whether the price chart will cross its upper or lower limit.
- Range. The principle of the option is the same as in the previous one. However, a trade should be opened here if the trader is assured that the chart will not move out of the range by the end of the expiry period.
- Ladder. This option can bring up to 600% profit in one trade. It is necessary to show, in which direction the price will go: up or down. Also, three additional lines are displayed on the chart. If the price crosses the first one, the profit will be 200%. If the second one is crossed, the percentage value is doubled. If by the end of the deal the quotes reach the third step of the "ladder", the trader gets 600% of profit from the deal amount. These are approximate figures, it all depends on the broker and the exact terms of the option.
These are just some examples, in fact every broker can offer you dozens of binary options. You better start with the simplest ones and then move on to the complex ones.
Binary options allow traders to trade short or long positions.
Binary brokers offer different expiry times, from ultra-short turbo options (from 60 seconds), to expiry times of a month or more. The differences in expiry times play an important role in both the amount of profit a trader can make and the amount of investment risk. When in doubt about the choice of expiry time, traders are advised to choose a longer expiry time, as this allows them to see a bigger picture.
There is also the intraday type of trading. This kind of trading usually takes only a few hours a day and has its own peculiarities of analysis. Day trading binary options is a medium term strategy for those, who cannot spend hours in front of the computer and watch for signals all the time.
Intraday trading is an approach to trading based on completing a couple of trades, during a single trading session. Here, trades are held from 10 minutes to several hours. All transactions are completed by the end of the day, and no trades are carried over to the next day.
Trading within the same trading session with longer expiration times has several important advantages. Your technical and fundamental analysis will be more qualitative and effective. Using analytical tools on charts with short timeframes is difficult because of the large amount of market noise. There is also no need to monitor the chart every second to open positions. In addition, statistics show that intraday trading strategies are the most profitable when used correctly.
Day trading binary options can be an exciting way to invest, especially if done correctly. You must use a variety of trading instruments as well as fixed-risk trading strategies and execute your trades carefully. This is the key to success in options trading.
Technical analysis for binary options day trading
Day trading binary options in India require knowledge. You can rely on luck, but it will not bring you a steady income. In order to have a more accurate understanding of what is happening in the market, there are different methods for analysis, and the most popular among traders is technical analysis.
This kind of binary options day trading analysis is a great way to increase your profits, as long as you have the right strategy. It will allow you to predict the direction of the market before it happens. This can be extremely helpful. However, it is important to invest time if you hope to succeed.
If you are new to binary options day trading, you need to start by understanding the basics. This means that you should be aware of the terms that are used in this field, as well as the most popular technical indicators.
Some of the most common tools you will encounter when analysing data are ADX, candlestick charts, moving averages and RSI, Stochastic, etc. It is important to familiarize yourself with all of them before you start.
The ADX focuses on measuring the strength or weakness of a trend, but it can also help determine the direction of a trend.
The Average Directional Index helps you determine if the market is trending and how strong it is. It has 3 lines:
- the ADX line;
- a -DI negative directional indicator;
- a +DI directional indicator.
The ADX line measures the strength of the trend without regard to direction. This allows traders to determine if there are trading opportunities in the trend. An ascending line indicates that the trend is gaining strength. A falling line indicates a trend that is losing momentum or reversing.
RSI translates as "Relative Strength Index". It shows the strength of the current trend, i.e. its potential. This can be easily seen on a chart:
- If the RSI line is near the lower 30 level (default setting), it means that the potential for a downtrend is exhausted and is likely to change to an uptrend soon;
- If the RSI line is near the upper 70 level (also by default), the situation is reversed: the up-trend has exhausted its strength, and the down-trend is very likely to turn into a down-trend soon.
Another popular technical analysis indicator used in day trading binary options is the MACD. The MACD uses moving averages in order to present the most accurate trend predictions. This indicator will tell you where the market is likely to be within minutes. A moving average that is high indicates that the market is in an uptrend, while a low one means that it is in a downtrend.
Moving averages are mathematical averages over a period of time. They give you an idea of where the market is heading. However, it is better to use them in conjunction with other indicators. Because the indicator on its own does not give any signal, it only shows a trend.
There are many other technical analysis indicators which you can also explore.
Almost all technical indicators will be good for intraday trading strategy, moreover, it is desirable to use several indicators to increase the informative value of signals. For example: moving averages, Stochastic, RSI will simultaneously show a more accurate signal and trend than a single signal.
However, you should always consider your own opinion when choosing which indicators to use. You should use the signals you find with your own analysis in order to determine the best entry and exit point opportunity for each trade. It may take some time to master these indicators.
Some people think that the indicators for day trading binary options may be too complicated to use. It is not easy to determine if a signal is recognized correctly. For this reason, there is a demo account where you can practice your skills and learn to read different mathematical algorithms. If you follow the right advice and practice all the time, you will be able to earn your living in this market.
How to start day trading binary options in India?
If you are interested and want to learn more about how to trade binary options intraday, open a demo account on an online broker platform. Before you really start trading, it's always a good idea to sign up for a demo account. These accounts give you the opportunity to trade in the real world, without putting your capital at risk. Because you will be using virtual money, you will be able to learn trading strategies and indicators without the fear of making a wrong move. Once you have mastered the learning phase, you will feel more confident and comfortable to start making real trades in India. The more time you have to practice and improve, the better you will perform.
In order to open an account on the platform you need to register, it is very easy and does not take much time. Enjoy all the benefits of the platform once you have created your account. A proprietary mobile app that allows you to track your account and make profitable trades at any time, video tutorials to help you understand the world of trading, chats with traders where you can exchange experiences and opinions, online news and information, and plenty of tools and calculators that you can use.
The platform's tools make trading more enjoyable and engaging. The platform is designed by professionals for your seamless experience!
Once you've practised enough on the demo account, a real trading account is at your service. But to start trading on it, you'll have to make a small deposit. And this is where it gets real. Every trade you make will be reflected in your account, and you will be able to withdraw your profit. Keep track of your progress in your account and change your strategy if necessary. Try it, it's easier than it looks!
It's worth noting that it's important for you to follow the news, also on the trading platform. Many traders, especially intraday traders, try to work during the release of important statistics and other news. At these times, there is usually more activity in the market, and volatility can increase considerably. Sometimes the trends reach 100 pips or more in just a couple of hours. Good luck in trading!