It will be soon one month since I started to trade binary options for real money on Spectre ai. After a good first day that was followed by a few terrible ones, I started to increase my win rate over the weeks. I went up to minus 50% of my account when I really messed up. With some discipline I managed to be back up 30%, then lost again and went up. Here are some tips that might be useful for beginners like me considering to start trading digital options, mainly tricks to avoid.
Emotions are still hard to manage
As I mentioned in my previous articles, one of the hardest part in being successful at binary options is to control your emotions. Whether it is about trying to recoup a loss or not being satisfied with substantial profits, being able to stop at the right moment is not easy. Some people recommend to follow strict rules, such as the 5/2 rule. Basically you have to stop once you win 5 trades, or once you lose 2.
Even if that rule perfectly makes sense, it is rigid and does not take into account other factors. If you start trading digital options with real money, you will experience some periods when you literally walk on water, it’s like you are able to anticipate where the price will go. I made streaks up to 14 wins in a row. So why stopping when you are in perfect conditions to win?
I lost 2 trades in a row (+1 before that) 19th in the morning. Should I stop? According to the 5/2 rules, yes. But here is what followed:
There is also a win and a win. What I mean is sometimes you just get in the money out of luck, because one candle suddenly spiked in your favor. Sometimes you just perfectly timed your move so that your victory is total. If you manage to get five wins in a row in such fashion, I would not advise to stop. You see, even if it’s true that overconfidence will make you lose trades, it is exactly the same with a lack of confidence.
In my opinion, to be successful in binary options trading you have to be confident in what you are doing, but not too much to avoid taking hasty decisions and therefore mess up your entry points. Of course it is sometimes hard to assess, especially in the heat of action. This is the argument of the proponents of the 5/2 rule. I would say it is probably valid to some traders, but it does not mean YOU must do it that way. If you have the intelligence to stop at the right moment, when you feel you start losing it, you will probably be better off with flexible win and stio loss. I sometimes stop after 3 wins. Because I don’t feel it, or because my wins were not convincing.
Binary options : find you own style
As a beginner you will probably try to find binary options strategies to copy. So basically you will start Googling and stumble upon videos and articles of people claiming they found the winning formula. Assuming they say the truth (some do), it does not mean that their system is the panacea. The digital options winning strategies are known, they are derived from the technical analysis. Statistically some strategies might be more reliable than others. But then there is the human factor.
It is important for a strategy to be sound, but it is as much important that you are comfortable with this strategy, and that you are able to execute it.
Some people are specialized in mean reversion, others prefer to follow trends… Some like quiet markets, others busy markets. It is impossible to know beforehand what will suit you best, you will have to experiment. In my case I have noticed, thanks to the analytics tool Spectre offers, that I do best before the European session until the opening of the American session. I will focus on that period, and avoid trading binary options in the mid afternoon/evening.
A typical binary options trading session : how to do it?
Now you might wonder how you start trading binary options as a dummy, what do you need in terms of hardware and knowledge? Honestly, not much. It’s better to have big screens, 2 ideally, to be able to follow several charts and a bit of news. Before trading I start reading for a few minutes about overall FX sentiment (e.g. https://www.dailyfx.com/). I check the news calendar and write down the big news that are scheduled to be released. I start then to look at the charts, mainly the USD ones as they give better payouts (I won’t miss another opportunity, but if I see two compelling set up I will of course favor the USD pair). I usually don’t do anything for a half an hour, an hour or even more, depending on what I see. Then I start to place my puts and calls based on very basic indicators (Bollinger bands, candlesticks and 4 moving averages).
Learning binary options: results after one month
Using very simple strategies, and despite a few awful days durng the first week (like 35 % win rate), my overall win rate is of 57% out of 185 trades (yes, I overtraded a lot at some point, up to 32 in one day !). This is enough not to lose money. I actually made some (up 17 %). This is very encouraging, given that I made a lot of very stupid mistakes and that my win rate is improving. In the coming weeks I will focus on improving my trading skills and my risk management to avoid blowing profits as I did already two or three times. I will then maybe be on the path to become a successful hobbyist binary options trader. And if you want to trade as well on Spectre, register here your free demo account. Stay tuned.