Trading the trend is by far the most popular binary options strategy out there, and for a very good reason. When you are trading with a trend, you have a slightly higher chance of a successful trade, especially when executing short term trades. Binary options can already have a thin margin of error, and giving yourself even a 1 percent better chance of being successful can be the difference for some between losing a lot of money and being profitable. Hopefully, you are already a very successful trader. Even so, this little tutorial will prove to help you boost your profits when applied correctly.
Knowing exactly when to enter a trade even when you are going with the trend is a little bit trickier than it seems. Anyone with some experience can tell you that no matter what the trend says, you will still be wrong once in a while. That’s just part of the oscillating nature of markets, and when there is a definite expiration point placed on your trades, like what we see in binary options, then you are creating a scenario where you could be wrong, regardless of what the trend says.
First, know that it’s impossible to time your trades with 100 percent accuracy. Realistically speaking, our goal should not be perfection, but we should keep pushing for as close to perfection as possible.
Next, you need to make sure you have powerful charting software. Many brokers provide charts for you, but these are typically subpar at best. You want something that is fully customizable and something that you can create your own lines within, using various technical indicators of your own. Some sites provide these online for free, others might charge you. Depending on what you are looking for, there’s no real benefit to paying for something that you can get for no charge as long as it’s of the same high quality. You might need to look around to find what you are looking for at no charge. If convenience is important, then paying a bit for what you want isn’t an issue.
The next step is where things get a bit tricky. You need to identify a trend line. This might sound simple, since you can see exactly where prices are headed just by looking at a chart, but it’s a bit more in depth than this. Also, there is no set-in-stone best practice for determining an actual trend line. What we have found is that two lines can act better than one. Find a trend line both at the top of the chart and one at the bottom of the chart. For this to be effective, you need to use a candlestick chart. Not only does this give you a more accurate picture of what the asset’s movement is like visually, but it can also serve as an identifier for channels. When the trend moves outside of the channel, you know that it is likely to return, and if that return to normalcy goes with the trend, then your trade has an even higher likelihood of success.
When prices stay within the channel—as they usually will—your goal should be to identify weak points within the channel. Even if prices stay within the channel, they will gravitate toward the natural direction that the trend is headed. If a candlestick is moving away from the trend, the odds say that it will change within the next few minutes.
You can be trading the South African trading exchange, but this strategy only works when the trend remains ongoing. If some sort of external event changes this, then it is time to abandon the strategy for the time being. Keep an eye on the news and don’t be afraid to call it off when signs say that it won’t work.