Admit it, at the beginning of the day I really want to open a deal, even if not all the conditions of the strategy are met. Such an entry often turns out to be unprofitable, which affects the emotional state of the trader. There are also cases when the strategy seems to give a signal to enter, but you feel uncertainty, do not enter the market, and then watch how the signal works out the profit. Only without you.
A tricky trick is designed to help in such situations – a series of transactions. This life hack was used at the beginning of the last century when trading stocks, so why not take this technique into service?
Today we will consider in detail the psychological and tactical component of the “ladder” of binary options.
Psychology of the starting deal-ladder from binary options
When trading binary options “High / Low”, a correctly defined trend within the day will help the trader to stay with a profit even if a part of the investment on contracts closed with a loss is lost. It has been proven that intraday one way trading is much more profitable than buying options in different directions.
Therefore, for a trader, it is very important to be confident in his own forecast, which in many respects psychologically depends on the first transaction, which is often erroneous due to the haste of execution. The level of financial losses in the market is directly proportional to the probability of error. A trader who receives a minus for a deposit will experience uncertainty or fear on subsequent forecasts and transactions, which will lead to a chain of errors and will only increase the loss.
Choosing an underestimated bet size for the first entry levels out the emotional return due to the low level of losses, which will make it possible to concentrate on an objective reassessment of the forecast. The resulting profit will technically confirm the correctness of the conclusions made and the “victorious” attitude, which is very important at the initial stage of work.
Easy start tactics when buying a series of binary options
Trading binary options intraday begins with a trend forecast based on data or candles from the past session. In the event of a significant fundamental event, yesterday’s movement may cause the trend to continue, but, as a rule, a new day “starts from zero”.
Morning trades of a trader are held at a minimum of information, often the first forecast is wrong and cannot take into account the events that will take place during the day. It can be published political, economic forecasts of analysts or macroeconomic indicators, worse / better than preliminary estimates, etc.
The trading system, working on the data of the previous day, issues signals to buy binary options from the beginning of a new session and cannot predict the impact on the course of future events, as well as of current fundamental news. The rules do not allow a trader to ignore strategy signals or conclusions of his own forecasts of a graphical or other type of technical analysis. The only way to reduce the error price on the first trade is to reduce the investment size by 10% and shorten the expiration time.
In this case, the second deal, with the obligatory confirmation of the trend, should already go according to the standard parameters – 100% investment and standard expiration time. If the trend continues, the trader leaves the investment constant, but necessarily doubles the duration of the option. This allows you to avoid the moment of a strong and long-term correction or “lunch flat” – a mandatory period of “calm”, which is present in any market instrument.
Timing of the first trade from a series of binary options
First entry point: 11-00 Moscow time or the first morning news on the economic calendar, indicated by three importance marks.
The opening of European exchange trading is reflected in a surge in volatility in almost all instruments due to a sharp inflow of liquidity. Therefore, the rate of a currency or other instrument, for which a binary option was opened a little earlier than 11-00 Moscow time, may significantly rise or fall, often changing towards the future daily trend.
The chosen time of the first trade can indirectly confirm or deny the trader’s forecast. After the morning burst, the price freezes for a while, so there is no point in choosing a large period for the option expiration.
The subsequent deal, on the contrary, has an increased contract duration, opens in the same direction – if the repeated forecast has not changed. Otherwise, when the trend reverses, the trader should start by opening an option on 10% of the “standard” investment.
It is advisable to combine the first entry when changing direction with the events of the economic calendar. This will help to take advantage of the jump in volatility, as in the morning, first trade, as well as to compare the technical and fundamental forecast.