What Wise Traders Do
Wise traders are savvy people, mistrustful of other people, who always want to act on their own initiative. They want to make their own trading decisions, and even when they follow trade signals provided by someone else, they still apply their own criteria and decide not to follow some of the trade signals.
Wise binary options trading is no different, and wise binary option traders are mistrustful of big promises and effortless money, they know that big profits are possible only through some kind of personal effort.
So instead of focusing on popular stocks, such as Apple, or trading in the way that is most
popular to trade, wise traders think differently. They will trade less popular stocks, they will
trade binary options on two different stocks, and they will look to achieve true limited risk
trades. By definition all binary options offer limited risk, since the initial premium is all you can lose.
But wise binary traders take into account price and time analysis, probability patterns, and the possibility to make synthetic binary option trades. A synthetic binary option trade is one which consists of 2 or more carefully selected binary options, so that big risk is really limited, and so that the payout of one option offsets the cost of buying the other.
These trading methods were developed by classic stock option traders in previous decades, they are not new concepts. It’s just that binary traders who know what they are doing, implement these old concepts using binary options and sometimes they combine them with a directional trade, such as a CFD trade, on the same underlying market.
Wise Traders are Specialists
Wise binary options trading is not different, and is about being a specialist. Even if you know a market extremely well, as far as the direction it will take, you can still be wrong on the timing and this means that a binary option will expire worthless. On markets such as EURUSD for example, is best to devise partially directional trades, with hedging insurance.
You can make it so that you will make no profit if the market rises by 100 pips over 3 days, you will get your money back if starts dropping, and you will make a small, high probability profit if it does rise by more than 100 pips over 3 days. This can be done with a combination of binary options alone, or with the use of one more CFD trade. The point is that you can be wrong on the timing and still not lose money, or stand to lose too little compared to what you can make.
Most markets are hard to predict on both price and time at the same time, there are scalping strategies where this can work. But in most cases, and for most markets, predictability of both price and time seems to exist between the one week and two week period.
And this can work just fine with hedged trades where the options expire in 2 or 3 days, you simply place a series of these trades one after the other.
Thirty minute binary options can also be profitable, using similar synthetic, hedged trades, and by taking advantage of specific time zones in the forex market. EURUSD for example is likely to touch new price levels during the London or New York trading session, and very likely not to touch new levels, during the Asian trading session.
Synthetic hedged trades make less or much less profit than simple outright trades, but the probability of a profit, over many trades is extremely high.
Trade Binary Options Wisely