Although Wall Street is miles away, traders from down under are getting ready by the droves to take on the relatively nascent yet opportunity-rich soil of binary options. Before launching a full-on assault, however, Australia-based traders are advised to heed the following defensive tips and tricks. Whether you're a complete novice in the space or has graduated top from his/her Economics or Finance class, here's 5 tips on how to be a defensive and smart trader of binary options.
Select the Right Broker
Successful traders know the undeniable importance of having a good broker by your side during mostly uneventful days and the bouts of market chaos that intersperse it. A good broker, such as TorOption, offers a solid platform from which to manage positions, execute orders, and backtest strategies. They also charge commission fees very competitively, so you're left with more capital to trade with. When comparing brokers, try to look for one that doesn't just act as a platform but renders technical assistance as well through offerings of free educational webinars and articles, proprietary indicators, and other tools for analysis. Moreover check their social network profiles, like the TorOption Facebook page, to see both their news and their reputation.
Always think that there is more you can learn about the binary options market and the interconnected global financial markets for that matter. Be careful of the information you choose to absorb, albeit, as overloading on irrelevant and outdated information will only make your trading activities more stressful and tedious. Drill down on fundamental concepts and high-probability strategies. Attend investing seminars and enroll in quality self-paced courses. Either way, never think you're smarter than everyone else you're betting against.
Trade Long Term
If you have the option to choose between day trading or long term investing, the latter is always a more prudent style that fits a defensive trader's profile. Long-term strategies including swing and trend trading have been proven to produce better yields over time. In addition, it's less stressful than short-term trading since you don't have to look at intraday price fluctuations that affect your account balance. If you really want to trade intraday options contracts from TorOption, it's ideal to open two trading accounts wherein one will be designated for short-term positions and the other for long-term ones. Be sure the long-term account constitutes a larger portion of your tradable funds.
Risk is ever-present in trading, irrespective of the financial asset and technical strategy involved. Thankfully, binary options contracts already define the risk involved beforehand. This means you already know how much you stand to lose if you are wrong about your prediction. Still, there is no limit to how many contracts you can open per day, leading many inexperienced and undisciplined traders to overtrade. Control risk by setting in place firm parameters for consciously keeping yourself checked at all times. Monitor your impulse for buying and selling contracts and stop trading altogether once you notice a pattern of overtrading.
Establish a Routine
Routines help you maintain a positive bottomline month over month. Each trader has his/her own routine, be it through early morning prayers or afternoon naps. Whatever mantra you decide to adopt, your pre- and post-routine should benefit your trading, particularly through fast mental recovery. Weeks of looking at numbers, statements, press releases, and other pertinent data will give you a headache. A routine cushions the mental strain experienced every day.