For the binary options trader, few types of price action are as powerful as price trends. Not only are they highly effective at delivering profits, this type of movement is the easiest for novice level traders to detect within price charts. Both short and long-term trends can be capitalized upon, with each offering the same potential for substantial profits. However, lasting trends will provide a longer time-frame for entering into multiple winning trades.
A price trend is nothing more than a price that moves in the same general direction for a period of time. There is some debate in regard to just how long this movement should continue before the action is labeled a trend. The definition may be different for binary options traders, as there are expiry times as short as 30-60 seconds to choose from. When these, or similar short periods are opted for, there will be no need for the asset price to travel in the same direction for an extended period of time for profits to be earned.
The benefits of this type of trading are quite clear, and those who learn how to identify this type of movement are in a perfect position to profit greatly. Even better, identification is easy. There are several instruments which can be selected along with this type of movement, including Put/Call, One Touch, Short Term, Long Term, and Ladder. No asset is off limits, as they all have the potential to move in a single direction at any time, especially when market sentiment is strong.
Per-trade investment amount decisions can be made easier by determining just how strong the trend is. When the direction is clear, strong, and long-lasting, higher investment amounts can be opted for. When the direction is weak, with many bounces, lower amounts can be opted for. Do keep in mind that all trends will come to an end at some point, which means that there will need to be some consideration with regards to when a reversal of direction will take place. The good news is that there may be opportunities to trade with the reversal as well.
Trends can be verified in price charts, but they can often be spotted in advance by reading market news. Any report that is likely to change investor sentiment should be examined further. Watch for reports related to economic data, earnings reports, stock upgrades or downgrades, and more. Any and all of this type of information can influence how investors feel towards specific assets, and in doing so, can lead to an increase in buying or selling.
There are many different types of price action that new traders will need to learn to recognize. Trends should be first on the list, not only because they are easy to identify, but also because they provide such huge profit potential. The basic strategy is simple – select Call when the trend is upward, Put when it is downward. Some consideration of the appropriate expiry time is essential, but when first starting out, shorter time periods can be selected to reduce risk and boost profits.