Trading Strategies | GFM Trader

 

TRADING STRATEGIES

 

Any trader that wants to trade the binary option market should ensure a degree of understanding of the terminology and the basics of trading. For this purpose GFM Trader has provided an e-book for all its clients about technically analyzing the market and a series of videos explaining how to use our practical platform.

As traders once you know how to use the platform and how to enter the trades you should have a strategy to analyze the market and place orders based on informed decisions. If you are interested in technical analysis our e-books should be great resource for you. Furthermore GFM Trader provides a daily market update to all its clients so that you can pick a high probability trade.

Before you start to make any investment you should evaluate your risk capital and investment options in order to utilize the binary options market to its full potential.

Now lets talk about some strategies…

In the financial markets prices move only in three ways. Up, down or side ways some times known as a range. Since there are only three options the trader must evaluate a direction based on technical and fundamental analysis.

Fundamental analysis is evaluating the price movement according to financial news data that has been announced by the central banks or economic organizations. The economic data enables the trader to foresee in which direction the price might highly likely move, since at the time of the announcements the markets are very volatile and sudden price movements create a good opportunity to make profits. For this strategy you need to follow the daily economic data announcements and their times.


Please refer to our Daily Analysis Page for todays daily economic data announcements or to you daily market update.


Technical analysis uses past price movements to forecast the future. This method works well for many traders. If mastered it can forecast the future with high probability. Please refer to our technical analysis e-book (provided only to clients). Since binary options are traded during short periods a direction and the support and resistance levels will generally be enough to give you a high probability trade in your direction. For our direction preference and the daily support and resistance levels refer to our daily analysis site or your daily market review.

Most traders use both technical and fundamental analysis.

Since the market can only move in 3 directions there are mainly three strategies one can apply:


Call Strategy


Technically your strategy for an up movement should encompass technically a support level or a break out level of a resistance to enter a call option.

Fundamentally you should be looking out for economic data that has been announced favorably for a certain asset, being currencies or stocks etc.

For example, your technical analysis indicates that the EURUSD is very likely to increase from its current value of $1.2830 over the short term. This analysis should it be correct may bring a gain of 81% during the day. You check the economic news calendar and note that there are no announcements for the EUR, if there were any you would have taken the time of the news into consideration as well. The GFM Trader platform also shows you your risk potential so before you enter the trade you know exactly what you might gain and lose.

You review our technical analysis sheet and according to the direction preference enter a call option with $1,000 and an expiry of 1 hour.

Since you bought at a support or the break of a resistance level with an expectation that the price will move up from there, it is highly likely that the price will remain above the quoted market price. Thus giving you a high probability of making an 81% gain ending the trade with $810 profit.


Put Strategy


Technically your strategy for a down movement should encompass technically a resistance level or a break out level of a support to enter a put option.

Fundamentally you should be looking out for economic data that has been announced unfavorably for a certain asset, being currencies or stocks etc.

For example, your technical analysis indicates that the EURUSD is very likely to decrease from its current value of $1.2830 over the short term. This analysis should it be correct may bring a gain of 81% during the day. You check the economic news calendar and note that there are no announcements for the EUR, if there were any you would have taken the time of the news into consideration as well. The GFM Trader platform also shows you your risk potential so before you enter the trade you know exactly what you might gain and lose.

You review our technical analysis sheet and according to the direction preference enter a put option with $1,000 and an expiry of 1 hour.

Since you sold at a resistance or the break of a support level with an expectation that the price will move down from there, it is highly likely that the price will remain below the quoted market price. Thus giving you a high probability of making an 81% gain ending the trade with $810 profit.

Range Trading

Since the markets often move sideways many traders use the range binary options to profit from the markets. Especially during the Asian session markets are more quiet and move side ways more, creating a great opportunity to take advantage of range trading.

If there are no news announcements for the day and/or if the major markets are stable or closed then you can opt for a range market binary option trade. During such market conditions you can note from your daily review what range exists between the support and resistance levels and accordingly make an informed decision.

For example, if your technical analysis indicates that the markets will be fairly stable, you could purchase a Range option. Accordingly you can select whether the price will remain In the range or Out of the range.

GFM Trader advises you to take some time in learning technical and fundamental analysis to understand market movements and to make informed decisions.