When Not to Trade Binary Options

One of the great things about binary options is that they give you a lot of flexibility in terms of when you can trade, especially being as you can trade numerous underlying financial instruments such as stocks, currencies, and commodities.  Being able to participate in different markets means you can trade during more times and days than you could if you were only participating in a single market.  There are times you don’t want to trade if you don’t want to lose money, however.  Here is when not to trade binary options:

  • During financial reports.  You’re not going to want to hear that, since financial reports can product volatile swings which many traders hope to profit from, but generally speaking you probably want to avoid reports unless you specifically know how to trade them using fundamental analysis.  Those volatile swings can mean increased slippage and price spikes which may cause you to lose money.
  • Weekends.  You can theoretically place an order which has an expiration time and date on a Sunday or Monday when the market you’re trading in opens after a weekend off, but this is a great way to lose money.  When markets come back from the weekends there is usually higher volatility and wider spreads.  Trading during the middle of the week is usually a better way to go since you avoid this level of unpredictability.
  • During big news events.  There are many factors that can influence the price of various financial instruments.  Which news is going to have an impact on your binary trading depends on the instrument you’re trading, but you probably want to avoid placing a trade right around an election, an IPO, or a similar event unless again you’re an expert at trading with fundamental analysis and you know what you’re doing.  Here’s a tip: most people don’t.  You’re probably no exception, especially as a beginner.
  • Avoid times when the market is choppy.  If price is spiking a lot without any obvious trend, you probably want to keep out of the market until you see things settle down a bit.  This isn’t to say you can’t profit during a consolidating market, especially with binary trading—but there is a difference between a market which is consolidating quietly and one which is choppy with a lot of fakeouts.  If you don’t see a great opportunity with a great context, it’s best to wait for another opportunity.

You can use binary trading with many different financial instruments, which means that if one market is untradeable, you can always switch to something else while you wait for big news events and reports to pass or for the market to become more predictable and context to line up for a better trade.  Just remember to test your trading on all the instruments you’re thinking of working with before you go live.  The worst time to trade binary options is always when you’re unprepared.  So do your homework and have consistent results in testing before you trade with real money.

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Binary options trading involve risk. Although the risk of executing a binary options open is fixed for each individual trade, it is possible to lose all of the initial investment in a course of several trades or in a single trade if the entire capital is used to place it. It is not recommended to base your investment decisions on any information presented on or originating from BinaryTrading.com. By browsing this website you express your acceptance of the terms of this disclaimer and that BinaryTrading.com cannot be deemed responsible for any losses that may occur as a result of your binary option trading. BinaryTrading.com is not licensed or registered as a financial consultant or adviser. BinaryTrading.com is neither a broker, nor funds manager. The website does not provide any paid services. All content of BinaryTrading.com is presented for educational or entertainment purposes only.

General Risk Warning: Trading in Binary Options carries a high level of risk and can result in the loss of your investment. As such, Binary Options may not be appropriate for you. You should not invest money that you cannot afford to lose. Before deciding to trade, you should carefully consider your investment objectives, level of experience and risk appetite. Under no circumstances shall we have any liability to any person or entity for (a) any loss or damage in whole or part caused by, resulting from, or relating to any transactions related to Binary Options or (b) any direct, indirect, special, consequential or incidental damages whatsoever.

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