Binary options trading attracts many traders from around the world. Multiple factors contribute to this.
Advertising is so aggressive that no matter how hard you try, you’ll end up seeing a commercial. Are you a sports fan? Chances are binary options trading will be promoted when you watch your favorite game.
Do you spend most of your time in front of computers? Chances are you’ll end up seeing binary options trading heavily advertised.
This is not a bad thing. After all, marketing is the engine of consumer spending and this, in turn, leads to economic growth.
However, binary options trading looks so easy in theory, that everyone wants to try it. From this moment, you’re hooked and either you learn how to trade, or you’ll end up losing your deposit
Scaling Into a Trade
As a definition, scaling means to enter a trade at different levels. The same trade.
In Forex trading, scaling in a trade means to look for a better average for your entry. Of course, every trader wants to pick the top or the bottom of a trend. There’s nothing wrong with that.
The problem is that this is very difficult. Therefore, one needs multiple chances.
When doing that, when entering the same trade at different levels, scaling takes place. While in Forex trading it gives a better average, in binary options trading scaling refers to time, and, sometimes, price too.
Split the Amount
Before scaling in a trade, one needs to split the trading amount. If you want to buy put options, say, on the EURUSD pair, worth of $200, split it into different parts.
The bigger the timeframe is, the more parts you should have. For example, if your analysis comes from the four-hour chart, you should consider having as many entries as possible.
Imaging the pair forms a contracting triangle on this time frame. You’ll end up watching the pair consolidate for a week or more until the triangle breaks and the trend resumes.
Use Technical Analysis Tools
Now that you split the amount, you need to know when to enter a trade. Use divergences with oscillators, or trading theories like the Elliott Waves Theory, or use Fibonacci retracement or expansion levels to add to a trade.
Another way to find great entries is to use the Average True Range indicator, find the typical range, split it into equal levels and deploy your trades.
As for the expiration date, you have two choices. The first one is to leave it the same for all trades.
Obviously, if your trade comes from the four-hour timeframe, short-term expirations dates are out of the question. Use end of the week or even bigger ones.
The second one is to choose lower expiration dates the further your entry is from the initial trade.
Let’s say you’re bearish EURUSD, so you buy a put option with the end of week expiration date. If the price goes against you on the same day another fifty pips, you january decide to scale in that trade and take another put. However, use the end of the day as your expiration this time.
Conclusion
Scaling is a great tool that helps traders survive in this competitive environment. The idea is to find the perfect entry for your binary options and to have the optimal expiration date.
Following these simple rules will result in having more chances for your options to expire in the money.
