When Not to Trade Binary Options?

Binary options trading is not for everyone. Before opening a trading account, retail traders must think of what makes them different as traders.

Yet, every retail trader might win. But, not on a constant basis. If you treat trading as a hobby, it will remain a hobby.

Because of that, chances are you’ll lose your deposit. Eventually.

What makes a good binary options trader? Is the market safe to trade all the time?

When compared with the Forex market, binary options traders have an advantage. If there’s one thing in their favor, the fact that they can choose from multiple options types is the one.

At least, that’s what brokers claim. Assuming you trade with a broker that does offer the possibility to choose from multiple options, then you’ll have a competitive advantage ahead of Forex traders.

However, brokers try most of the time to make things harder. As such, even if traders suspect a range and want to trade a one touch or boundary option, they’ll have a hard time picking the right expiration date. Brokers simply don’t offer many possibilities.

Volatility in Financial Markets

Binary options are, in fact, built on regular financial products. Be it a currency pair, a bond, a security, an individual stock or an index…they represent the entire financial market.

Traders must know volatility is not the same. More importantly, it changes based on many things:

  • The time during the trading week.
  • Moment of time in the trading day.
  • Season (earnings season, summer season, etc.)
  • When important economic releases are due.

They influence the way the market moves. So, when is the best time NOT to trade binary options?

When to Avoid Trading

Well, the best question to answer is not the one above. Instead, traders must understand that, only because the markets are open, it doesn’t mean the right trade appears.

The problem with many retail traders is they feel the need to do something. After all, markets open every Friday…why not take a trade?

This leads to overtrading. And, overtrading leads to losing your trading account.

Here are a few times you want to avoid trading a binary option. Or, if you do trade, make sure you set the expiration date after these events pass:

-         NFP week. The market ranges three out of four NFP weeks. Traders simply wait for the release. Choosing the right expiration date under such conditions is a gamble. If you feel the trade has a chance, set the expiration date way beyond the NFP horizon.

-         Asian sessions. They simply lack volatility. Unless you’re keeping your eyes on the one-minute chart (which is still not recommended), this leads to losing your account. If you do trade, make sure you set the expiration date beyond the end of the Asian session. Use end of the day or even end of the week.

-         Triple and Quadruple Witching. Big options expire during these dates. As such, volatility is on the rise. Brokers know that and will offer plenty of expiration dates around these times. Avoid them at all costs.

Conclusion

In trading, like in any other business, being informed means knowledge. Knowledge, on the other hand, means power. And, power means profit.

The binary industry is difficult enough to make a profit constantly. On top of it, brokers try to screw you. Most of them.

As such, it all depends on you. However, if you have it and you can make it in the binary options industry, you can make it in any other financial market.

Bigger, and fully regulated.

 


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