Trading stocks with binary options can make you a lot of money – if you have the right strategy. Learn more aobut the best strategies for stocks here.
Stocks have certain special properties that make them uniquely well-suited for some strategies and unique ill-fitted for other strategies. The key to success with trading binary options based on stocks is to be able to distinguish the one type of strategy from the other.
Stocks have two unique characteristics that enable you to use special strategies:
In contrast to currencies and commodities, stocks are not traded 24 hours a day throughout the week. Each stock has a home stock exchange, and when this stock exchange is closed, the stock is not traded.
This creates a number of interesting times during which a stock performs in special ways, most significantly near the opening and closing hours of every trading day. As a trader you can use these special times to run special strategies that are unique well-adapted to stocks.
While currencies and commodities are constantly exposed to fundamental influences such as trade and real life supply and demand, all the factors that influence a stock’s price are made by the stock exchange. This allows you to use special strategies that focus more heavily on price movements than it would be wise with currencies and commodities.
To the knowledge about stocks’ unique characteristics into trading success, traders developed a number of strategies that are perfect for stocks. While there is almost an endless amount of endless strategies, here are three examples that even new traders can easily understand and apply.
While stocks are only traded when their home stock exchange is open for business, traders can nonetheless place trades for these stocks. These trades accumulate over night and are all executed by the beginning of the next trading day.
This turns the market opening into a significant event. If most indicators such as foreign stock exchanges and news have pointed into the same direction over night, there is often a significant surplus of supply or demand by the beginning of the next day. Right after the market opens again, this surplus pushes the market so strongly into one direction that the market jumps over a few price levels and creates a gap.
These gaps allow you to invest in a binary option. By recognizing the type of the gap, you can win a binary option with a high accuracy. Most importantly, you need to know the gap strategy to trade closing gaps, and the runaway and breakaway gap strategies that allow you to benefit from gaps that create a movement in the current direction.
Gap strategies allow for accurate predictions, thereby enabling you to win a high percentage of your trades and to use a binary options type with a high payout.
At the end of each trading day, trading volume slowly starts to decline, which creates a unique opportunity for you to make money. As the day traders, who do not hold positions over night, stop investing, the market starts to calm down. With fewer traders in the market, the trading volume starts to decline.
In this market environment, the small number of traders in the market sometimes pushes the market too far. One by one, each trader stops to invest in the current movement, until there are so few traders left in the market that even a few traders can make the market jump and create a gap, thereby taking the market to a prize no other trader considers reasonable.
This type of gap is called exhaustion gap. After an exhaustion gap, traders realize the mistake and start investing in the opposite direction, thereby pulling the market back and closing the gap.
When you recognize an exhaustion gap near the end of the trading day, you can invest in the prediction that the gap will close and win a high percentage of your trades. Depending on the size of the gap, you might even be able to use a one touch option, thereby creating a payout of up to 500 percent.
Complex chart patterns such as continuation patterns or reversal patterns allow for the most secure predictions for binary options. With currencies and commodities, these patterns are rare. With stocks, however, the exclusive influence of supply and demand on the price makes complex price formations more likely.
Traders that want to invest in complex price formations should always focus on stocks. When you learn to draw the right conclusions from complex price formations, you can win a high percentage of your trades.