How to Trade Binary Options
- Binary options – the world’s financial instrument. They allow traders to from price movements across all the world’s markets.
- There are only 2 types of transactions you can make with binary options: CALL and PUT.
The IQ Option platform allows our traders to make investments starting from just $1.
- Call – Option for rising prices. If you believe the price is about to go up, choose this option.
PUT – Option for falling prices. Buy this option when you expect the price to decrease.
If you see on the chart that the price isn’t rising or falling, that means that right now there’s a “neutral trend.” In this case, it’s best to hold off on buying this option. Consider choosing a different asset to invest in.
- Never invest more than 2% of your capital in a single option. This is the golden rule for any investor. This way you can manage your investing without losing your head…or your money
- In order to improve the quality of your results, use technical & fundamental market analysis.
- Try different asset classes. If you’re not getting results with currency pairs, try stock indices. On IQ Option you can find over 500 types of assets, including Amazon, Facebook, and Google.
- Sign up for IQ Option’s, where you’ll find out how to analyze trends, choose a trading pattern, and personally answer any questions you may have.
This is a collection of my posts that I believe are the most important to read if you are a new visitor
This will be the most valuable to you if you are a beginner to forex
Collection of my top articles about trading
Posts series about Trading Systems
Enjoy and feel free to bookmark, share and subscribe, if you are finding this helpful.
All this is, and will remain, completely free and free from ads.
Here is the info to help you make the most of this blog
If you wonder why I created this blog, here is why.
You might also want to know a bit more about me although I am not disclosing a bio here.
If you found this blog helpful, please tell your friends and circles.
You can use buttons below or just share the link to this site with them.
Your comments or questions are very welcome.
Please click on ‘post the comment’ below.
To get notified about new articles please follow me via e-mail or subscribe.
Link to ‘follow by Email’ and ‘Subscribe’ is on this page.
This blog is non-commercial
There are no ads, no affiliate links, no ebooks to sell, and no introducting broker links here. Pure free trading experience and insights shared here. Enjoy!
You can also e-mail me directly at michal9 followed by the @ sign and the hqforextrading.com domain name.
2 years, 47 posts, 22k page views…
I started this blog in December 2013 to share my story of becoming a consistently profitable forex trader, to help myself clarify my thoughts and plans, and to get some more motivation to follow my own trading plan.
Now in December 2015 I believe I can say that this blog has met the objective stated above 🙂
And I hope it offered some helpful perspective and materials to my readers.
At this point I am most likely to discontinue posting here, but the materials will remain available online.
I will continue to be active in the markets and I will now most likely focus on strategies that offer the highest return vs. time spent on trading… such as weekly momentum stocks strategy and a portfolio of ETFs that I will re-balance quarterly.
Trend following system on forex and commodities, using daily bars… I continue to think is a good strategy and yet I came to realize that its time requirements and capital requirements to make trading it really worthwhile… are somewhat higher than I estimated.
And so I felt like sharing this insight also here, in all honesty. But anyway most aspiring traders will need to experience this on their own vs. just reading about it.
Thank you and all the best in 2016 and beyond.
Two great trading books I’d like to recommend
His website is here.
What is absolutely unique about these books:
- mechanical properly backtested system, fully disclosed, tested on a large sample of markets and long period of time, with great results, with results that can be verified
- a story how it would likely feel like to trade the strategy, year by year, very powerful, so true… and those who actually traded a strategy will understand this part very well
- hints on how to properly test the systems: right data, considering dividents, special events; portfolio re-balancing, right benchmark, etc. Plus a unique, and critical, view on Wall Street and S&P500.
New resources and tools I use
This is to share a couple of resources I am using now and I am finding them very helpful.
I now use trello boards and lists as my trading journal. I have a trading “board”, then I have a list for each strategy or technique or system that I trade, and then an “item” for each market or currency pair. As I open each item, I paste chart screenshots and record my comments. It is very visual, very easy to find things, easy to use. It also makes it easy to share charts with a get image URL function.
This is to present an end-of-day trend following trading system rules
It can be traded at the end-of-day, i.e. once per day, by spending 5-15 minutes per day to go through ~30 major forex and commodities markets, search for setups, place orders, manage existing positions.
It has a potential to be a profitable system moving forward. I know it has been profitable over the last 15 years, based on backtesting. Of course, not at all times and not across all markets, but generally, on a portfolio level, it has been profitable! I coded it as a EA in MT4 and tested. Equity curves look good for most forex and commodity markets, as well as equity indices. Again, this is not a holy grail, 66% of trades are losers, and per market there are 2-3 years drawdowns. If this discourages your from trading it, I understand. But this system is robust. It is profitable on a wide range of parameters and markets. It is not curve fitted. Winners are a few times larger than losers.
It is a trend following kind of system. Read more about this approach, e.g. Michael Covel books. In short, it will buy when something is going up and it will sell when it starts going down. It will lose money in ranging markets, but it will surely participate in, and profit from, big moves. It will not predict them, it will react and follow. It is similar to the turtle’s system you may have heard about. They used 50 days breakout for entry, I use RSI, and it showed better results in backtests than using channel breakouts for entry.
Open a long position if RSI(20) is above 65. Note this is contrary to popular use. It opens a long trade if the price is going up. This is a trend following!
Open a short position is RSI is below 35.
Initial and emergency stop loss at 7*ATR(20). This is a very wide stop, trade small positions, e.g. 0.02 lots to make sure losses are small & acceptable, e.g. around 1% of your trading capital loss per trade.
Close a long position if the price prints a 50 days low.
Close a short position if the price prints a 50 days high.
Position entry method: at market on close.
Position closing method: if the price closes below the 50 days low, exit at market.
If it protrudes but rejects the 50 days low, i.e. shows a false break, then place a stop loss below last bar low (i.e. move the initial stop to the new level).
Trade with this system all liquid majors and commodity markets. It can also be traded on equity indices, but I would trade it long only. Although in backtests it made a lot of money in 2008 shorting S&P500, note this is a long term system and long term the equity indices are designed in a way that they go up. For commodities, of course be careful about gaps, limits, contracts roll-overs and expirations.
Use a trustworthy and low cost broker. Consider spreads and swaps (roll-over cost) as this system holds positions for days or weeks and sometimes months.
Backtest it manually before trading it. Trade it only if it shows positive results on a portfolio level over a sample of at least a few hundred trades. Yes, a few hundred. Trade it on a separate account, to easily be able to track the results of this specific system. Once you decide to trade it, just follow the rules. It requires almost no thinking.
Trade it only if you accept the drawdown levels and losing streaks, as seen in the backtest, in fact, assume 2x larger ones and 2x longer series of losing trades.
That’s what I do. I trade this as one of my actively traded strategies. For a while I ran a public journal on forex factory with a very similar trend following system (at a time I used channel breakouts) and I made money (luckily there were a few big trends at a time I ran the journal for 3 months).
I hope you will find it helpful. I searched for long time for a “holy grail”, or a system that I could trade end-of-day, on a variety of markets, that I trust has an edge. This is what I found. This is best what I have found so far. It is simple and I believe it can be profitable.
Technically, it is easy to trade.
Difficulty in making money trading this system, especially if traded in size, lies in the fact that it has significant expected drawdowns and losing streaks, but they are a natural consequence of using a trend following system.
I am starting to trade this and I may provide an update some time from now. In backtests this system took 30-40 trades per market between 2000 and 2014, so it is just 2-3 trades per year per market. So it will take time to see any statistically significant results of trading this method.
Good things about this method: it is low cost (not many trades), makes money independently from trends in equity markets (in fact, in case of a bear market, likely there will be trends on a few forex and commodity markets, which this system will benefit from), it requires little time (just minutes per day, at the end of the day).
In summary, I presented a trend following system, with specific trading rules, that can be used in a mechanical way, it has been backtested and it has been profitable over 2000-2014 period on most major markets, with the same parameters. I hope you will find this beneficial. I surely would have appreciated someone showing me this a few years ago.
I wanted to share two links today
One is a website of Oli Hille at http://www.tradingbook.org/
He is authentic, a real trader, consistently profitable one, and sharing his valuable lessons with others.
The other one is a book by Brent Penfold, “The Universal Principles of Successful Trading”.
I found it very relevant, inspiring in spite of some pessimism there.
Very realistic, very authentic, I can certainly relate to many experiences the author shared and I am finding his solutions very practical and real.
In fact, while I continue to trade discretionary trend following system today, I am planing to re-open the project of qualifying an automated trading system, to backtest is mechanically, and then trade manually.
I hope you will enjoy the two resources I shared.