9 Fundamental Truths About Trading Binary Options

9 Fundamental Binary Options Truths

Trading in binary options successfully demands both skill and discipline. Because the trade durations are so short, it’s a realm where fortunes can be made or lost in the blink of an eye. For those who aspire to become successful binary option traders, these are Nine Fundamental Truths that I have realised over the years.

1. The Best Strategy Is Context-Dependent

There is no universal strategy that guarantees success in trading. The best strategy is the one that suits the current market conditions, minimizes risk, and maximizes returns. Flexibility and adaptability are key; what worked yesterday or the last hour might not work today or now.

Some of you commented that my trading charts look cluttered. That’s because I use different sets of indicators for different approaches. I systematically color them so that I know to look at the white bollinger bands, or the ichimoku cloud bands, for instance.

Best Binary Options Indicators - Is This Chart Too Cluttered?
Caption: That’s how i currently trade. This is on Pocket Option. I have Bollinger Bands on the left chart to spot short-term reversals, and on the right side, it’s my uncluttered Ichimoku Cloud bands where I can observe the higher TF and how far the price action is away from them.

2. Trade When You’re at Your Best

The best time to trade is when you can be fully focused and alert. There’s no one-size-fits-all answer because traders span different time zones and schedules. Financial freedom means trading on your terms. It is unreasonable to yourself to have to wake at 3am to trade the “New York Open”, for instance. Besides, in Binary Options, with chart time frames as short as 15s and 5s these days, the need to be around at market open times (Asia, London, New York) is even more remote.

Pocket Option, Quotex and IQ Option (Binary not available for EEA countries) offer 5-second charts.

3. Choose the Right Expiry Time

Selecting the right expiry time for a Binary Options trade depends on the chart’s time frame. Your goal should be to capture most of the predicted price movement within that time frame. The chosen expiry time should not be so long that what would have been desirable for a shorter expiry then becomes undesirable. Many traders have a fixation with time, and think that the more they put on a trade, the longer the expiry time should be to make it “worth it”. This is highly incorrect. That is the same broken logic that might lead one to think that a Lamborghini should enter a series of bends at 220km/h.

Red Mustang doing mustang things
Caption: Red mustang doing mustang things… SMH

4. Learn to Read Price Action

To master trading, you must understand price action. It’s like reading a story; you should be able to narrate the tale that price action is telling. This skill comes through observation and experience.

“Neural Networks” are market logics that try to predict the impending price action. See if you are able to correctly assess the charts and plot what’s going to happen in the next 20-50 bars.

Neural Networks chart plotting indicator for MT4
Caption: Neural Networks chart plotting indicator for MT4

5. Focus on “Clear” Assets over Payouts and “Drama”

The best assets to trade are those with clear and predictable price action. Don’t sacrifice clarity for a higher payout; clarity leads to better predictions.

Let me give you one more insight. Learn to trade situations where you find yourself saying “This trade is too good to pass up!” as opposed to “Let’s try to find one more possible trade”.

Julian- Binary Lab
I've been wanting to prove you guys a point. That the non-OTC charts have worse payout and worse to trade than the OTC on Pocket Option.
Caption: I’ve been wanting to prove you guys a point. That the non-OTC charts have worse payout and worse to trade than the OTC on Pocket Option.

6. Choose Your Deposit Method Wisely

For deposits, cryptocurrency or e-wallets like Advcash or Skrill are often preferable. Credit cards can lead to over-leveraging of your personal finance, and also compliance issues when your card expires or needs to be replaced ahead of your withdrawal. Be aware that some brokers require withdrawals above your deposit to use a different method.

7. Deposit Bonuses: A Double-Edged Sword

Accepting deposit bonuses isn’t a one-size-fits-all decision. If it encourages reckless trading, it’s detrimental. You should not be thinking, “I got another $1000 to play with!”. Instead, view it as a means to support larger, but still controlled, trade sizes.

I would like to point out that Pocket Option lets you claim your bonus even AFTER you have begun trading your deposit. This is volume dependent apparently. You need to claim it before you’ve already completed the required turnover for the prospective bonus amount. Otherwise, the option will disappear.

8. Managing Trading Anxiety

Anxiety is normal in trading. Start with consistency in demo trading, scale down to manageable trade sizes in live accounts, use Multiple Time Frames (MTFs), and gradually increase your stakes as your confidence grows.

I recomend you watch this video on trading with MTFs.

9. Dealing with Losses: A Tactical Approach

Trading losses are inevitable. Treat them like competitive sports matches. Sometimes, it’s okay to write off a loss as a strategy to come back stronger. Alternatively, use the Martingale strategy cautiously, risking calculated amounts.

Sometimes, such as following an unsuccessful martingale, or accidental loss above your risk appetite, you may have to employ a “slug fest” approach, taking consistent trade sizes and waiting like a sniper for the right opportunities to arise. Challenges in trading ultimately build strength.

Remember that trading is a journey, not a destination. These nine truths can guide you along the path, but your success ultimately depends on your dedication, discipline, and ability to adapt to ever-changing market conditions.

Recommended Watching: 19 Ways To Lose Money In Trading

You might also like this video I made! Because with an awareness of the potential mistakes, you can avoid them!

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