Scalping Strategy In Binary Options Trading
In Hollywood movies, the word scalping holds a shady meaning but in the world of online trading, scalping it is a trading technique used by binary options traders or Forex traders to skim profits from the financial markets. The main idea behind this trading technique is for traders to open a market position and close it within minutes once they have pick up just a few pips in profit. If we were to draw an analogy to this form of trading then it would be filling a bucket up by drip feeding. Because of their success rate traders can make thousands albeit at a slow rate, while many brokers tend to dislike scalpers. Although scalping is normally done by Forex traders, the same trading technique can also be employed in binary options trading.
Scalping with binary options is actually quite similar to scalping in Forex trading. The only main difference is that with binary options, the positions are closed automatically due to the expiry of the contract. Whereas scalping in Forex trading requires that the trader close the market position.
Time Frame for Scalping:
With scalping in binary options, traders need to use options with a short expiry time. Hence, the best options to employ for scalping would 60 second options. Although more and more binary options brokers are offering 60 second options trades, it should be borne in mind that not all brokers offer this type of trade. So check first if your broker offers this type of trade. Nevertheless, when 60 second options are not available, 15 minutes and 30 minutes binary options can also be utilized. Another way to use scalping is by using Option Builder trades since Option Builder allows binary options traders to determine the expiry time.
Tools for Scalping:
Once you have decided on the time frame that you want to trade in, the next step is to determine the tools that you need before deciding to open a market position. Normally, the tools employed by scalpers include candlestick charts, price action analysis and technical indicators. Chart patterns analysis is not suitable as the analysis might yield the wrong analysis due to the longer time frame required. Only charts with a minimum time frame of 1 minute and a maximum of 15 minutes should be used if you want to employ scalping trading techniques. The main reason for this is so any information obtained from your analysis of the charts stays relevant. You don’t want to analyze a 6 hour chart for a trade that is going to play out in just 60 seconds.
Thank you for reading our review on scalping strategy in binary options. It all sounds pretty easy but remember that scalping is highly speculative. Practice often and be sure that you know what you are doing before you decide to start scalping! If you are completely new to binary options trading, open a free demo account and start practicing in order to gain more experience. In addition, trading binary options "the old way" with no automated signals service will make it harder for you to improve your monthly income, therefore I'll recommend you to use Virtnext, our TOP auto trader, but for more trusted services you are most welcome to visit our signals page.
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