The idea of making a trade on the stock market which lasts no more than sixty seconds may seem impossible. However, it is not only possible, there are many traders who do just that, and, make a comfortable living doing so!
This is a form of investment; all the speed and excitement associated with it may make it feel more like you are gambling! There are a variety of brokers which offer the chance to trade this quickly, Banc de Binary is possibly one of the best known one of these. However, although this is not the only way to trade in such a short timeframe, the concept of binary options does lend itself exceptionally well to short term trading.
As with all investment trading there are risks as well as the potential for high rewards. Understanding the advantages of trading this way is essential to ensure you undertake successful trades:
- Trading in just one minute allows you the opportunity to make exceptionally good returns on your investment very quickly. Many brokers offer between sixty and ninety percent returns. Investing $100 and predicting the price direction correctly could become $190 in just one minute! There are not many opportunities to make money that fast in most other careers! Ideally you spot an upward trend and ride this trend with repeat investments for several minutes. If you can imagine five minutes trading, investing your lump sum and profits each time at a ninety percent return, your profit after five minutes would equal:
- 100 + 90% = 190
- 190 +90% = 361
- 360 + 90% = 684
- 684 + 90% = 1300
- 1300 + 90% = 2470
Your profit after just five successful, sixty second trades could be $2,370 from just a $100 stake!
Of course, high reward trading does involve high risk; if just one trade goes against you in the above list then you lose your initial investment and any chance of a profit. This is an essential point to consider when placing your trades; it may be advisable not to roll all your funds over each time.
- Trading long time frames will give you the opportunity to rethink your strategy and second guess your decision. This can be a fatal move as you may decide to sell out a trade or cut your losses; when in fact, the trade was good. Trading in short term options does not give you the chance to second guess yourself, by the time you even start thinking about it the trade is over. Win or lose, your lesson is learned.
It is important to consider your experience level before you start trading short term. If you are new to binary options trading it is advisable to trade in long time durations. This will help your funds to last longer whilst you develop an understanding of the most effective way of trading.
Working out when to trade
The difficulty with any trade is knowing which way the price is going and whether it is likely to suddenly change. The easiest way to start is by studying simple candle graphs; these will show the upward and downward movements of your asset and potential boundary lines. These can then be used to identify the best time to place a trade and which direction the price should be going in.
If you intend to trade in sixty seconds it is advisable to start with a longer duration chart, such as an hour or two. As you start to see patterns emerging you can shrink the timeframe, focusing on the pattern and attempt to identify it on the smaller timeframe. Ideally you need to know the peak and low of your asset, trade to close to these and you are likely to be burned. You need to locate the opportunities where the trend goes on one direction for several minutes; you can then trade at the bottom of the price movement.
Finpari and Banc de Binary are two of the best brokers ( you may check full list of regulated binary options brokers ) on the market at the moment offering sixty second trades; it is advisable to use one of these brokers to ensure you stand the best chance of a successful trade.