If you have been trading Binary options recently no doubt you have noticed the markets are moving in a very volatile fashion as of late due to all the speculation surrounding the U.S. Federal reserves position on if they will begin to taper off their quantitative easing policy. Traditionally the summer months of trading have much less volume and considerably less volatility  ( rapid Wild swings in pricing). As some of you have noticed no doubt lately this just is not the case and so I decided to write up a series of articles to try and help clients trade around our binary options signals or whatever system you are using and hopefully imrpve your chances of beating the odds. I think if you have any consistent system of trading or consistent Binary options signals you are acting on this information can be of benefit to you.

 

      I sincerely believe that if you can employ some of the concepts I am about to share in these articles and you are using the premium binary options signals we share on this site. You will be able to outperform the posted results that we share. Some of these tips will require patience and practice and so I want to ask everyone who is a client and reading this to please consider practicing your trading in a free demo account. There is an unlimited demo account available at MarketsWorld.com and it offers a very good platform to practice your trading on. I still do demo trades and there is no shame in doing so because trading is about the most costly pursuit you can endeavor on in life without the proper execution. Just like a lot of things the more you practice the better you will execute and integrate the concepts I am about to share into your trading. OK off my soapbox here we go.

 

 Chance favors the prepared trader

 

     Binary options signals from Binary Options Tutor or not you have to have a plan of how much you are willing to expose yourself to losses on  a trading day and how much you can realistically exit with in profits. Now no matter what this plan is best developed by you alone. Here are some fundamental guidelines that if you can stick to them will help you profit if your system holds a consistent profitable probability of winning.

 

       Preserve capital at all cost. Warren buffett is arguably the greatest investor of the 20 century and frequently when he speaks he will reflect on the importance of perserving capital. Now we are talking Binary options here not long term investing. Yes in my honest opinion binary options are not investing at all because Binary options are simple speculative trading products or also used as hedges against conventional trades in most cases . I think it is great idea to take this concept and apply it to your trading style with binary options rather than throwing the baby out withh the bath water and simply saying this is not investing so Mr Buffett's advice does not apply. I don't care if you are trading American style Binary Options, EU style Binary options, Spot FX trades or any conventional markets if you are able to design a plan where you will set a predetermined exit on a trade and a predetermined take profits that is more than you are willing to lose then I honestly believe your odds of finding profits consistently increase about 200%. The sooner you can accept this as an undeniable fact the better your life as a financial speculator will be.  Let me lay out a hypothetical plan for EU style Binary options right now similar to something I have used over the years.

 

      Every day is a trade. So one day equals 1 trade now here is what we need for our plan.

 

Plan for losses and profits before you trade

 

NOTES: We are calling 1 day = to 1 trade so our stop loss in this example might be after 2 losses we leave on the day or after 3 wins we leave with profits. Every entire day is a trade so lets run some numbers here and I will base this on flat trade sizes with 70% payouts from EU Brokers with $10 trades on a $400 account.

 

Trade day 1 = 2 losses (- $20 ) $380

Trade day 2 = 3 wins ( +51 ) $401

Trade day 3 = 2 losses (-$20 ) $381

Trade day 4 = 2 losses ( -$20 ) $361

Trade day 5 = 3 wins ( + 51 ) $382

     

     What did we just see there we walked away with more losing days ( trades ) than winning days ( trades )and only had a 50% strike rate but some how we still managed losses on the week in the hypothetical example.

 

You need a consistent system with documented probability:
                       

NOTES: OK you guessed it I am going to use the Binary Options Tutor signals here and it is a shameless plug because living in the south as you might have guessed we have animals to feed ( A dog and a cat ) sorry no chickens,cows etc..

 

     We have a little results data up online now and results at different brokers and depending on your execution will vary but I will use them as guidelines. I am just going to look over these stats and pull out some patterns that I believe can remain in place. I dont expect history to repeat itself every day either so I am going to base my plan around positive outcomes underperforming the average and negative outcome over performing the average scenarios I see on our site.

Negatrive outcomes: Over almost 2 months I have not seen a draw down more than 5 consecutive losses and we have a plan to leave after 2 losses on the day so I might start trading only after I have seen 4 losses posted on the results.

Positive outcomes: I see many consecutive wins of 5 or more so I will exit after 3 consecutive wins.  

 

 

 I want to point out something here don't take statistical patterns as a fact these are just stats and expecting them to hold forever and taking them as eternal truths will hurt your feelings eventually but if you look at the stats is just a small edge and understand you are just trading based off of probability of a system hopefully your feelings will be spared WHEN this does not work flawlessly that first time and you can just continue to trade as long as the probability in the stats continue to say it is worth doing so. OK off my soapbox there.

 

     There is a tendency in price to revert back to the average and our weekly averages reported seem to be around 63% so we are going to work off the theory these stats are good and add this into our plan. So after we see 4 consecutive losses on the signals we will take a trade. We usually see no more than 5 losses for draw downs with 63% over all so hopefully we are under performing in reality not just statistically and the results will improve on the day from there.  This should help us in our plan to absorb no more than 2 losses against us on the day and keep us in the markets longer to find profits.

 

 Plans and discipline go hand in hand

     After you start seeing your plan working almost every day it will take less and less discipline to keep doing it or lets put it another way and this is not pretty I will warn you now. After you get burnt enough from abandoning your plan and traded more of your time just to pay for funding your account and suffered through a couple of years of frustration then you will Kiss the paddle of discipline gladly. The choice is simple. There are so many people who go through the hard way and some even harder than others and some never make it to consistent profits just becuase they refuse to setup a trading plan and stick to it and let it work for them long term based on the fundamental concepts just laid out.

 

      That's it just get probability on your side and developing a plan and sticking to it. I sincerely believe when you start collecting data and getting probability and money management on your side then your results as a trader will improve. Yes a better strategy helps but so many traders look for the perfect strategy in an imperfect world and in my opinion never stop to just develop a plan to trade around. The reason binary options brokers and other online business can offer CPA ( Cost Per Action ) is because they have developed in house stats that help them peg the value of the average customer so they can assess how to keep their business profitable and this works for them in spite of the fact that there will be a small amount of people to break that statistic but just as you see a price sometimes jump outside of the bollinger bands on a chart over all the price ( most clients for a broker and most consistent systems ) will not jump outside of your expectations designed around probability for an extended length of time. Plugging this into your trading style conceptually can take you away from looking at everything on a trade by trade bases and just how good your strategy is working and start to hopefully help you to focus more on the odds of a consistent outcome and managing the risk in your trading business.