How I Pick Tops And Bottoms In The Binary Options Trading
If you are trading binary options, one of the trickiest things to tackle is picking the right tops and bottoms for your trade. Just a slight bit of margin and you could lose your entire investment even if it was a close one. The thing is no one can tell you exactly how you can pick the right top and bottom for any security; the market is fluctuating too often for that to be done. The most dangerous thing you can do, however, is working without any proper strategy, which is actually one of the most common things traders do.
What usually happens is that traders observe some charts and then pick up a random value as a top or bottom based on some loose analysis. There is little strategy involved in their decision, which means that they jump into a trade without thinking. In the end, this is going to create a lot of trouble for you and you will most likely lose a lot of money. To avoid the trouble, you need to have a proper strategy to pick the price tops and bottoms for investments.
To help you out, allow me to propose a simple strategy.
There is No Exact Limit to Prices
The biggest misconception that can get you in trouble is that you can try and predict the exact top and bottom. First off, predicting these limits with complete accuracy is almost an impossible feat to achieve. Even if someone does that, trading on the extremes is too risky as the market can turn anytime, and the extremes will be crossed over by the slightest shifts in the market. This means that you will have extremely high chances of losing a trade. So going for accurate tops and bottoms is definitely not the best strategy for traders. The right way is to stay close to the predicted tops and bottoms, but not exactly at them.
The Right Evidence You Need to Pick Tops and Bottoms
In most trades, it is better to keep things simple, even when you have a “fail proof” strategy to pick price tops and bottoms. What you need is basically two indicators: demand for bottom and supply for top levels. Mark these supply and demand points on the charts and look for the prices to reverse in these areas. Let the price form a consolidation near one zone and see if it breaks out of that consolidation. If the breakout is at demand, you can expect the trade to be upside. And if it is at supply, the trade is more likely to go downwards.
This simple strategy is going to work exceptionally well if you are trading in trends. However, you can use it in general for binary options trading to conveniently reach the correct price tops and bottoms.