Binary options simplify trading, but charts still provide the necessary edge
Binary options have redefined how many traders approach the forex market, as well as markets for commodities, stocks, and popular global indices. Many of the new converts to this medium have rushed away from traditional trading to escape the seemingly complex set of skills required for success in that genre, but even with binary options, the path to success is still based upon knowledge, experience, and emotional control.
Binary options have definitely removed much of the clutter surrounding stop loss orders, margin calls, and the emotional conflict that arises when it comes time to close an open position, but these benefits do not mean that traders can do without the tools provided by technical analysis and the charting advantages TA provides. The same objective for winning remains – the trader must bias the odds in his favor before ever opening a position in the market.
What are the odds in the binary options market?
The binary options industry has come a long way over the past five years. Dramatic growth has been met with a proliferation of new brokers on the scene, all attempting to gain your patronage with bonuses, better offerings, and better reward demographics. Competition has definitely improved the payoff odds to a major degree. In the early days, a 65% payoff was common, with no rebate for a portion of your losses. In order to break even under those conditions, a trader had to be correct more than 61% of the time.
In today’s world, a 75% payoff and a 15% rebate structure can be found, yielding a breakeven ratio of 53%, roughly the same odds with a roulette wheel. A 10% rebate, however, is more common. The breakeven odds are then 55%, which coincidentally are the same as with traditional currency trading, after assuming normal spreads and leverage usage. The trick then becomes how does one do better than “50/50”?
Technical charts are the tools for success with Binary Options
Traders that want to find success in the binary options space must accept that relying on technical analysis is the only true way to improve your odds above the norm of “50/50”. To do otherwise would be to rely completely on luck to guide your efforts. In other words, without the benefits of TA charts, a trader is only gambling at heart, and when the “House” is experienced at managing the odds in their favor, the trader’s investment capital can only decline over time.
Unfortunately, few if any binary option brokers provide a fully operating MT4-like trading platform on the side to support your position calls. They generally provide only a snapshot of pricing history of the asset chosen for a brief period of time, along with a sentiment index of how other traders are positioned for the option at hand. Charts can only help you if they can help you spot patterns, discern levels of support and resistance, and detect the mood of the market from the signals provided by a host of indicators.
Where do you find good charts to use for binary options?
It is starting to sound like you need eyes in the back of your head to trade binary options, but you do need access to good charting tools on the side. On www.forexcharts.net we hope you’ll find most charts when it comes to fx trading. And then you can always use the charting services provided by your traditional broker, if you still have an account with it.
The message is clear – If you want to win with binary options, you need the benefits that TA charts bring to the table.