Options trading is one of the most difficult tasks in the trading industry. You need to be extremely careful about your trade execution. A single second delay might cost you a huge amount of money. Despite the high-risk factors every day the number of a retail options trader is increasing at an exponential rate. Compared to any other traditional business the payout in the options market is extremely high. But don’t get fooled by the payout structure in the options market. You have to learn the perfect art of trade management to make a profit even after facing losing trades. In today’s article, we will give you five amazing tips which will help you trade the options market like a pro trader.
Use of higher time frame
We all know that higher time frame trading is always safer than shorter time frame trading. In higher time frame, you don’t have to deal with lots of false trading signals yet the majority of the novice trader starts their trading career based on lower time frame trading strategy. They are so much biased with the profit factor in Forex market that they always want to place a new trade. But in the options market, you have to understand that a single quality trade execution is thousand times better than low-quality trades.
Trade with price action signal
Price action trading is one of the most reliable trading systems in today’s world. Almost all the pro traders in the UK uses the price action confirmation signal to place their trade in favor of the long-term trend. So being a new options trader it’s highly imperative that you start learning about the reliable price action confirmation signal to trade the key support and resistance level.
Use of SMA
We all know that 100 and 200 days SMA is the most favorite trading tools for the professional options traders. If you ask them, how to trade binary options with a high level of accuracy, they will say set pending orders at the 100 and 200 days SMA. The expert UK traders use it to find the dynamic support and resistance level of the market. Though this system is extremely profitable, make it sure that you are not risking more than 2% of your account capital on any single trade.
Learning the advanced art of trade management is very crucial for your trading success. You might have 90% win rate in the options market but if you trade the market without assessing the risk factor, you lose money in the long run. But if you educate yourself with the proper knowledge of trade management, you can make money with 60% win rate. The majority of the traders blows their trading account due to big lot size trading. You need to understand how to calculate the lot size without increasing your risk exposure in the Forex market.
Some people will say that blindly follow the 2% rule of money management and you will be fine. But this is not entirely true. Let’s say that you have placed 10 trades with 2% in a day. And if you lose all 10 trades in a row, you will lose 20% of your trading capital. So make sure that you are not risking more than 2% on a single trading day.
Never trade during the news
We all know that the novice traders love to trade the news. But being a new trader you must resist this urge. Unless you learn the fundamental analysis section very precisely you should never place your trade during the high impact news release. You might be trading along with the long-term trend but still, you have high chance to lose money during the event of high impact news release. So it’s always better to stay on the sideline until the market dust settles.Updated Date: 11 June 2020, 06:36