Successful binary options traders have their own strategy.  It is important for traders to develop their own trading strategies because when they develop their own strategy, they acquire a greater understanding of the underlying asset and its price movements. They are more tuned into how the strategy actually works and what will cause it not to work, which can happen because market dynamics change. Beginners often find this a daunting task. So here are some basic rules to get you started.

The first step is to identify whether you are an intraday trader or a swing trader. Will you trade on a one-minute chart or a daily chart? Choose your time-frame after considering your personality and mind-set. Some like the fast-paced action that ultra-short term trading affords, while some others are more laid-back and prefer to trade the longer time-frame charts.

• Focus on the asset you wish to trade

Most binary option brokers offer a variety of underlying assets. Currency pairs, stocks, indices, commodities are some of them. Each market has its own demand-supply mechanisms. Carefully assess each asset and choose one that suits your trading style.

• Are you a trend trader or a range trader?

Assets are either trending or moving in a range. Different market scenario will require different sets of indicators and rules. Using an oscillator during a trending market will lead to false trades. Similarly, moving averages fail miserably when prices are stuck in a range. Understanding the current phase of a market is important to adopting the right trading strategy.

• Do you follow price action, or are you dependent on indicators?

Price action traders read the market and make their trading decisions based on the actual price movement of an asset. They do not rely on conventional indicators to form a trading bias. However, some traders are more comfortable with indicators pointing them in the direction of a trade. Both styles of trading work. What suits you is for you to decide.

Money management is the most overlooked aspect of trading. Make sure the percentage you are willing to risk per trade fits your account size. Risking too much money on one single trade can take you out of business sooner rather than later. Conservative traders generally risk around 3-5% on a given trade, but this also requires either a larger amount of trading capital or precise entry points.

Final Thoughts

Analyze as many charts as you can, and look at them as opportunities. Look for good price moves, and examine the underlying technical conditions that led to those move. Once you have zeroed in some common technical parameters that generally lead to profitable price movements, construct a set of entry rules that help you get into the market, without exposing yourself to excessive risk. See if the strategy worked on past price data, and if it did, paper trade for a while. Once you are satisfied with the efficacy of your trading strategy, start trading with small amounts of money to help build your confidence.