Too many experienced and novice investors confuse binary options with forex options, there are many differences, but the most important difference, is that binary option trading are for very short periods of time, and you never actually own anything, you are simply renting the rights to an asset.
Once you understand the difference and change your mindset you can make huge profits. Think of it as the difference between rents a house, buying a house or leasing a house with an option to buy. When you rent a house, you are paying for the use of the house during a specific time frame, and you have no benefit from the market value or the equity. When you are trading stock options or future options you are leasing a house with an option to buy at a specific price.
With time you will be able to develop or adjust your trading strategy to make profits, but if you would like to try an all new strategy, the 3-3-3 is one of the best for binary options.
You will find that binary options are an easy and highly profit investment vehicle to trade the economic calendar, economic events listed on the calendar have direct actions in the markets when the data is released.
You can easily find an economic calendar to see which events are scheduled to be announce.
1) The forecasted results
2) The last release results
3) The actual results immediately upon release time
The economics calendar also provides a lot more information, the name of the event, the time of the release and the currency likely to be effected by the results.
Most economic calendars also rank the events by the importance or effects on the markets
1) Very important release
2) Important but not market movers
3) Little market value except it helps develop a complete view of the economy or supports other reports
It is important to select only very important economic reports, those listed with 3 stars or however your calendar shows that they are important.
Once you have selected the event you would like to trade, you need to have 3 choices again.
1) Determine the market response if the report comes in above forecast
2) Determine the market response if the report comes in below forecast
3) Determine the market response if the report comes in neutral
You need to remember forecast has nothing to do with good or bad, it is what economist and analysts are expecting the report to show. If for instance the jobs market is bad and the report forecasts a loss of 200,000 jobs, that is bad for the economy, but if the report comes in and shows that the economy only lost 180,000 jobs, that is above forecast and is good for the currency as traders have already figured in the forecasted data and the markets have adjusted.
You then have to select the asset you are going to trade. Here you have 3 choices
You can select
2) A commodity such as gold or oil, which could also be effected by the report. For instance a drop in GDP will usually cause a drop in oil. Lower growth, lower demands for oil.
3) An index or stock that might be affected by the report. If interest rates are dropped perhaps a home builder or bank stock could be a better trade.
Once you have selected the vehicle for your trade you have once again 3 choices.
The Binary Option Strategy of 3's
1) You can buy an asset
2) You can sell an asset
3) You can decide to do neither ( not trading is a decision or choice )
Once you have determined which way the asset or security you are analyzing will go you have the possibility of 3 results
1) You can be in the money
2) You can be at the money
3) You can be out of the money
Once you have selected you made all your decision and are ready to wait for the release of the economic report, you can now learn to implement the final strategy of the 3's.