Binary option trading is basically a sort of gambling, that depends on predictions in which the gambler makes a profit when he makes the correct predictions, based on the available information. Predicting on price movements is a hard task that requires a well thought out binary option strategy that increases your chances of making profits.
Besides a good plan, you also need skills to make the decision on what good trades to place your money. When the price of the assets break the support and resistance levels, a breakout occurs and a new trend if formed. Successful traders use this opportunity to place their trades early in the new trend that is known as the binary breakout strategy.
How does the binary breakout work?
To benefit from the breakout, traders invest their time and resources to study the price fluctuations so as to identify the price breakout. A breakout in binary options trading happens when the prices close higher than the resistance level or lower than the support level upon which a keen trader is ready to enter a position in the new trend.
It is necessary for the investor not to rush to place a trade yet because the price may go back to the previous support or resistance level. Failure to get back to the previous level in the first two attempts shows that the new price is firm enough. At this point, the trader may place a call bet if the price broke the resistance level or a put bet if the price broke the support level.
Breakout Trend Support and Resistance
Things to consider when using the breakout strategy
This new trend may, however, be short-lived since the price may fall back to the original level in the third or fourth attempt. The binary breakout strategy is, therefore, short-term in nature and very risky, and requires a very careful analysis so as to benefit from the trade. Many online binary options brokers avail useful information in the past trends to potential traders to help them make an informed decision and gain full benefits from the trade.
There are also the independent sites and applications available that offer advice and information on to trade and make the best out of it. It is, however, advisable to keep a watchful eye and treat such websites with a bit of suspicion due to the increased growth of online scammers.
Test the breakout strategy with a free demo before investing your money!
However much this strategy seems promising, you need to be very careful before placing your money on any trade. You may first test it using the demo, to find out how well you know the strategy in reality and avoid risking your money. Learning how to manage your money is very imperative, and it is advisable that you significantly cut your losses by not risking more than 5% of your money on every single trade.
Finding, and learning how to read online candlestick chats is very useful in making more money. Online trading requires a lot of patience, discipline and hard work that can be very rewarding. Trading breakouts is very challenging but with the necessary skills, information and understanding, you can make a lot of profits.
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