One question a lot of beginning binary traders start with is, “How do I learn to trade?” Specifically, what you are probably wondering is where you can get a trading system. A trading system or method is a set of rules which tell you when and how to enter and exit your binary options online trades. They can help you select trades that are likely to be profitable from those which your binary options online broker presents to you. If your broker offers you Option Builder, you can set your expiry time according to your exit rules once you find a trading opportunity. But how do you get a system together in the first place? Click here to learn how to set up your own trading system
It can be one of the most overwhelming aspects of trading binary options online, especially when you’re starting out. You’ve probably heard of fundamental analysis, technical analysis, and price action, but knowing these three categories may not make you feel any less intimidated. After all, these types of analysis can seem highly technical (pun intended). What makes it worse, you have probably seen more bad examples than good examples. You may have looked at other traders’ charts and seen dozens of indicators, and wondered, “How does anyone make any sense out of any of this?”
There are several different ways you can get a trading method. Here are the main approaches you could take:
- Get a system from someone else and use it as is.
- Build a system from scratch.
- Get a system from someone else and modify it.
Each different approach has its own advantages and disadvantages. Is there a best choice? Probably not; it mostly comes down to whatever works first and whatever you feel comfortable with.
1. Get a system from someone else and use it as is.
The first thing you will likely try to do is use someone else’s system. There is nothing wrong with this. There is no requirement that you be original to be profitable and successful, and there are already a lot of excellent trading methods out there. Some of them cost money while others are free. Paying money to buy a system isn’t necessarily a bad thing, but you may want to avoid doing that in the beginning, and you should probably only do it if you get a referral. Why? Not because a lot of paid systems don’t work, but simply because so many great systems are already online for free.
Where should you look? Binary options trading communities exist, but you will find a lot more resources these days if you look for systems in more established communities, like Forex forums. Here people freely will share their trading systems and help each other improve as traders. Why? Because most people will fail at trading anyway, so the few that don’t are, ironically, often the ones that help each other out. Trading may be a competitive activity, but you will find a lot of cooperation and kindness in the community as a result.
The advantage of using a system someone else developed is obvious—you don’t have to do any developmental work, and it is simpler to learn something someone else devised than it is to start from square one. All you have to do is test and apply. The disadvantage is that not every system works for every person, and if market conditions change or you have specific needs, a system may work better with modifications. And if you don’t understand why a system works, this may lead you to have difficulties with it later, even if it works for you now.
2. Build a system from scratch.
To do this you will already need to have built up some understanding and experience by at least looking at other peoples’ systems, and probably testing a number of them yourself. When you build a system from scratch, you will be experimenting with indicators, fundamental trading decisions, price action, or a combination of them. You will need to sit down with historical charts and backtest different ideas until something starts to work.
The benefits? Originality means a lot to some traders—plus, all good systems start somewhere. And you will probably understand why your system works since you developed it, and that can be very helpful, if not essential. The drawback however is that this is the least efficient way to start trading. It will probably take you a much longer time, and you may become discouraged early on since the process may feel non-intuitive and confusing in the beginning. You may feel like you have no landmarks.
3. Get a system from someone else and modify it.
This is the middle ground where most traders eventually find themselves. With this tactic, you hunt through other peoples’ systems until you find a few that you like. Then you test those systems as if you were going to use them as they are, but you start making changes if there is something you think you could do better, or something you do not like. For example, you might start testing a technical analysis system involving Fibonacci retracement levels (read about them here). Maybe there are some moving averages on your charts for context, but you don’t like the moving averages that were chosen by the person who invented your system. So you switch them out with some which give you better results during testing. That would be an example of a modified system.
Another example would be if you were using a set of price action patterns (learn about price action in this article) to trade, and during the time you tested them, you discovered subsets of each pattern which had better or worse results. You might modify that system by only taking certain subsets of trades, and ignoring those which gave you less impressive results. Or you might notice a new pattern to add to the mix which the person who invented that method never discovered.
Getting a system and modifying it is usually the most efficient way to start trading, but not always. If you find a perfect system that someone else made, if it isn’t broke, don’t fix it. There is no reason not to use it as it is. You should be happy as a trader when you find something which works well, regardless of where it came from. There is no reason to make it a matter of pride to create something new. You should take advantage of the great resources you find and the generosity of others. Becoming successful in binary options online trading comes down to being resourceful and efficient and recognizing greatness when you find it.
If you come up with something awesome on your own, then that is what you should use. And you might consider sharing it with others. Most traders do not have the discipline to follow through with even the best free system and do well. Being generous with your discoveries lets you “pay it forward” with the community, but it won’t compromise your own success. Odds are however that you will find a trading method somewhere which you like, but which you can make better by adjusting to fit your schedule and your trading personality.
Checking out a binary options online broker that offers a free demo account is a great way to test out your trading system.
Head to MarketsWorld now and see if your system works!