As a trader, you have to pay your bills like anyone else. Therefore, you will have to meet a certain income goal with your trading. Choosing an improper strategy might make that impossible. Your ability to adjust your trading strategies in binary options according to your needs, will greatly determine your trading success. Whether you chose a strategy based on trends, technical indicators, candlestick formations, or gaps, you always need to be able to tailor your strategy according to you needs.
One of the most dangerous situations any trader can be in is to trade an effective, money making strategy, and still not make enough money to cover his cost of living. In this situation, most traders start looking for more trading opportunities to make more money.
Since many of them do not know how to adjust their trading strategies, they make the mistake of investing outside their original trading strategy. Desperate for more money, they fall back into old habits of making random trades without a strategy, and start losing money instead of making more. This viscous cycle will speed up until they are in deep trouble. It is therefore very important to know how to adjust your trading strategy according to your needs.
How to evaluate trading Strategies in Binary Options
In conventional theory, the success of any trading strategy is determined by two factors:
- The percentage of winning trades you will have with this strategy, and
- The percentage you will win with each trade.
By multiplying both numbers, you will get your total winnings with this strategy. As long as the result is over 100, you will make money with this strategy. For example, if a strategy enables you to win 70% of your trades, and you get 1.7 times the invested amount with each winning trade, the result is 119%. The result is over 100, which means you will make money with this strategy.
This, however, only tells you whether or not your strategy will work. It does not tell you how fast it will work. If you’re strategy is to trade double tops and double bottoms in hourly charts, for example, you will probably only get one trading signal a day, even if you are monitoring dozens of assets and markets at the same time. Sometimes you will not even get a single signal a day. If you had been planning to make four or five trades each day, this will turn into a big problem for you. After some time, you will inevitably realize you need to be making more money.
How to adjust your trading strategy properly
There are a number of ways you can adjust your trading strategies in binary options without completely abandoning your original strategy. First of all, you can try to monitor more assets for signals. This is not always possible, and in most cases it cannot triple the number of signals you can find. If you are trading rare signals like double tops, you therefore have to look for other solutions. One possible option would be to switch to a smaller time frame. If you are currently trading an hourly time frame, you could get significantly more signals by switching to a 15-minute timeframe.
Keep in mind, though, that if your old strategy was working for you, almost every adjustment to generate more signals will lead to a reduced quality of each individual signal.
In other words: You will be able to invest in more trades, but you will win a smaller percentage of them. Still, if you triple the number of your signals, for example, and at same reduce the percentage of winning trades from 80% to 70%, this trade off is well worth it. On paper, your strategy might look worse than what you started out with, but over the course of a month you will make more money. In the end, that is the only number that matters.