In this video, Gail Mercer, founder of TradersHelpDesk, shows you the importance of managing binary options trades.
Managing Binary Options Trades
The advantage of trading with Nadex Binary Options is the ability to manage the trade. Instead of being an all or none binary option provider, Nadex allows traders to exit their trade prior to expiration. This gives traders an edge because if the market turns against their position they can exit with an even lower loss amount. This morning was a great example. Out of four trade signals, with proper trade identification and management, only one loss would have be suffered (EURJPY).
On the EURUSD binary option, price makes a lower low but the Stochastics shows significant divergence to the upside — take profits and run.
After entering on the USDJPY, a lower high is formed indicating that price did not have the strength to test the previous high — take profits or scratch the trade.
The GBPUSD signal came in after a higher low was formed. In other words, price did not have the strength to test the previous low before the signal was generated. Do not take the trade.
The EURJPY had no indications that the trade would fail and this is the only one that would have actually suffered the full loss.
On Thursday, I wrote a great article on whether traders should hold until expiration or exit early. Although it sounds easy, managing binary options trades is part of being a trader and a skill that all traders should strive to improve on.