Your strategy in binary options is of course a very crucial part of making it as a successful trader.
It makes for a more efficient and skilled approach to online trading and critically provides direction when you need it. However, the strategy only pays dividends if you get it right. Because there is no textbook way finding success in binary options trading, much of the strategies are the intellectual products of individual traders who have devised them according to their own specific trading styles. There are also established strategies to consider but what really works is studying the market for yourself and devising your own game plan.
And having, devised your game plan, you will also need to test it to make sure it works properly. No strategy can be relied upon to work every single time but a really good strategy should be able reel in a profit up to nine times out of ten. Your testing needs to be extensive and thorough. We have lined up the why and how of testing your binary options trading strategy before playing by it.
Staying In the Game
Many traders would like binary options trading to be a long term source of income. However, that is not going to happen without a good trading strategy. Testing your strategy will help you determine if you can rely on it day in and day out to deliver consistent results and keep your account alive and thriving in the long run.
How to Test Your Strategy
Testing your strategy involves finding out your winning expectancy and then steadily tweaking it to churn out a bigger profit. Your winning expectancy is basically a combination of your win percentage and average revenue for each successful trade you make. Sounds fancy but it is really very simple. As long as the numbers are solid, all your strategy really needs to do is keep up or make them even better.
What You Can Use To Help With the Testing
The primary instrument you will need for testing is a demo account. The only problem with that is not all binary options brokers provide that option so it is important to look for it from the onset. The key difference between a demo account and a real account is that it already comes with funds for you to trade with instead of requiring your personal funds so there is no real financial risk on your part in trading with them. So it is the ideal setting for testing a new strategy and seeing how it performs in the market the same way it would if your real funds were at stake. The features of a demo account vary with each broker so it is necessary to study them beforehand and select the one with least amount of restraint as well as the highest amount of fake money.
Then there’s the large trading sample. For this manner of testing, you will need to consider a substantial number of trades upwards of fifty at least. Then carry out the test like this:
- Trade using a certain strategy for some time
- Make a note of all the results of every trade
- Calculate your winning expectancy
- If your winning expectancy is over 100, the strategy is a good one, or else make changes to it until it exceeds 100
Do You Need A Binary Options Strategy? Yes, its a good idea but not necessary. Rigorous testing of your binary options strategy is a key element to your success as a trader. It is also a continuous case of tweaking and adjusting and monitoring even after it has been proven to generate good results. With the right tools however, it should not be too demanding.