Four Reasons to Watch the Markets
There is a time to act, and there is a time to wait. Actually, a lot of action takes the form of simple observation. Novice traders often dive into trading thinking that trading is all about placing trades. In reality, trading effectively is about picking out diamonds from a field of coal. And learning how to do that well takes a lot of time, effort, and expertise. And there is really only one way to develop that expertise, and that is to spend a lot of time watching the markets.
Do you have a charting platform, like MetaTrader 4? No? Your first step to becoming a more successful binary options trader is to get one. Even though you will probably continue to place trades directly on your broker’s binary options platform, you cannot expect to learn much watching the really basic charts that your broker displays for you. You need to watch the markets with professional charting software (don’t worry; the programs on the page I linked to above are free) so that you can really see what is going on. Here are four reasons to consider setting aside some time each day to simply observe.
1. Get very good at reading charts and reading them fast.
When you are a newbie, brand new to binary options, you will probably be baffled when you look at your charts for a while. You may be especially confused by the relationship between higher and lower timeframes. The good news is that the more time you spend each day simply watching the charts as the bars form, the stronger your intuitive understanding of the charts will become. You will eventually learn to read the language of the bars. Instead of seeing a bunch of colored bars, you will begin seeing patterns. And then instead of seeing patterns, you will start seeing the movements underlying the patterns.
The ability to read the charts like a book is important no matter what types of trades you place. The ability to do it quickly and accurately is even more essential if you are planning on doing 60-second trades and other short-term options, since you will have to act fast when you spot setups. Otherwise the opportunities will be gone before you can analyze and interpret them.
2. Discover assets you feel comfortable with.
How many assets does your binary options broker allow you to trade? A lot of brokers give you the opportunity to trade from 40 or more assets. Some brokers may very well offer you over 100 different stocks, indices, currencies, and commodities. Only by watching charts for different assets can you figure out which assets you actually should trade. You may find some assets are routinely choppy or have a lot of whipsaws—or no movement at all. Over time you will identify financial instruments which provide you with enough movement to profit but are not as likely to throw you unwanted surprises.
3. Learn about context.
One of the toughest aspects of trading for a lot of people is understanding the context surrounding a trade setup—which actually should be considered an essential part of the setup. Traders get good at spotting indicators that line up or price patterns that form, but may lack awareness of the bigger picture. They may not understand what is going on with the market overall, and as a result, they may not see how the setup fits into that bigger picture.
The context may change the meaning of the indicators or the price pattern, which is why it is vital to learn to understand the markets on a broader scale. The more you watch the charts, the more you will learn about context, and the easier it will be for you to tell when you have a solid framework for a trade and when you do not—even if the actual setup looks identical at first glance. In one context, it may be a setup, but in another, it may be meaningless or even misleading. Learn about price pivots points as well here.
4. Establish good habits.
If you want to succeed at trading binary options, you will need to cultivate a lot of good daily habits which you can maintain over the long term. Scheduling time to watch the markets every day—whether simply to observe, or also to trade—is one good habit you can establish early on. Even before you begin trading (demo testing or with real money), you can start watching the market at the same time each day. Use that as a bedrock for establishing other good habits every day.
When you are first starting out with binary options, simply watching the charts scroll every day will be one of your most effective learning tools. You cannot read up on binary options or watch video tutorials and expect to understand the markets if you are not observing them. Observing the charts allows you to put that knowledge into play in a real-life environment and see what it looks like firsthand. The more you watch and analyze, the more intuitive the markets will become to you, and the more you will eventually understand about why your own trading system works, and what a truly great setup looks like. This is the key to winning over the short term and the long term!
Apply these qualities to your own trading life