What do we expect from a good trading strategy? Profitability, usability, security of our funds? Actually, it has to include it all, but finding the can be a really long term process.
Scale trading is one of the most popular trading techniques. Quite often it is described by the professionals as the “can’t lose” strategy, but don’t rush into trading with it right away, because it will be as profitable as you are skilful
The basics are pretty simple: if you see that the price is already going your way, open more trades to increase your earnings.
There are certain advantages in scale trading, which can suit you well:
When you divide your investments into the smaller amounts, risks become considerably smaller. For instance, in case of sudden changes in the price movement, you will lose only a small amount of your funds, instead of losing it all.
Buying more options during the correlation periods allows increasing of your total profit, especially when the trend is stable.
In the same time, there are a couple of negative moments, which has to be taken into consideration:
If your prediction is incorrect, your total loss will be heavier than the one that you could have get by entering the market without scaling.
Random buying of additional options can also result in eliminating of all the advantages of your current profit.
Still, have doubts about whether or not you should use it? Let’s say that you’ve decided that it is time to buy a call long term option. When and most importantly how to choose which additional options you need to buy with it?
First of all, you need to know that opening trades with the trend can be quite risky. That’s why scale order has to be bought during the price correlation periods. The best way to determine it is by using technical analysis tools. Understanding of support and resistance lines won’t take much time, but can provide you with the best trading opportunities. One of the best moments to open new trades is when the price of your asset gets back to the resistance level. Also, it’s important that your additional options will share the same expiration time with the one that you have bought first. This way all your options will be working as one and for the same goal.
What makes scale trading really interesting for binary options traders is its flexibility and the ability to adjust it to the current trading situation. Instead of opening one big trade, you can divide it into parts and open new trades in the same direction, if a situation seems profitable.
Trading becomes easier with the developed approach and scale trading is definitely worth checking out!
Try these strategies on our Demo!