Every soldier going to war must be properly armed, and while no bullets are fired in the financial markets, it is a combative market. The financial markets are a zero-sum arena; what is made and lost by traders in the market is from within the market players and not from outside. Profits made are generated from traders who have lost money.
Since the market is a combative one in a figurative sense, it then follows that those who have superior firepower in the market will obviously have greater advantages than those who use smaller caliber weaponry. So as the number of traders in the binary options market increases, so is the competition for the trading profits in the zero-sum market.
To be able to survive the battle in this front, the trader must be armed with the tools that will ensure success. Here is a list of some of the trading tools that today's binary options traders should have in their kitty.
Basic tools that are a must for every trader
There are areas of the world where these general tools are in abundance and are there before taken for granted. But in many places of the world where binary options traders are located, some of these tools are expensive to acquire and not readily available. These tools are hardware directly used for trading, and include:
- Smartphones and tablet devices
- Broadband internet facilities.
Why do binary options traders need these tools? Smartphones and tablet devices are very handy for taking trades on the go. You can imagine being in the restaurant and seeing a very good trade opportunity. This is where the trading app of your broker comes in readily to enable you pick up some quick trades when away from your trading stations.
The use of broadband internet ensures that pricing and news data can get into your platforms very quickly. You also need fast internet connection to ensure that your trade orders are executed in a timely fashion, especially when one single pip can make all the difference between success and failure.
If you live in an area where power supply is not constant, such as in various parts of Africa, Latin America or Eastern Europe, you will need to ensure you have a solar-powered laptop so that you can always have your trading station up and running with energy which never goes to sleep. Once you have gotten the basic tools, it is time to move on to the specialized tools.
More advanced tools
Under the advanced tools, you will need access to the following:
- MT4 trading platform (or similar software, ie. ThinkorSwim)
Interactive Charts are a necessity for every binary options trader. Many binary options platforms do not have charts that can be used for meaningful technical analysis. Most of the charts found on these platforms are simple line charts which can not serve to tell a trader whether the chart will go up or down, nor do they support line studies or the placement of indicators which many traders use as part of their technical analysis. Therefore, the trader must either get charts from established Forex platforms, or get them from third party providers.
- Access to market moving news
Many trades will require access to market moving information.A classical example is a news release regarding Alcoa, which signed a deal with Ford Motors for orders or its aluminum product for car parts. This deal will obviously open new opportunities for Alcoa and bring in new business for the company. Such news will please investors and therefore a quick analysis of the stock asset will point to only one direction: UP. A binary options trader who traded this news on market open would have profited from it as the 1 hour opening candle opened at 9.35 and closed at 9.69. Access to a news server would have made this possible, so an MT4 platform with a news server is quite useful. If you are able to afford subscription fees for premium news servers such as those from Thompson Reuters or Bloomberg, these will do just fine as well.
- The Economic News Calendar
The Economic News Calendar points to specific news releases as well as the date and times of release of each news item. Think of the Economic News Calendar as an event planner. It helps the trader plan trades around news events. The scheduling of each news event also helps the trader know when not to be in the market if his trading system does not include news.
- Indicators and Expert Advisers
Indicators have gradually come into the mix in terms of what tools traders can use to execute trades either manually or automatically. These indicators come in different formats, but some of the popular ones are designed as MT4 bridges and are connected to MT4 platforms and built to communicate with the web-based platforms. There are also versions of indicators which are strictly web-based and are built as browser extensions to connect with the web-based platforms.
So in a nutshell, if you are a trader wishing to start off in binary options with the right tools, you should have the following:
- A trading desk which has been setup with two laptops or two desks with visual display units joined together. One should be used for analysis and the other used for trade executions.
- A broadband internet modem, preferably a 4G network if your country has started to operate on this band.
- A source of uninterrupted power supply if you live in a country where power outages are frequent.
- A smartphone or tablet device with a memory of at least 2G RAM or even higher if possible to increase the speed of your processor. Of course the broker's trading application should be downloaded and setup on the device.
- A news service.
- Charting software
- A trading strategy which works