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Options Trading Strategy for beginners

Options and cryptocurrency trader, specializes in forming simple strategies for consistent profits.

Double your money every 10 days or 10% profit everyday?

What would you prefer?

If you think about it, its actually the same thing written differently.

So what's the difference?

Difference is in the approach. When you say I want to double my money every 10 days, its a vague statement, you just have an ambition not knowing how to achieve it. But when you say I want to earn 10% profit everyday, you have set yourself small targets straight away and you are showing patience to achieve your ultimate goal. How to achieve that target is what we'll talk about in this article.

But before that, why am I talking about money management in an article about options trading?

I believe that trading is all about money management and being patient with it. Managing your profits and losses without any panic or anxiety makes you a good trader. Believing that you'll recover your money even after a setback or loss. Other than that, you need a good safe strategy to complement that. A strategy which gives you CONSISTENT PROFITS with MINIMUM RISKS.

Why trading strategy is necessary?

Without the proper know how of the market and trading, you may win occasionally, but overall you will only face losses. Trading is not simply guessing, whether the market will be up or down after certain time. There are important questions which need to be asked and analyzed…

  • Up or down???
  • What’s the trend???
  • Are there chances of trend reversal???
  • What should be the expiry time???

You cannot just guess all these answers and expect to get all of them right every time. So this requires you to understand the market if you really have to profit consistently from options. And thus comes a huge risk for the trading virgins out there.

So what do I have to offer to you...

I am not going to teach you about the market basics and all that technical crap… although what I am about to present to you requires you to understand some of the basics.. some very minor ones, which you may already know.

I am going to show you a trading technique which keeps the simplicity of trading for newbies and simply reduces the chances of losses and hence reduces the risk. I am going to show you a trading platform which combines the traditional trading methods with binary options trading. And then, I am going to show you how you can use the traditional day trading methods in binary options to earn consistent profits. I am going to show you how to increase the probability of getting all the above questions answered correctly and profit from most of your trades. And even if you don’t, you wont lose it all.

Lets set the expectations

Let me get you a little more excited by showing you the money at stake. If you start from the initial investment of $100, here are the profit levels that you will reach:

  • After 10 days – $200
  • After 20 days – $400
  • After 30 days – $800
  • After 40 days – $1600
  • After 50 days – $3200
  • After 60 days – $6400

If you consider 20 trading days in a month, you will have $6400 after 3 months. And once you reach 5000 mark, you just have to double it every 10 days to make a handsome $10000 easily and with MINIMUM RISK.

Trading is more about money management and being patient with it. Whatever I wrote above about converting $100 to $6400 in 60 days is just to get your attention and interest. In reality, although it is possible, it is too ambitious and will lead you to make mistakes. It will lead you to being more and more impatient and then making more mistakes. Remember, the best strategy in trading is good money management and patience.

What I recommend to my readers is to increase the investment month on month instead of every 10 days and stop increasing the investment once they feel impatient or insecure. So if you are starting with $100, considering 20 trading days in a month, earn a profit of $200 in first month and then double your investment the following month. This way you’ll earn $100,000 by the end of the year, starting with just $100 (again I have to highlight) with MINIMUM RISK.

So what is this gold mine of a strategy?

Lets get started

Firstly, whatever I am going to show you will require you to open an account with deriv.com. Deriv.com, formerly binary.com, a company of Regent Markets, is a very old and highly respectable broker. It is important to open an account with Deriv.com as they have some unique features required for my strategies. We’ll talk about these features when talking about each of the strategies.

Another important feature offered by Deriv.com is that they offer you to create a demo account without having to invest even a single penny. Once you are good to go, you can create a real account and deposit the real money. The minimum deposit amount is just 5$ and the minimum trade investment is just 1$.

Deriv.com offer 4 types of trades:

  1. Rise/Fall: The usual binary option trades where you have to predict whether the market will be up or down from the current level at the expiry time.
  2. High/Low: This is similar to Rise/Fall Trades except you yourself get to select the barrier instead of the default current level. The return profit percentage is adjusted according to the selected barrier and expiry time.
  3. Touch/No Touch: Here, you have to predict whether the market will touch or not touch the selected barrier before the expiry time. You yourself get to select the barrier. The return profit percentage is adjusted according to the selected barrier and expiry time.
  4. Multipliers: Multipliers is like traditional trading with a twist of binary options. You’ll have to predict the market direction to open a trade just like binary options, however there is no expiry time to be set. You can close your position any time and your profit/loss will be decided by whether the market was higher or lower from your entry point. If you select “Up”, you will earn profit by closing your position when the market price is higher than the entry spot. If you select “Down”, you will earn profit by closing your position when the market price is lower than the entry spot. Your profit is the percentage change in market price time your stake and multiplier of your choice. It also offer stop loss and take profit just like traditional trading.

My strategy is around Multipliers and I prefer to trade in forex.

Multipliers Trading Strategy

Lets understand Multipliers. Go to Trading app in Deriv.com and choose Multipliers option.

options-trading-simple-strategies-for-beginners

Asset

I prefer to trade on Forex as they are more stable assets, so I have selected EUR/USD.

Stake

You can add your stake from as minimum as $1. As I said I’ll be investing from $100.

Commission

Commission for the trade is shown under the stake which will be deducted as soon as you start the trade.

Stop Out

Stop out value is the price at which your potential loss is equal to the entire stake, so effectively it is equal to your stake. When you place the trade the Stop out level is also shown on the chart. When the market value reaches this level, your position will be closed automatically.

Multiplier

Multiplier value is the percentage of the original stake and have value from x50 to x500. Higher the multiplier value, more the profit. But also, more the commission and also the risk of reaching the Stop Out value faster. In order to understand the multiplier value, let me start a trade.

I started an “Up” trade with $100 Stake and x500 multiplier. The commission gets deducted from the stake so Current Value starts from (Stake – Commission). Recent positions are shown in the left window.

options-trading-simple-strategies-for-beginners

If you click on any position, contract details are shown. Here you can see entry point, current market value, stop out level on the chart. It also shows how your profit is calculated – “Win 500% of your stake for every 1% rise in EUR/USD”. This 500% is the x500 multiplier value that I had selected.

There is a Close button in the left window which closes the contract. I closed the contract when my total profit reached 11.22 i.e. more than 10% of my stake. Now lets see how the profit is calculated.

My entry point was 1.19903 and my closing point was 1.19940. So the asset rise was 1.19940-1.19903 = 0.00037 i.e. the percentage rise was 0.00037/1.19903*100 = 0.030858. Multiply it with the x500 multiplier i.e. 0.030858*500 = 15.43. Now, subtract the commission from this value 15.43-4.21 = 11.22.

If you are not good in maths dont worry, all this is just for information. What you need to worry about is setting the stake and checking the Total profit/loss and then closing the trade at right time.

Also, higher the multiplier you choose, the greater the risk as your stop out value gets closer to entry point. For beginners, you should start with x50 or x100 and then slowly increase the multiplier as you gain experience.


options-trading-simple-strategies-for-beginners

The details gives you the entry and exit point and time. If you see below it took 4 minutes to complete the trade gaining 10% profit. You’ll wonder if it takes only 4 minutes to make 10% profit you can make many more trades. Also you would say that as the price trend was up we could have waited longer and let the contract make more profit before closing it. And this is exactly where impatience and insecurity comes in. I will cover these points a little more in detail ahead.

options-trading-simple-strategies-for-beginners

Take profit

You can set this value to automatically close the contract when your profit is equal to or more than the set value. I would recommend to set this value to your target profit, so your contract ends automatically once you gain your target profit. This way, you are not tempted to wait a little longer to gain more profit.

Stop Loss

This is same as in traditional trading, your contract will close automatically if your loss is more than the set value. We have to be careful in using this as a value too close to the entry point may cause the contract to end with a loss, even though there was high chances of reversal. A value too far can cause you to lose a lot. If setting this value, I would recommend setting to 60 to 70% of the original stake.

When to close the trade?

This is the most important question in this form of trading.

Firstly, dont think it took just 4 minutes to gain 10% profit, so I can make a lot more trades and gain much more profit. The background work it took to choose this trade so that it gets completed in 4 minutes is a lot more. Also, most of the times, it will take much more time even to get to any profit value. Why I showed the trade which profited in 4 minutes is to show the potential of this type of trading. However, it usually takes a 3-5 hours to get 20% profit.

Secondly, set yourself a daily target. I set myself 10% as I work on it part time only, but you can set yourself 20% or 25% but I will not recommend more than 30%. As then you start becoming greedy and get impatient and make mistakes.

Thirdly, I would recommend that your target per trade should be 10% only. So if your daily target is 30%, make 3 trades in a day. This is because if you increase the target percentage per trade, your risk percentage also increases.

Lastly, choose your multiplier carefully. x500 gives you faster profit but it also means it can give you faster losses. Beginners should use x50 or x100 and dont overcompensate with more trades if you lose any trade.

As I said before, trading is about money management and being patient about it.

How to choose a trade?

I have talked about how to make the trades, the trading option to use for secure trading, how to manage your money and how to set yourself daily targets, now lets talk about something very important – how to choose a trade? How to identify which asset to trade on? I said I trade on Forex but which currency pair. This is the background work that you’ll have to do before making a trade.

But that will need another hub to explain in detail.

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