Published by Sebastian Preiss on March 3, 2016

Trend follower or swing trader strategies

When it comes to binary options strategy there are many important, defining choices you need to make. You can’t sit on the fence and say that you will be a risk taker, and risk averse at the same time. Nor can you be a trend follower and a swing trader all at once.

You have to decide what sort of trader you will be. Making choices like these will determine how you will approach binary trading as a whole. In other words, this is not something to take lightly.

Deciding on trend follower or swing trader strategies

When it comes to being a trend follower or a swing trader the differences are many, and they are important. We are talking about very different ways of looking at the market in search of money-making opportunities.

One method is not objectively better than the other. One does not offer you a better chance of making a long-term profit. But one will fit better with you. And this is the one you should choose. Learn more about trend follower or swing trader strategies in this article, where we outline what it means to be a trend follower, and what it means to be a swing trader.

Hopefully, you will find it easier to define yourself as a trader once you have digested this information.

Trend follower

The prices of assets often move in trends. These can be short-lived or long-lasting, move up or down, and have strong or weak momentum. By identifying what sort of a trend is ongoing, some traders will aim to make money by investing in binary options. Such traders will predict that the trend will continue and choose their option accordingly.

A trend follower can make numerous investments in one trend. For example, if a trend appears to be long-lasting and have strong momentum, there can be money to be made both in medium and longer term high/low options, as well as a touch option.

Identifying a trend can be done by using a battery of statistical tools, and different graphs and diagrams to represent the market. They include:

  • Moving average
  • Bollinger band
  • Trend lines
  • Support levels
  • Resistance levels

Please note that the market isn’t always in a trend. When no trend is defining the price movement of an asset, a trend follower will avoid the asset in question in his investments.

Swing trader

A swing trader will not invest in the direction of the trend. Instead, this sort of approach will focus on much smaller changes in price. Because even when a trend is ongoing, there will still be a lot of price fluctuations, up and down, within the trend. These zigzag patterns constitute trading opportunities for a swing trader.

Swing trading sees the market in shorter term than trend following. Here, it’s not the big, overall trend that matters, but the countless smaller, shorter fluctuations that occur constantly.

Because such swings happen constantly in the price of any asset that is traded at a substantial volume (and that is the case for all assets that form the basis of binary options), this form of trading offers many more trading opportunities than trend following.

Swing traders use many of the same technical indicators as listed above for trend followers above. But in this sort of trading momentum indicators are more important. They can help traders find out how much further a movement is likely to remain.

What to choose?

There are pros and cons of both these methods. You are not going to lose all your money if you go with one, or instantly become a millionaire with the other. It is more a case of finding out what’s the best fit.

Trend following can seem more rational to some people. It instinctively can seem safer to invest in the direction the market seems to be moving. This, of course, is not necessarily true, as constant fluctuations occur that can have huge impacts on short-term investments such as binary options. None the less, the feeling of doing what seems sensible can appeal to a lot of traders.

As for swing trading, this is an opportunity to trade a lot more actively. You are not simply going in the direction of the overall trend; you are looking for opportunities to make money within it. Swing trading offers more possible trades per day because swings occur also in periods when the market is not in a trend.

The choice is up to you!

Tell other people about this article...
Share on FacebookShare on Google+Tweet about this on TwitterPin on Pinterest