Choosing the Right Assets to Day Trade

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Video Transcription

Welcome to the first lesson of the Day Trading Binary Options course. On this lesson, we will teach you how to choose the right instrument to trade, and why it is important for you to choose the right instrument to trade if you want to become a profitable binary options day trader.

First of all, let’s start with the trading sessions worldwide. You need to understand that the decision to trade an asset is based on where you are located geographically, or what times of the day are you investing in binary options trading. So, let’s start with the Australian and Tokyo session. This session starts at zero GMT and 1:00 a.m. GMT, respectively, and goes on for six hours. During these sessions, you might want to focus on the Aussie dollar, the New Zealand dollar, the Japanese yen.

Of course, you can trade the euro, U.S. dollar, because it is the most liquid pair, and you might want to also try and trade Chinese stocks. I wouldn’t recommend to do it, because even though the strategy that you’re going to learn in this course is purely based on technical analysis, if you don’t understand the asset you are trading, your options will expire out of the money more times than they’re supposed to. So, let’s stick with the Aussie dollar, the New Zealand dollar, and the Japanese yen during the Australian and Japanese session.

The most important sessions of the trading day are the London and New York session. During the London session, you can start trading the FTSE 100, which is the index published by the Financial Times, that is composed of the 100 most important stocks of the London Stock Exchange. Some examples of these stocks are Vodafone, Unilever, Glaxo Smith Kline, etcetera. You can also trade the DAX. The DAX is the German index, and this index is composed of the 30 most important stocks of the Frankfurt Stock Exchange. Some of these stocks are Adidas, BMW, and the Deutschebank. And, of course, you can trade any currency pair during the London session.

When the New York session opens, it overlaps with the afternoon of the London session. This is where you will find the most liquidity in the markets, and you can trade every single asset. You can start trading the S&P 500, which is the most representative index of the actual market condition, and you can also trade the Dow Jones Industrial Average, with all of the price action of the 30 most traded companies of the New York Stock Exchange. And you can trade actual stocks, and any currency pair.

If you can trade during the London session or the New York session, it is the best time of the day to trade binary options. You will have access to more assets on your trading platform, and you can actually have more volatility, so you will have more setups, and you will have more trades to put on. And you can trade any major currency pair, and commodities. We suggest that you stick to gold and crude, which is light sweet crude oil. The indices are the FTSE 100, the DAX, the S&P 500, and the Dow Jones Industrial Average.

And, when it comes to stocks, please choose to trade high volume stocks. High volume stocks are stocks that trade at least one million shares per session. And these stocks are Citi, Google, Bank of America, IBM, Baidu, Yahoo, LinkedIn. If you choose to trade any other stock, you will be trading a very illiquid market, which means that two things can happen. One, there will be no movement in price, and your options will end up out of the money, and two, if you don’t understand how the stock market works, in a very illiquid market, a big order can move price very aggressively. And if you’re not prepared for these kinds of moves, we suggest you better stick with high volume stocks that are very liquid.

So, this is the end of lesson one. And throughout this course, you will learn everything you need to know to day trade binary options, from picking the right assets to trade, to how to apply the strategy. And a good thing about the strategy is that it’s applicable to any timeframes. So, you can trade a 15 minute option as well as the end of day expiration options.

Adam

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Adam is an experienced financial trader who writes about Forex trading, binary options, technical analysis and more.

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