A Binary Trader's Toolkit

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Trader’s of binary options never really stop to think about the tools and equipment that they are using throughout their day-to-day trading activities. Beginner traders often think that they only need a binary options broker and some capital to get started, but these are just some of the essentials.

Are You Missing Anything from Your Arsenal?

If you are an aspiring trader, or even an experienced trader, then you need to develop your trading “arsenal” — the tools and equipment that you use daily to help you with your trading decisions, and to ultimately help you become a better trader over time.

We’ll start by discussing the essentials — the tools and equipment that you absolutely must have if you want to be a competent trader. We’ll then talk briefly about tools relating to mentorship, and then fundamental analysis, technical analysis, tools for trader development, and advanced tools and equipment.

The Essentials

A good broker and a bit of capital are just a few of the essentials that you need in order to become a competent trader. In the list below we’re going to break each “essential” down and explain each one:

Binary Broker - a broker is going to be your connection the markets, they connect you with other traders who are willing to take the other side of your trades. For this reason, a good broker is absolutely essential. Any broker won’t be good enough, you should look for one that appeals to your way of trading.

Capital - one major mistake that many new traders make is being undercapitalised, this means trading with not enough funds. A low four-figure sum is a good place to start.

Internet connection - a good internet connection is absolutely essential if you want to ensure that you get the best price. This is especially true with binary options, when trades are often kept open for just a few minutes at a time.

Backup connection - so you have a good internet connection, but what happens when they internet connection fails? They all do at some point. You should have a backup connection such as a mobile Wi-Fi hub or dongle, even your smartphone will suffice.

Computer / Laptop - traders don’t need to have the latest computer or laptop, but they do need to have a machine that is capable of easily running trading software. Pay special attention to your processor and your random access memory (RAM).

Blogs and Message Boards

Practically every trader will benefit from having a more experienced mentor who can guide them and offer them advice that they would otherwise have to learn through many mistakes. There is a slight problem though, it can be extremely difficult to actually find these mentors — some of them are easy to find, but definitely aren’t cheap.

This is why you should be active on a few blogs and message boards. These websites will act as a mentor to you and will provide you with a different perspective to the markets. A quick search on your favourite search engine for “binary options blogs”, “binary options message boards”, or “binary options forums” will bring up an abundance of results.

Tools for Fundamental Analysis

First and foremost, you should be using an economic calendar to help you with your fundamental analysis. An economic calendar will enable you to stay updated with upcoming economic events such as the following: consumer confidence, unemployment rate, new home sales, interest rates, GDP, and more.

News outlets (such as Bloomberg) are also very important, these will provide you with more information than economic calendar can. They will essentially keep you updated with more specific news such as news relating to companies.

Books and other learning material should also be in your trading arsenal. This will help you gain a good understanding of economics, both microeconomics and macroeconomics.

To conclude, you’ll want to use the following: an economic calendar, news outlets, and you’ll also want some learning material.

Tools for Technical Analysis

Technical analysis is just as important as fundamental analysis, which is why you should have just as many tools. Firstly, you’ll want a good charting platform such as MetaTrader 4 or MetaTrader 5. This is important because it helps you conduct technical analysis that can’t be conducted on your broker’s platform.

Predefined scans and signals are provided by websites and online platforms. They apply filters which will match certain stocks to your own trading methodology.

Stock research portals will allow you to conduct technical analysis on specific stocks. This could involve historic data, internal company data, and much more.

Backtesting software is important if you’re serious about using trading systems, especially those that use expert advisors (EAs). This software isn’t necessary, but can make backtesting much easier.

To conclude, you’ll want to use the following: a charting platform, predefined scans and signals, stock research portals, and backtesting software.

Tools for Trader Development

As a beginner or intermediate binary options trader, the only thing that you’re going to need for your trader development is some sort of mentorship (as we have discussed above) and a way to log and document your trades (i.e. a trading journal).

Now, there are two ways for you to start a trading journal: use the pen and paper method, or create a journal on your computer or laptop.

The pen and paper approach will be preferred by the “old-school” traders, but might not be the most efficient approach for traders who are scalping. If you do decide to go ahead with this approach though, make sure to get a good notebook. Document as much as you can about your trade (e.g. open rate, close rate, open time, close time, currency/stock, lot size) and also remember to note down your emotions throughout the trade.

If you decide to go with the electronic approach, the recommended way of doing this would be to use your word processor (such as Microsoft Word or Google Docs). Document everything that we discussed in the aforementioned section.

Equipment for More Advanced Binary Options Traders

When you become a more advanced trader, you’re going to need more advanced tools and equipment to help you develop and progress. The standard trading journal isn’t just going to cut it anymore.

Here are some advanced tools and equipment that more experienced traders should think about using:

Touchscreen monitors - It’s no secret that advanced traders use multiple monitors, but yet so few of them think to use touchscreen monitors. These can be very valuable as they can help minimize the clutter around your desk.

Screen recorder - Screen recording software can be installed onto your computer or laptop. It does exactly what it says on the tin, it records your screen! This helps you when your later reviewing your trades.

Webcam - A good quality webcam is important if you want to monitor your reactions throughout your trading day, remember that you want to stay calm and collected.

Portable heart rate monitor - it’s true, some traders will even use a portable heart rate monitor whilst their trading. They collect the readings and later analysis them with help from the webcam and screen recorder. These pieces of equipment work in harmony to help the trader control his/her emotions.

Closing Notes

Binary Options beginner traders will often overlook the amount of tools and equipment that can be used in order to advance their trading career and help them increase profits. It’s quite an easy aspect to overlook considering that you need to dig deep down and analyses every aspect of trading.

Hopefully the suggestions listed above will help you become a better trader and understand the arsenal that you need to develop in order to become a confident and proficient trader. The list is definitely not complete and there will probably be some pieces of equipment that you like to use specifically to help you, however, the list posted above is definitely a good place to start.