Fixed time trading is a straightforward concept that involves predicting whether a price will rise or fall within an agreed time period. It can be applied to a variety of markets including forex, cryptos, stocks and indices, but can rapidly descend into gambling without a considered strategy. Applying research and technical analysis can give traders the edge they need to make fixed time trading profitable.
In this article, we cover the meaning of fixed time trading, followed by a guide on how to develop the best trading strategies. We’ll also cover how to select a platform, what to trade, and technical analysis techniques.
What Is Fixed Time Trading?
Fixed time trading requires a prediction about whether the price of an asset will increase or decrease within a fixed period. It therefore falls under the definition of binary options, which involves choosing between two outcomes with a time expiry.
If the prediction is correct, the trader will receive the initial investment back plus a bonus. If not, the trader will lose the initial investment. Because the bonus is stated upfront, the potential outcomes are known before completing the trade, unlike other types of trading where profits and losses are variable.
Fixed time trading is a simple trading method that can offer high returns.
Understand The Potential Returns And Risks
As mentioned earlier, the returns and risks of fixed time trading are defined by the broker.Understand the potential returns and risks before placing a trade, and consider the likelihood of a correct prediction versus the potential loss.
5.Analyze The Market
Before making a prediction, analyze the market using technical and fundamental analysis.Look for patterns and trends in price movements, and consider external factors such as news and events that may impact the market.
6.Place The Trade
Once you have analyzed the market and made a prediction, it’s time to place the trade.Place the trade with your selected broker and wait for the expiry time to see if your prediction was correct.
Overall, fixed time trading can be a profitable way to invest, but it requires discipline, analysis, and risk management to be successful.
Select The Price Direction
This will be based on your analysis of whether you predict the price will increase or decrease when entering the trade (strike price) to the time expiry.
Once the trade is confirmed, it’s a waiting game to see if the prediction was correct. However, some brokers now offer the option to alter the trade after investment. This can include ending the trade early, extending the trade, or placing more money into the trade (for example if you become more confident that you will make a profit). The potential reward will be updated accordingly.
Choosing A Fixed Time Trading Broker
The first thing to establish when trading is which broker to use. Here we summarise the key elements to consider when searching for the best providers.
High-quality desktop platforms and mobile apps are essential when fixed time trading. They should have good technical analysis tools including charts and indicators, with intuitive interfaces that you can confidently navigate.
Potential profits are set by the dealer and will therefore vary between brokers. Compare potential percentage returns as well as any fees to ensure they won’t wipe out your profits. Also check minimum deposit requirements to ensure they are appropriate for your investment level.
Check if the broker offers a demo account. This is a great way to practice fixed time trading using virtual funds, while getting familiar with the platform environment.
Fixed Time Trading Strategies
Fixed time trading shouldn’t be a gamble, so use technical analysis to make informed trading decisions.
Here we cover some example strategies.
One of the simplest ways to carry out fixed time trading is to take advantage of short-term trends.For example, find an uptrend using candlesticks, then open an ‘up’ position.An uptrend occurs when each candlestick peak is higher than the previous peak, and each trough is higher than the previous trough.
For more in-depth analysis, use a technical indicator.The Directional Movement Indicator (DMI) is one of the best indicators for fixed time trading.This is because it can indicate the strength of a trend, suggesting whether it will be sustainable or not.
The DMI is formed of three lines:
- The Average Directional Index (ADX) – The ADX is used to quantify the strength of the trend, but is independent of the trend direction
- The DI+ Line – This is the positive directional movement line
- The DI- Line – This is the negative directional movement line
The signals to look for when fixed time trading are an ADX above 25.This indicates a very strong trend, but needs to be used in combination with the DI lines to determine whether the trend is upwards or downwards.
It is advisable to avoid ADX readings below 25 when engaging in fixed time trading.
Subsequently, observe the DI+ and DI- lines. If the DI+ line surpasses the DI- line, it implies an uptrend.
Displayed below is an illustration of a robust uptrend, confirmed by the DI+ (blue line), DI- (black line), and ADX (red line), which remained above 25 throughout.
Pointers for Fixed Time Trading
Below are some valuable tips for beginners seeking to venture into fixed time trading:
- Only invest a small percentage of your capital per trade. As each trade holds the potential of losing the entire investment, losses can accumulate quickly.
- Commence fixed time trading with longer-term time scales. This will make the process less overwhelming initially.
- Establish trading limits and adhere to them. This involves the number of trades per day and investment amount. These should be based on the amount you are willing to lose, assuming you predict all your trades incorrectly.
- Make use of online resources, courses, and books to research the asset you are trading or to learn about fixed time trading.
- Check for expected news announcements regarding the asset you are trading, including company reports and central bank updates.
- This will allow you to plan your strategy accordingly.
Is Fixed Time Trading Legal?
Fixed time trading is legal, though banned by regulatory authorities in some countries. For example, the ESMA in the EU and FCA in the UK ban fixed time trading for retail traders. Retail traders would be able to use an unregulated broker in these locations, but this comes with the limited protection of funds. A better option is to use a broker regulated outside the UK or EU, providing the regulator is reputable.
Similarly, fixed time trading brokers cannot be based in India according to SEBI, but Indians could participate in fixed time trading using a broker located outside of India.
Forex Trading Vs Fixed Time Trading
While forex trading and fixed time trading involve predicting the future price of an asset, forex trading does not have a set time period. This means the trader has the flexibility to sell at any point, which has the potential to be at any price. Forex prices are also partly based on market conditions whereas fixed time trading returns are defined by the broker.
Final Word On Fixed Time Trading
Fixed time trading is one of the easiest investing concepts to understand, but requires quality research and analysis to be executed successfully. Whilst it can result in large returns even in quiet markets, it also requires discipline to avoid losing large amounts of money in a short period.
What Is Fixed Time Trading?
Fixed time trading is a method where traders predict whether a price will rise or fall within a set time period.
If the trader makes the correct prediction, they will receive their initial investment back along with a bonus percentage. However, if their prediction is incorrect, they will lose their original investment.