Welcome to our Binary Options Strategies section, here you will find beginners guides to lead strategies, more advanced information on things like money management and articles on specific strategies.
Basic strategies for successful trading
Strategy is one of the most important factors in successful binary options trading, it is the framework you use to make trading decisions, including your money management rules and how to make money from the market. The Grail doesn’t have one, if we have it, we’ll use it all!
The two most important basic types of strategies are:
- basic
- academic
Fundamental strategies focus on the fundamental health of companies, indices, markets and the economy and, while important to understand, do not matter to binary options in terms of trading techniques.
Technical trading or technical analysis is the process of measuring charts and price movements, looking for patterns and making predictions, studying predictions from those measurements and patterns.
The strategy simplifies your trading without taking the guesswork out of choosing entries and reducing overall risk.
The definition of the text book reads like this: Action plan designed to achieve goals or targets by combining the art of planning and controlling operations to achieve victory When it comes to trading the goals are 1) make money and 2) Money is not wasted
The number one way of achieving this is by using a rule based method of selecting entries based on the tried and true technical analysis indicator age. There are dozens, if not thousands, of trading methods. All strategies market They can be classified in terms of the instruments used, the time frame that determines the amount of risk involved, and these other methods primarily.
- Price Action/Scalping Strategies – Price Action Strategies are based on market movements to enter time, these can be trend following or not, long term or short term and take bullish or bearish positions.
- Trend Following / Directional Strategies – A trend following strategy targets trending assets to identify a series of profitable entries with a high success rate.
- Down/short strategy – 99% of the time the market or individual asset is not trending. Instead, trading during highs and lows, these strategies focus on support and resistance, reversals within ranges and short-term trends as asset prices move up or down from support and resistance and vice versa.
- Long Term / Momentum Strategies – These strategies are less risky as they target stronger signals and longer time frames. But it takes longer to develop and takes longer to open than other types of signals.
Technical analysis indicators are usually mathematical formulas that convert price action into an easy-to-read visual format. Common types of indicators include but are not limited to moving averages, trendlines, support and resistance oscillators. Japanese lanterns and candlesticks
financial management
The strategy is 1 of the 2 pillars of risk management, the other is money management, you can control your risk by only targeting good signals, eliminating bad signals clearly and not spending a lot of money on trading. This will wipe your account once.
Money management is total control of your trading fund, it should clarify trade size and long-term money management, a well-thought-out money management structure should simplify:
- trade size
- risk management
- future growth
- tension
Traders with a clear financial plan should not worry about whether they can trade tomorrow or if their trade size is correct or whether they will grow their investment in line with their progress. All decisions are governed by overall capital management with a clear plan.
Read more about money management.
Japanese candlestick
This is the most common way to view price charts, candlesticks provide an easy-to-read view of the open, low and high prices, closing the chart in a way that no other charting pattern can. They form the basis of most price action strategies and can be used to provide signals as well as confirm other indicators.
Read more about candlestick strategies.
Support and resistance
This is the portion of the price action on the asset chart that tends to stop when price reaches support when price stops falling, this happens when buyers step into the market and are said to be the “lowest”. The “support price” encounters resistance when the price stops rising, this happens when sellers enter the market. (or missing buyers) and being said to be These areas, often represented by horizontal lines, are good targets for entries and possible areas where price action may reverse.
Trend line
These lines connect the highs and lows formed by the asset price as it moves up, down and sideways. A series of higher lows and higher highs is considered an uptrend and a signal that the price is trending. To move higher, a series of lower highs and lower lows is considered a downtrend and a signal that prices are likely to move lower. The beginning of the following strategy
Moving average
Moving averages take the average price of an asset over X number of days and then convert those values into lines on the price chart.Moving averages come in many forms and are commonly used to determine trends, provide targets for support and resistance and to identify. The list contains dozens of methods for finding the most common moving averages, including simple moving averages, exponential moving averages, volume weighted moving averages, and many others. They can be used on any time frame. and set it to any timeframe for multiple timeframe analysis and to provide crossover signals.
Oscillators
Oscillators are perhaps the largest indicators used for technical analysis, they include tools such as MACD, stochastic, RSI, and many others. Combined to determine market conditions, they are represented as standalone tools, usually lines with intervals between two extremes or above and below the midpoint that can help determine the trend, direction of support/resistance, strength of Momentum market and entry signals
Trading Psychology
With all forms of trading, psychology can play a big role.Lack of confidence can mean missed trades or underinvestment in winning trades.The other end of the spectrum of high confidence can lead to trading. Excess or increased risk, one of which can quickly clear the account.
Therefore, the trader’s trading psychology is very important, it can also be actively controlled or manipulated. (At least admittedly) is another trading skill that is often overlooked.
Read more about trading psychology and learning from experience.
Basic Binary Options Strategy
Here is an example of some basic rules for binary options strategies.
- Trends are your friend, only get the following trends.
- In an uptrend only when prices are near support, in a downtrend only when prices are near resistance.
- When the price is near support/resistance wait for confirmation candlestick signal.
- Once the candlestick appears, wait for the Stochastic and/or MACD signal, wait for a bullish or bearish crossover in a bearish frame.
- When meeting rules 1 to 4, enter trades using only 3% of the account on each trade.
- When choosing expiry use 2XCandle length IE if you use 1 minute candle then 2 minute expiration, if 1 hour candle then 2 hour expiry.
- If the trade fails check why it is not working, make adjustments if necessary and move on to the next trade if the trade moves to the next trade.
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Choosing a trading strategy
Developing a trading strategy for the binary options market requires a critical understanding of how the market operates in terms of available trade contracts, different expiration times, and understanding the behavior of individual assets.
Unlike the forex market where assets have to move in one direction or the other by an appreciable amount of pips to the trader’s favor before making a profit, the binary options market is bizarre. Aside from the Up/Down trade, which is directional and mimics the terms of trading in other markets (except pip movement), other trade types in the Binary Options market operate in completely different ways. Different trading contracts for different platforms Some binary options contracts do not even require the trader to get the direction of the asset right, for example trading the OUT contract will require the asset to hit. one price range or the other to take profit, so the trader can identify the appropriate trading contracts so that the appropriate strategy can be formulated, what is used to trade up/down contracts is not the same as what would be used for entry/exit contract types. will determine the strategy
For example, trading up/down contracts would require a strategy that could determine whether the asset would be bullish or bearish; trading an entry/down contract would require a range trading strategy or a breakout trading strategy to identify when. The asset is still in range or breaks out of that range.If you are looking to develop a trading strategy for In/Out trading, this is where your mind should be working.
In developing a strategy based on the binary options trading type to trade, there are tools that can help traders, this is where chart patterns, signal services, candlesticks and technical indicators will come in. It is a simple tool like the pivot point calculator that can be used as part of a contact trading strategy with very effective results.Using a tool like this leads us to the next part of choosing a strategy which is how. Understanding and expiration times
Understanding the expiration time
Expiry times are important to binary options as all trades in this market have time limits. However, not all binary options trades require time limits to succeed. Trades such as the Up/Up trade. In contrast, trades such as the OUT component of the trade area or the TOUCH component of the High Yield Touch or Touch/No Touch contract must not expire before the trade result is known. If the trader bets on the TOUCH outcome and the asset touches the strike price before the expiration time, the trade outcome is known and the trade ends with a profit.
So if the trader is not good at setting expiration times/dates (and really no trader in the market that can boast of his expiration settings all the time here) binary options trading strategy. must be adapted to the contract of sale which does not all depend on expiration.
Now, when you identify and separate trades that are not subject to expiration from those that are, you can better understand the strategy you are looking for.
Understand asset behavior
The binary options market combines assets from different asset classes into one market, these assets do not work the same, some assets are very volatile due to large intraday movements, a very clear example is gold. Not all binary options are traded all the time. But only over time, like stock indices, the factors that can cause big moves in stock indices are not the same for commodities or currencies, even within the same asset class, no two instruments are exactly the same or behave the same. things
Understanding asset behavior is therefore key to developing a trading strategy for the market, it is up to the trader to study the behavior of the asset, understand the technical and fundamental indicators that will influence the behavior and price movement of the asset. Then create a trading strategy that will work for that asset.
Demonstration
In this section, we will demonstrate the use of all the parameters we have discussed above using a simple trading strategy. but effective
– The strategy we will use to price bullishness/bearishness, so we will exchange Call/Put contracts.
– We will trade the strategy on an hourly chart so it will have an hourly expiration time We do this using the understanding that the effect we want to trade on the hourly chart will happen in one hour.
– We want to use this with liquid assets and respond to the strategy, so we will use EURUSD.
This strategy is used to create a color coded indicator showing green arrows on bullish signals and red arrows for bearish signals.It is intended to trade the EURUSD because this currency responds well to price stimuli during London. / New York overlaps in the forex time zone and responses can be sent in an hour.
As soon as the red arrow appeared (as shown above) The signal will trade the PUT option on the digital CALL/PUT option. Using this signal, the trade was executed on the binary options platform. where signals are generated to expire resulting in our favored trading results.
This strategy (custom strategy) satisfies all our conditions:
a) It is suitable for trading contracts in the binary options market.
b) It is an ideal strategy to help traders use appropriate expiration.
c) It fits the behavior of the asset and above all the strategy is a profitable one.