One way of increasing your chances of making a profit is using a methodical and carefully planned strategy for trading in binary options. Remember, you should always maintain a realistic view and keep in mind that success is never a certainty.
What type of binary options trading strategies exist?
When it comes to binary options trading, there are two main categories:
First type: Betting models based strategies – these strategies, which heavily rely on using specific patterns and combinations of timing and investment amounts, will produce positive results regardless of the traders’ skills and experience in trading.
These betting models based strategies assume that traders can design their option buying strategies in a way that increases the probability of winning.
Second type: Strategies that are based on more efficient ways to predict the direction of the market. These strategies are usually based on technical and statistical evidence that may imply whether a certain market is going to move up (bullish market) or down (bearish market). Often, this analysis can be a very complicated thing to do, especially for a trader who has no prior experience or qualification in the field.
That is why, for binary trading, simpler methods of interpreting charts have been devised. Let’s examine the most commonly used ones.
Binary options simple strategy
Here, we are going to present an example of a simple binary options trading strategy from the “second type” of binary options strategies. It is intended to help the trader better predict the fluctuation of the market and increase the odds of picking options that will have good results. The strategy is based on the simple and most basic assumption that markets tend to correct themselves in the opposite direction after movements in one direction. This means that if, for example, the price went down in the last time frame, it is very likely that it will go up in the next one. One must always take into account that this is a rule of thumb and this will not happen in many cases, especially if there is a clear trend in the markets, but when the markets are calm and there is not much fluctuation, you may take this strategy as a strong indicator.
This technique is ideal for binary options since they usually have a small time frame.
Most likely, the trading platform you are using will display a chart that is relevant to the option’s time frame. In the case where an option expires in 15 min, you will see the chart as it was for the past 45 minutes, and then an empty chart for the remaining 15 minutes as you can see in the following illustration:
60 Minute Strategy
In cases where current price is higher than the opening price (as shown in the chart above) odds are that the price will go down. In this case you should buy a PUT option. In an opposite case where the opening price is higher than the current one, our simple strategy indicates that the market will go up and you should therefore buy a CALL option.
After you bought the PUT option (as is recommended in this example) you must wait for 15 minutes which is the expiry time in this case. When the expiry time is up, our chart will look like this:
Binary Options final chart
As shown in the example above, we can see the price went down to 79.6941, and that means the option generated a profit of 83% in 15 minutes. Further analysis shows that the price finished close to the opening value after a small increase following the tendency to normalize.
The outcome in the example above is more than likely to happen in most cases, although it is expected that a fair amount of trades will not have the same outcome.
You should also take into account, when using this strategy that in some cases the market is under the influence of some breaking financial news or a trend that can strongly affect it. In those instances, using such a simple strategy will not be helpful. Remember, the 60 minute strategy is recommended for times the market is calm and no earth shattering news are to be expected.
The high/ low binary options type of trading is considered to be one of the most popular trading strategies out there. As you have probably already guessed from its name, the goal here is simply to predict if the price of a certain asset will go higher or lower than the initial price. The time period in this type of trading is determined by the investor himself.
How to Trade High/Low Binary Options
The first thing to do is to choose a reliable broker. The following step consists of the selection of the asset you wish to invest in. Choose the most convenient expiry time and then make your prediction.
One of the reasons that this type of binary option trade is so popular is because it is very simple:
- Choose a reliable broker to trade high/low binary options with.
- Next step is to select the asset you want to invest in.
- Choose an expiry time.
- Make a prediction whether the asset will go higher or lower than its initial price.
If you think the asset’s price will rise, you should buy high options. If you think that the price will go down then you should buy low options. It is that simple and straight forward, and you can find this type of trade on almost any binary options platform.
Predicting the price, however, cannot be done randomly but should be based on a technical and fundamental analysis. A sound analysis will be the best basis for a trade to be a successful one.
The Importance of the Expiry Time
Setting the expiry time is a fundamental part of a high/low binary trade. If you predict the right movement for the price but do not have sufficient time for the action to follow through, you might lose the trade. Best thing to do is to choose a binary options broker that lets you set the expiry time yourself. Remember, even if you are permitted to set the expiry time yourself, there is no guarantee that the trade will be successful.
You can always learn a lot from paying close attention to the time frame chart. The candlestick duration is always a good indicator of a profitable expiry time. The same goes for giving extra attention to the different technical indicators such as the chart patterns and pivot point. By taking these indicators into special consideration, you increase your chances of setting an expiry time which will cause your trade to be a successful one and generate a reward.
As with everything, practice makes perfect, and high/low trading in binary options is no different. The more experience you gain in binary options trading, the better your results will be and you will be able to generate more profitable trades.
60 Second Strategy
How to trade 60 second binary options is probably the most repeated question regarding trading binary options so to start with, the concept we will be presenting here should be used as part of all your 1 minute trades. It will be even more effective when implemented as part of a broader strategy. If you use this strategy, you will almost surly become a better trader and make more successful trades.
The reason this strategy is so effective is that purchasing contracts in sets of three approximately 10 or 20 seconds apart “softens” the volatile nature and unpredictability that inherently exist in such short term contracts. This strategy will serve as an averaging mechanism which will balance out some of the randomness that tends to have such a deep effect on 60-second contracts.
A Simple Yet Effective 60 Seconds Binary Options Trading Strategy
- Should be integrated in all your 60 second strategies.
- All trades should consist of 3 contracts, purchased 10-25 seconds apart, and should be identical.
- Every contact in the series will be purchased for the same amount.
- The amount of volatility should determine the time you wait between purchases. The more volatile it gets, the longer should you wait between purchases.
- In most purchases, you should use the default spacing of 10 seconds.
- When there is particularly high volatility for your chosen asset, lengthen your intervals to between 15 and 25 seconds.
- The intervals you choose should never exceed 30 seconds, for this will cause your first contract to expire before your third contract is purchased.
- As long as these few simple guidelines are strictly upheld, the exact spacing will become less critical and as with everything, the more practice you get the better you will become at automatically adjusting the purchasing intervals to the volatility of your assets.
Although this is a very simple yet effective strategy, it is no magic recipe and there is no guarantee that trading 60-second options will make you instantly rich. But this strategy has been tried and tested by many traders in the past few years and there is a reason for its popularity. It really can help you improve your results in trading binary options especially if used as part of your broad 60 second trading strategy. So why don’t you give it a try and see for yourself: