Best Binary Options Trading Strategies

Best Binary Options Trading Strategies | As a binary options trader, there is a number of different strategies and options you can use. I would recommend trying several different strategies and then sticking with the most profitable. After you have learned how to utilize just one of the strategies efficiently, you can little by little increase your knowledge of the other ones and build them into your repertoire. By doing this, you will always have multiple options for getting as high a yield as you possibly can.

Binary options trading is like a bird’s eye view of the economy. It’s a type of trade where people predict the direction of a particular asset or the market in general. Just what makes binary options very appealing is that aside from their straightforward reward-risk factors, investors determine when the trading starts and stops. Binary Options might go as short as just sixty seconds to finalize a trade.

In spite of the straightforward reward-risk variables, binary options trading requires people to have good strategies to trade effectively. There are numerous kinds of trading strategies which I will look into, to give you a sharper view of what the strategies are like.

Get a binary option robot for free by clicking the button below!

Technical Analysis

Technical analysis entails the use of charts to be able to predict the price movements of assets. It really is, in practice, the basis for every price prediction. Without charts, it’s impossible to keep an eye on price movements. technical analysis simply means that whatever happened in the past is going to repeat itself again in the future because “the market remembers.” Because of this, it’s extremely important to look back and analyze candlestick chart patterns or other technical indicators that occurred in the past. There’s absolutely no shortcut to being good at technical analysis; only experience and mastering the application matters when looking at charts.

Techinical analysis is mostly numeric and done with all sort of graphs

Techinical analysis is mostly numeric and done with all sort of charts

 

Fundamental Analysis

If technical analysis entails the use of charts, fundamental analysis involves reading the business news or reports. Fundamental analysis is about studying the entire economic situation to speculate whether prices will shift or stay stable. Let us have a look at gold for example. Gold prices are declining now for numerous reasons. The U.S. Fed have just stopped their quantitative easing, this action is predicted to raise interest rates for the U.S. by next year – two major factors that push the precious yellow metal’s prices down now. Besides that, anxieties in Ukraine are diminishing now, and gold’s purpose as a hedge against political instability isn’t presently needed. Previously, when Germany decided to take home some of its gold reserves from the U.S., investors scrambled to make an investment in gold. They have deducted Germany’s repatriation program as the country’s way of getting ready for an economic disaster. Physical gold is utilized as a hedge against financial uncertainty, and so Germany is very well aware of that. Things like these which you hear in the news are important to know to judge whether or not gold values will go up or down within a particular timeframe. Real-time monitoring of communication can help investors make wise judgment calls in binary options.

The Martingale Strategy

martingale strategy

Martingale Strategy

The Martingale method used in binary options calls for investors to increase two-fold the amount of their initial capital at each loss until a profit is attained. It’s as simple as that. This kind of strategy possesses high risks compared to the gains since it requires investors to magnify their bets until their position becomes a winning one. The theory of the Martingale strategy is usually to offset losing trades of earlier bets until an investor achieves their target. If a trader predicts the price patterns incorrectly many times consecutively, their loss will be extremely large. Beginners should absolutely stay away from this binary options approach.

 

Correlation Analysis

This type of analysis when applied to binary options, concentrates on the relationship between the prices of two assets in various markets, both of which on average move in the same direction. The two assets have to be in markets that are interdependent to be used to conduct suitable correlation analysis. Crude oil, as well as EUR/USD currency pairs, are two assets used with correlation analysis as both assets go in the same direction which can be noticeable when monitoring the graphs.

The correlation analysis approach is employed when a forex trader waits for the perfect moment when the crude oil graph exhibits a delayed response close to expiry, the investor would then execute the trade based on the direction of EURO/USD relative to the present price of oil. In the event the EURO/USD pair moved in an uptrend and the price of oil did not change; the right prediction would be a “call” option. Correlation analysis is mainly plain and simple to use. Gold as well as S&P500 are other examples of two assets with a high price correlation that can be used with this strategy.

The Price Action Technique

Price action is a technical analysis approach that considers the relationship between the current asset’s value to its previous price value while the majority of technical analysis techniques focus on the values derived from that price value record. Price action trading is not going to take into account fundamental factors and is commonly used for short time periods. Simply put, price action takes into account how prices adjust.

In a perfect situation, as we study the candlestick graph, we are going to notice an unusual change in the pattern. We will then wait a little for the price level to increase above this point (support line) as soon as the price drops below the support line again; we would consequently enter a trade heading on the same course the graph is heading once it drops below the support line. Price action trading is used in lots of situations, and for you to use it well, it is important to familiarize yourself with candle stick Graphs. Learn more about using free online charts for binary options.

The Pivot Point Strategy

Pivot points are utilized by the industry’s professionals and big institutions operating with large investment pools, and it is not limited to day-trading. An interesting fact about this trading approach is that a lot of financial institutions are basing their positions on the same pivot point and buying and selling large volumes, which has a direct impact on the price changes of the assets. Retail-traders and individual investors must move into the trades at a similar time and direction to ride the same trends.

The pivot points are defined as ‘major support and resistance levels’ where there is a strong likelihood of a price turnabout and where the pattern would shift in the opposite direction. Pivot points, when applied to binary options trading, assist us as an entry / exit indicator.

A good example: Based on the pivot point probability table the EURO/USD upper pivot point is at 1.30650. Given this data, if at the given time-frame the cost of the pair of currencies gets to 1.30667 we must swiftly enter a “put” prediction as a ‘retracement of price’ is anticipated to come about as the price has risen above the upper pivot point. Pivot point calculation normally is a technical evaluation formula that requires the application of a calculator. Look at some of the links to cost-free web-based pivot point calculators.

Pivot strategy

Pivot strategy

Binary Option Pairs

In binary option pairs trading, you have two different trading assets, and you need to know if either value will rise versus the other within the desired interval. This is a particularly useful strategy in scenarios where you think that a specific event will raise the value of one trading commodity and decrease the value of another. Regardless of whether your guess is in part incorrect, and the value of both drops, it is possible to win if the asset that you initially thought would decline, in fact, falls even further.

gold vs silver

Gold vs. Silver is a popular trading pair

Long-Term Binary Options

This strategy is similar to stock investing. The termination time can vary from a couple of hours to several days and even months. This technique is my personal favorite. It is ideal for people who invest larger amounts of money and want to analyze the trading assets cautiously before making an investment.

 

Sixty-Second Binary Options

Sixty-second binary options are the exact opposite of long-term binary options. These are a short term form of investment. With sixty-second binary options the risks are significant, but if you learn how to generate income with them, the sky is the limit in terms of how much money it is possible for you to earn. Sixty-second options are suitable for traders who are in a position to accept the fact that if you need to gain a lot of money, you have to be ready to lose a lot once in a while.

One Touch Binary Options

If you are trading with one touch binary options, you will be making a profit when the rate goes above or below the established target price. The amazing aspect tends to be that once you hit the target price value, the investment will not go wrong, even if the value of the asset shifts in a different direction strongly after that.

The Ladder Trading Strategy

Ladder trading just as suggested by the name is a stepped approach. You have numerous levels, every one of which is paid a certain proportion of earnings. This form of investment is appropriate for those instances when the investor believes he understands which path the trading assets price will take, but is not sure of the amount of change there will be in the price and over what length of time.

 

Ladder strategy

Ladder trading

 

The Pinocchio Strategy

This is among the clearest and easiest techniques. When the price of the trading asset goes up, it is expected to fall next, and when the price of asset drops, it is projected to rise. The trader always invests in the complete opposite path of the market trend. The strategy operates with the assumption that markets often overreact to exclusive news, and for this reason, values will change dramatically for a short time, before stabilizing or rectifying themselves, in the end.

candlstick

Candlestick charts can be a very handy for individuals who use Pinocchio strategy.

 

Support and Resistance Lines Strategy

The support line is the point at which the value will not dip below whereas the resistance line is the point at which the value will not rise above. These often apply particularly to various commodities, such as the value of coffee or even sugar. Whenever values are entering a particular range within the framework, it is easy for the investor to benefit, as whenever the value is approaching one of the two levels it is most likely to go in the other direction soon.

Trend Strategy

Trend strategy is likewise a relatively easy strategy, as it is exquisite and functional, it is a technique that both beginners and experienced traders often use. In trend technique, you bank on the market trend; when it is rising, you put a “call” investment, however if it is descending, you put a “put” investment. You can use support as well as resistance lines for assistance to assess where the trend direction changes.

Reversal Strategy

The reversal strategy can be utilized with the trend trading approach. Although to implement this correctly some extent of technical analysis knowledge is required. It is said that what goes up will have to come down! That is where this strategy comes into play. The characteristics of trends (shown in the above paragraphs) are that they will ultimately even-out, or even reverse. Experienced and professional traders can predict with some precision, using graphs and charts, when a trend is likely to reverse – they will then continue earning money from the same asset if the trend they have been riding happens to do a U-turn.

The Geek’s Market Pressure Strategy

The market pressure, also known as buying and selling, is often measured in accumulation and distribution. This pressure is displayed by many A/D line indicators and is based on the Williams A/D Line Tool. A Williams A/D line is dependent completely on price action, it doesn’t include volume in the computation and results in a choppy line when compared to other A/D line tools like the Chaikin A/D line tool. This technique is trend following, it uses two tools aside from price action, including a thirty day shifting average. Support and resistance lines, Fibonaccis, moving averages as well as other tools may be incorporated and will merely help serve to cut down false alerts and whipsaws.

The first thing to do is to establish a trend. You can do this through a variety of methods and it shouldn’t be too complex. A cursory look at the charts may be sufficient, if you need trend lines, shifting averages or the A/D line itself may be used. If the price change is moving higher with time, presume an uptrend, in the case where it’s moving lower with time assume a downtrend, if prices are going sideways or explicitly range bound the trend is said to be sideways. Concerning the A/D line if it is above zero the pattern is positive, if it is below zero the trend is negative, when it is either positive or negative and shifting back towards the zero line the trend is considered neutral. In case, the trend is up, only trade “call” (bull alerts). If the trend is down, simply trade “put” (bear alerts). If the trend seems to be sideways, range-bound or is neutral you can trade both or either “call” and “put”, but be careful of breakouts and false alerts.

market pressure

The signal happens on any specific trend following a tick in the A/D line after a corrective shift. With regards to an uptrend, this is when prices drop to or below the moving average. In the case of a downtrend, this is when prices increase to or above the shifting average. In the event of a range-bound asset, you will want to trade “call” when prices are below the range or shifting higher and trade “put” when asset values reach the top of the range or are moving lower. The recommended expiry is three to five candles following the signal candle which means a day to a week depending on the charts you are using.

The Demerits of Geek’s Market Pressure Strategy

Accumulation / distribution lines are not commonly used to obtain trading alerts. The tool is most often utilized to help figure out a trend, trend strength and potential reversals. As a trendsetting indicator, it can be as useful as any, if it’s above zero the trend is in general positive, if it’s below zero the trend is in general negative. As a signal of reversal, it will be neutral. It provides divergences that can be an indication of reversals, but variation is a sketchy indicator to trade on regardless of the tool displaying it. In most cases these divergences can go on for quite some time before any kind of significant reversal occurs.

The Merits of Geek’s Market Pressure Strategy

It produces results, consistently. I don’t know how to put it any simpler. If used in a trend following scenario the wild nature of the tool is excellent for determining movements near their point of origin. This really is a significant improvement over most other patterns following strategies that only hope to capture the center portion of a movement, after the initial intense signal has long been fired. The inclusion of the moving average is an important step in this technique as well as one that helps seal its advantageous status.

The 4 Candles Technique

The  four candles strategy requires candlestick charts set on the hourly timeframe. In MetaTrader 4, click ‘Insert’, and then ‘Indicators’, ‘Oscillators’ and then add ‘Stochastic Oscillator’ with standard settings (5, 3, 3). Place the overbought limit to eighty and the oversold limit to twenty. Once your chart appears, it’s time to sketch resistance support ranges, two of them. On the hourly graph, identify the first four candles of the present day. The first candle from the four candles is usually the one that starts at the 00:00 time in MetaTrader (that’s 24:00) if you are trading the Forex market. Put simply, this is about four hours into a new market day which has started, on the hourly chart.

Hover the mouse on each of the four candles to establish which candle has reached the lowest and the top most point respectively. Go on drawing the two lines on your chart depending on the lowest price and the highest price touched by the four candles only, notice that candle wicks do continue to count. From this point onwards, it’s waiting time. You need to observe your charts (or just set an alert) so that when one candle touches one of your lines (upper or lower) you are ready to examine the charts.

As soon as any of the horizontal lines is reached, you must look at the Stochastic Oscillator for verification. If a candle has touched the top line, it implies that the Stochastic is going in the parallel direction (up) and should not be overbought. When a candle is touching the line below, Stochastic needs to be going down and should not be oversold. In case all these rules apply, you may scroll down to the M15 time-frame and make sure that a fifteen minute candle closes above or below one of your lines, this is the signal to enter.

 

4 candles

Notice that when the below line is crossed Stochastic is merely halfway down as well as moving in the same direction as the candles, down! From here, we move to the M15, and when the first fifteen minute candle closes below this line, we insert a “put” option.

 

Rules:

“Call” Option: If an hourly candle touches your top line on the hourly time-span and the Stochastic isn’t overbought you scroll right down to the M15 time-span then wait a little for a candle to close up above the line. The closing of this M15 candle is where you make an entry.

“Put” Option: If a hourly candle touches your lower line on the hourly time-span and the Stochastic isn’t oversold you scroll right down to the M15 time-frame and then wait for a candle to shut below the line. The closing of this M15 candle is the entry point.

Disadvantages of The Four Candles Technique

This approach is not suitable for beginners who do not have candlestick know-how and can’t sketch decent support and resistance ranges. Another issue is the fact that there is no idea about expiries, or whether or not it performs as well in greater or lesser time frames! This strategy is also time bound, suppose the first four candles of the day end up being passed? What does one do then? Wait for the next day?

Advantages of The Four Candles Technique

I consider this technique to be remarkable for several reasons. First, the assessment of the chart by making use of candlesticks doesn’t just depend on indicators. Second, it uses only one indicator that is the Stochastic Oscillator, a powerful and reliable tool. Next, it confirms breakouts plus keeps you in the direction of the trend by making use of more than just a single time frame. Fourth, you have an excellent chance of avoiding erroneous breakouts thereby helping you minimize your losses.

The Revolt Strategy

What does “The Revolt” Mean?

The revolt is a technique that attempts to pinpoint exhaustion within a trend. The blue line primarily represents the strength of buyers, while the red line represents the strength of sellers. When purchasers are capable of making new highs, the blue line will go up, and the red line will drop. The blue line rising indicates there is a lot of buyer power and purchasers are in control, though at what point have the buyers gone too deep and spent their momentum? It is in such instances that the sellers would revolt and take back the strength. Whenever the sellers are able to make new lows, the red line will go up, and the blue line will drop.

revolt

The Revolt is a technique that attempts to pinpoint exhaustion within a trend. The blue line rising indicates there is a lot of buyer power and purchasers are in control, though at what point have the buyers gone too deep and spent their momentum? It is in such instances that the sellers would revolt and take back the strength.

 

How the Revolt Technique Works

This technique is not time-frame reliant but bears a fairly short to medium expiry time zone relative to the timeframe being observed. Should you be looking at five minute periods of time, expect the move to be made in an hour or two. Should you be looking at daily periods, the move may take a month or so.

We’re making an attempt to pinpoint extreme power from one side of the market through the use of a fourteen period ADX as well as its component DI’s. In the event that the buyers happen to be extremely powerful, then it is assumed that the sellers were essentially quite weak. Therefore, this will be represented by the redline falling below ten. When the blue line drops below ten, we consider this to be a signal of buyer weakness. We then will enter a “call” trade when the buyers are at their very weakest as this will be the moment for the buyers to revolt. And of course, a “put” trade will be entered when the sellers are at their weakest.

revolt2

The signal for DI below level ten will be established by the Stochastic Oscillator (5,3,3). We are expecting a crossover in the overbought zone (80+) and the oversold zone (20-) at the same time since the DI’s are pointing to extreme weakness. Such will be the spots on the market in which revolt is most likely to take place.

 

The Cons of The Revolt Technique

This approach just does not work in some market environments. Particularly in trending markets. The seller weakness that ought to be a “put” signal could be more like a trick if the signal presents itself in an uptrend market situation. The “put” alert is only going to exist as a result of some momentary dip in the trend that will most likely reverse back into the uptrend. I would advise trading this system in ranging markets only, where you can define the way you see fit. I am not saying it is not a good idea to use this in trending areas; I am merely saying it’s more dangerous, therefore you should set the expirations on your trades to much shorter time frames.

The Pros of The Revolt Strategy

The system is advantageous for the reason that it uses easy yet practical reasoning as the principle for its trades. We put “call” trades at the time the sellers tend to have moved too far in their selling spree and the market has become oversold. We put “put” trades whenever the market is overbought. The simplicity allows traders to render quick decisions about their signals without getting a bunch of complex and confusing information. Just two indicators, that is it. We are simply subscribing to the revolution in instances of surplus.

Binary Hedging/Straddle Technique

The hedging / straddle binary options strategy is comprised of multiple trades on one asset in opposite directions. This forex strategy includes administration risk characteristics which prevent you having to deal with a full loss of your traded capital along with the significant opportunity to profit. The strategy is based on the presumption that “what has gone up, will come down”, hence, it works as below:

Step 1: Select your general direction: decide if you would like to invest in a “call” or a “put” option.

Step 2: Choose your main asset then invest according to the overall direction you had previously decided upon.

Step 3: As soon as the value of our underlying financial asset advances according to our predicted guess, you make an opposing investment. This is the trading strategy’s tipping point.

Even if the trade has taken a positive path traders should know that the possible danger of a sudden change in the asset’s general direction continuously lurks in their trades. The accepted solution here is always to make an investment in the opposite direction.

If in step 1, your general direction leads to putting an investment in a “call” option, then in step 3 you will invest in a “put” option. Consequently, you’re now trading both “call” and “put” options, thereby minimizing the danger of making a loss on all the options, and maximizing the chances of gaining from any one of them.

In other words, the hedging binary trading strategy assures that you will end up “in the money”- it’s risk control at its finest. All going well, you could end up enjoying benefits in the two trades even if by the end of the trade the market price of the asset was between the striking value of your first and second investments.

Conclusion

Applying strategies to your investments is critical for your overall success in binary options trading. Just as trades fluctuate, applying the appropriate binary options strategy is also a dynamic skill all traders really should master. To obtain minimal financial dangers, reach optimum trading flexibility and simplify the entire trading process, I have gathered above some of the top trading strategies used by today’s forex traders in the hope you will find them beneficial to your trading life.

Possessing a much better management of your binary option trading deals is essential to your understanding of the behavior of currency markets. The more you employ and observe these trading techniques, the higher the probability that any or all of your trades will be successful ones.

Get a binary option robot for free by clicking the button below!

References and Further Reading

  1. A New Look at Currency Investing, CFA
  2. Age-dependent investing: Optimal funding and investment strategies in defined contribution pension plans when members are rational life cycle financial planners
  3. Target-driven investing: Optimal investment strategies in defined contribution pension plans under loss aversion
  4. The Role of Health-Related Community Investing As a Strategy to Promote Active Living
  5. Stocks for the Long Run 5/E: The Definitive Guide to Financial Market Returns & Long-Term Investment Strategies
  6. The Investment Strategies of Sovereign Wealth Funds
  7. Quantifying Wikipedia Usage Patterns Before Stock Market Moves
  8. The social stratification of social risks: The relevance of class for social investment strategies
  9. Quantifying Trading Behavior in Financial Markets Using Google Trends
  10. Government spending, political cycles, and the cross section of stock returns
  11. Investors’ Horizons and the Amplification of Market Shocks
  12. Side-Stepping Fiduciary Issues in Negotiating Exit Strategies for Preferred Stock Investments after Trado
  13. Information Sharing and Stock Market Participation: Evidence from Extended Families
  14. Individual investors and financial disclosure
  15. Corporate Investment and Stock Market Listing: A Puzzle?The cross section of conditional mutual fund performance in European stock markets
  16. Stock Return Serial Dependence and Out-of-Sample Portfolio Performance
  17. Financial Advice and Stock Market Participation
  18. Contemporary Strategy Analysis
  19. Firm Characteristics and Stock Returns: The Role of Investment-Specific Shocks
  20. Improved AHP-group decision making for investment strategy selection
  21. Can Internet Search Queries Help to Predict Stock Market Volatility?
  22. Martingale Limit Theory and Its Application
  23. Martingale Spaces and InequalitiesInvesting strategies for a star industry: the case of Taiwan
  24. Volatility in Macroeconomics
  25. Optimal trading strategy and supply/demand dynamics
  26. Money or Mirage? Testing an Intraday Moving Average, Trading Strategy on Exchange Traded Funds
  27. Analysis of fractal trading strategy with the FTSE Bursa Malaysia KLCI
  28. Trading Strategy – More Trading, More Action, More To Come!
  29. Automatic Method for Stock Trading Strategy

botpopup