Today we will share our binary options trading strategy with you. This strategy is designed to help you determine if you are interested in binary trading and teaches you how to trade binary options properly. If you prefer safe play to gambling, you will need a strategy or tactics to help you master binary options and other trading activities. This is where our TSG team comes to the rescue. We will provide you with the best binary options strategy .
The main reason we are interested in learning about trading binary options is the fact that binaries simplify what we already do in Forex. At the same time, binary options also allow us to make more money in the process. We are also risk control .
Binary options are easy to understand. This is coming from someone with little or no experience in the area. If your favorite approach to forex trading is to jump into the fast price movement and follow the trend of the day as long as the momentum lasts, you can learn how to make money trading binary options very quickly.
When we first discovered binary, the light bulb in our heads turned on. We figured out the same thing we did in Forex can be done. But walk away with 75%, even 95% of trades winning because we just need to be on the right track. No need to worry about how many pips we can capture in the process.
And that, my friends, is the real beauty of binary options.
What are binary options?
Binary options are a form of derivative with a fixed profit or loss. Binary options trading is very simple. All you need to do is ask yourself a simple question or not. Will the price of the underlying asset be worth more than the strike price at the expiration date?
Now, let’s start by understanding how binary options work.
Basically, we can trade binary options for any kind of instrument. Whether it is commodities (Gold, Oil or Silver), Forex exchange currencies (EUR/USD, GBP/USD or USD/JPY) or stocks (Amazon, Tesla or Twitter).
So the first thing you need to decide is choosing an asset to trade.
Second, prior to submitting our transaction, each of these instruments has a current value at any given time. How to trade binary options depends on our trading skills. It is used to predict where the present value will be in the future. In other words, we must use our skills to predict the direction of the market. This will determine our success in binary options trading.
The market can only go up or down. If we believe the current value will increase in the near future, then we buy a Call option. On the other hand, if we believe the current value will decrease in the near future, we will buy a Put option. Read more about call option vs put option .
Third, we need to define what is the most important aspect of binary options trading. The expiry time will ultimately determine if you make a profit or not.
Binary options trading requires you to accurately forecast two things:
- Whether the market will rise or fall.
- Your forecast needs to be accurate within a certain time frame – known as expiry time.
If you go in the right direction of the market at the time of expiration, you will make a profit. Being wrong means you suffer a loss. The way binary options work is that if you go in the right direction of the market, you will get a percentage of what you originally invested.
Usually 75% to 95% and in some cases even 100% of your initial investment, depending on your Binary Options Broker.
Suppose we are wrong in the trade, then we will lose the whole invested amount in the short term.
We have created a beautiful infographic that highlights four steps on how to master binary options trading.
See below:
We will now focus on step two, which is how to predict price movements. If you manage to figure this out, then knowing how to make money trading binary options will be a piece of cake for you.
Now, before we outline a method on how to make money on binary options, we always recommend that you take a piece of paper and pen and make a note of the rules of the best binary options strategy .
In this demonstration, we will look at Purchase Calls.
Best binary options strategy
Our team at Trading Strategy Guide is ready to share with our favorite trading community our 60 second binary options strategy. Not only do we hope this strategy will make you money, we’re sure it will. The mathematical model behind this binary options trading strategy has a proven market edge.
The only tool you need for successful binary options trading is the RSI indicator .
Even the RSI is not good enough if it doesn’t have the right settings. The default setting of RSI needs a little tweaking if you want to master the 1-minute timeframe. We use the 3-period RSI to trade binary options profitably.
Naturally, a lower RSI period means that the indicator will tend to be noisier than usual. But it is more responsive to immediate price action. Along with the RSI settings adjustments, we also played around with overbought and oversold values. We have found that by using the 80 RSI for overbought and 20 RSI readings for oversold conditions, we get more accurate intraday trading signals.
*Note: Make sure you adjust your RSI settings before jumping into a binary options trading strategy.
By varying the overbought and oversold lines of the RSI, we have eliminated the noise. So now we are ready to highlight our binary options step by step guide:
Step #1: Find an instrument that shows the last 50 candles low. Using 60 second chart (1 min TF)
1 minute binary option or 60 second time frame is the best chart to trade binary options. In other words, the best binary option expiry time is the 60 second timeframe.
We recommend highlighting the starting point on your chart. And the end of the 50 candle low you have identified. Just draw two vertical lines on your chart through the start and end points of your 50 candles low.
When you count 50 candles low, you should always start from the current candle. Then go from the right side of your chart to the left side of your chart. If you manage to count 50 candles low, obviously the starting candle point will be your 50 candles low.
Moving forward, it’s time to put the RSI to use and spot if we’re overreading.
See below:
Step #2: At the time the 50 candle low develops, we need an RSI of 20 or less
Since this is a reversal trading strategy, we need the RSI to show a bullish reversal signal. An RSI below 20 indicates that the market is in oversold territory and it is likely to reverse.
In our example below, the EUR/USD 1-minute chart is satisfying two conditions.
Remember that to move to the next step, we need 50 candles low. We also need an RSI below 20 to happen at the same time.
We have added an element of confluence that needs to be satisfied. If used in conjunction with the two previous conditions, it will make you a binary options trader.
See below:
Step #3: Look for a bullish divergence to develop between the RSI and the price.
When trading reversals, you need to be as accurate as possible. The more confluence factors are in your favor, the more accurate the reversal signal will be.
What we need to see here is that the price continues to fall after the low of the 50 candle is identified. At the same time, we need the RSI to move higher in the opposite direction.
If the price moves in one direction and the momentum indicator moves in the opposite direction, it means they are diverging from each other. This signals a potential reversal signal.
Now it’s time to highlight how to find the right entry point for a binary options trading strategy.
See below:
Step #4: Buy a Call Option after the first candle closes above the high of the 50 low
The first thing you need to do is mark on your chart the high of the 50 candles low with a horizontal line. The first candlestick formation that crosses this high is your trading signal to buy a 60 Second Call option.
It’s that simple!
After you decide on the amount to invest and choose 60 seconds as your expiration time, it’s time to sit back and wait 1 minute before hoping to take your profits.
Step #5: You take profit if the next candle closes higher than your trigger candle
If at the time of expiration the price is higher than the price you opened the Call binary option at, then you are in luck because you are about to sign up for a big payout.
For example, if you have invested $1,000 and your binary options broker offers you an 85% payout, it means that you have correctly predicted the outcome of a trade. You get back your initial investment of $1,000 plus an 85% payout which in our case was $850 profit.
If you want to buy Put Binary Option, use the same binary options guide, but in reverse.
See below:
Conclusion – Binary Options Trading Strategy
Before learning how to make money trading binary options, you need a great Binary Options broker. You cannot start running home right out of the gate without making sure you have a binary options broker who wants you to succeed. Second, you need a strategy-based trading technique to reveal the direction of the market. You only need to forecast whether the price will go up or down in the next 60 seconds, making it very convenient.
We use a heuristic approach to speculate on how the price will move over the next 60 seconds. At the end of the day, traders are looking for a reliable binary options system that will help them make money trading.
The good news is that the best binary options strategy is exactly that system. Our team is made up of many experienced traders in the industry, including binary options traders, who know how to make winning trades. We are ready to help you every step of the way.