Binary Options Strategy – Strategy Guide

 

 

Strategy Guide

When trading binary options, a winning strategy requires a strategy that wins more trades than it loses, and the most important thing is in payout more than loss . Digital trading often pays out at less than 100% of the invested amount – so simply winning more trades than you lose may not necessarily be enough for long-term profits.

The art of profitable binary trading shares some similarities with the world of sports betting. The important feature linking the two firms is expectation . Long term profit trading binaries can only be taken when the expectation (theoretical profit in any trade) leads to a positive expectation from that trade.

Therefore, the binary options trading strategy is used to identify repeating trends and circumstances in which a trade can be executed with a positive (profitable) expectation. It can be as simple as;

• If asset ‘X’ drops in value for three consecutive sessions, open a call option for the duration of the next session .

The above is an extremely simple example of a trading ‘strategy’. Strategies don’t need to be overly complicated (although they can be), sometimes the simplest strategies work best.

Types of trading strategies

There is a wide range of techniques that can be used to define a binary options strategy. New investors may want to explore all of them – each of them potentially profitable when used properly.

In addition to the basic, or traditional, types of trading strategies outlined above, there are also alternative methods;

• Technical analysis charts and charts (chart analysis and other technical indicators ) are often considered first when discussing strategy. Much has been written about the trends and patterns commonly found in price charts and many of these can translate directly into trading strategies. Retaining a simple strategy while trying to dive into technical analysis isn’t always easy, but it does provide a route to some insights that may not be immediately obvious elsewhere.
• Fundamentals – Analysis of the fundamentals is almost a prerequisite for almost any type of investment or trading. However, with binary options trading, the time scale is often too short for the fundamentals to change the price in the expected direction. There are still some binary options trading that can be gleaned from the study of the fundamentals, and that is another potential route to a successful strategy. Especially long term options. Some brokers now offer one and two month expiry dates so this form of strategy is much more realistic.

See why price action is important.

Benefits of a good trading strategy

A good binary trading strategy will greatly simplify decision making about where and when to trade. With  time  being key to everything trading is about, the less guesswork around entry and exit points, the better. Particularly for inexperienced traders.

A repeat strategy will always highlight trading opportunities, in other cases the majority of those openings will be missed. Strategies encourage discipline, manage aid money, and provide the clearest predictor of positive expectations. While it is possible for traders to profit from binary options without a strategy, it gets exponentially harder.

New traders will also simply benefit from trying to build their own binary options trading strategy. Once you’ve taken the time to analyze the different methods and build a strategy from scratch. It is much easier to evaluate the strategies offered by others. Without an initial background in the art of trading strategies, it is easy to get intoxicated by the promise of unprecedented wealth using someone else’s expensive software or trading strategies.

A demo account can be a good place to start testing binary options trading strategies without risking capital. Read our full list of demo account brokers  here.

Top brokers:

Elements of a profitable strategy

There are three elements of binary strategy that every trader must know. In this article, we present each type of strategy and examples for beginners and advanced traders.

Specifically, you will learn:

• What kind of binary options strategy is there?
• Why do I need a trading strategy?
• Why do I need a money management strategy?
• Why do I need an analysis and improvement strategy?
• With this information, you will immediately be able to choose the strategies that work for you and become a successful binary options trader.

Choosing a Sub-Strategy

To create a successful binary options strategy, you must combine three sub-strategies:

• Trading strategies
• Money management strategy
• An analysis and improvement strategy.

Each of these strategies does a very specific thing for you. To be successful, you need all three. If you lack one, the other two become useless.

Let’s take a look at each sub-strategy type and see how you can find the right one.

Why use strategy?

The trading strategy is the most famous type of sub-strategy for binary options. It is so well known that many traders make the mistake of thinking that it is the only strategy they need. But more on this later. For now, let’s focus on how you can find a good trading strategy.

Trading strategies help you find profitable investment opportunities. It determines which assets you analyze, how you analyze them and how your signals are generated.

For example, a trading strategy might determine that you only trade major currency pairs from 8am to 12am, you use a 15-minute price chart, and you invest when the 10-period moving average and the Money Flow Index (MFI) both point in the same direction – for example, the moving average should point up and the MFI should be in the oversold zone or vice versa.

The big advantage of such a deterministic strategy is that it makes your trades repeatable – you always make the same decisions in the same situation.

Investment value

This way of trading is extremely important to your success because binary options is a numbers game. Financial investing, in general, involves the risk of losing trades, but the short time frames of binary options are particularly erratic. You can never be completely sure what will happen next. Even the best traders will only win 70 to 80 percent of their trades, those with high paying strategies can even make a profit with a win rate of 30 percent.

Successful trading does not mean always being right. It means frequent enough to be profitable. Think of a flip coin. When you win 50 percent of your trades and get double your investment on winning trades, you know you will break even after 100 flips. If there is some way for you to increase your win rate to 60%, however, you know that you will make money. The same applies if there is a way to increase your payout. Your trading strategy does exactly this for your binary options trading.

Attack Rate

When you trade high/low options, for example, you can expect an average payout of 70 to 75 percent. This means you need to win 60 percent of your trades to make money. Trading strategies help you identify situations where you know that if you always invest according to your strategy, you will win at least 60 percent of your trades and make a profit.

Without a specific trading strategy, you will never know if you will win enough trades to make a profit. On some days you may get lucky and make a lot of money, but on other days you will lose half of your account balance. Sooner or later, you will have a bad day and lose all your money.

With a trading strategy, you can avoid such a disaster. A trading strategy is an important foundation of long-term trading success.

 

 

Why use Money Management?

Money management strategy is the second foundation of your trading success. To understand its purpose, let’s go back to the coin flip example. Even if you have a strategy that gets the odds in your favor, such as by ensuring that you win 60 percent of the flips, this strategy will lead to disaster if you always bet all your money on each flip. You may get your first win, but you will soon lose a flip, and all your money will be gone.

To prevent bankruptcy, you must limit your investments. This is the first purpose of a money management strategy.
The second purpose is to help you tailor your investment to your abilities. Let’s go back to the coin flip with a strategy that will help you win 60 percent of your trades and look at some money management strategies that are likely to fail:

• Always invest the same amount. If you start with £100 and invest £1 per trade, you will make great profits from the start. You’ll also have enough room to survive a string of bad luck. However, as your account balance grows, your investment will soon become too small. Once you hit the £1,000 mark, for example, winning a £1 trade will hardly make a difference. The problem with this type of money management is that it doesn’t grow with you.
• Invest the way you feel. Some traders change their investments based on their intuition. When they feel or have won their last trade, they invest more. This strategy is dangerous because losses are heavier than wins. When these traders lost a few trades in a row and invested a little more in these trades, they lost a large percentage of their total account balance. They have to significantly reduce their investment, which makes it difficult for them to get it back. Step by step, they lost more and more money. The holes they dig themselves will always be bigger than your ability to get out of them.
• Invest more after a loss. Some traders increase their investment after a loss, for example by doubling their investment. They hope to eventually win a trade, make a profit, and start the cycle again. Such strategies work great – until they fail. Even if you choose a very small starting investment, binary options allow you to make so many trades that you will be broke within a year.

Lessons in bank management

What can we learn from the examples of failed strategies? There are three lessons:

1. You need to adjust your investment to the overall account balance.
2. You must have an accurate definition of how much you invest and increase your investment relative to your overall account balance.
3. You have to reduce investment after losing trades and increase after winning trades.

To meet all three of these criteria, a good money management strategy always invests a small percentage of your total account balance, ideally 2 to 5%. For example, if you decide to invest 2% on each trade, you will invest £2 with an account balance of £100. If your account balance grows to £200 you will invest £4 per trade and so on.

Whether you should invest 2% or 5% on each trade depends on your risk tolerance and strategy. Investing more can make you more money, but losing streaks costs more. We recommend using a demo account to find the right settings for you.

Strategy analysis and improvement

An analysis and improvement strategy is the most overlooked sub-strategy you need. It helps you find weaknesses in your trading and improve over time. Without an analysis and improvement strategy, long-term success is at least difficult, if not impossible.

When you get started in binary options, you still have a lot to learn. That means you have to try different strategies, change the parameters of each and improve. This sounds simple, but it can be difficult to figure out what works for you and what doesn’t. There are so many variables that it’s nearly impossible to connect all the dots.

Without an analytical and innovative strategy, newcomers will lose themselves in the endless complexity of trading. An analysis and improvement strategy makes this complexity manageable.

Definitive analysis

There is no exact definition of what your analysis and improvement strategy will look like, but by far the most popular method is to use a trading log. In your transaction log, you note every aspect of your decision. After you invest, you write down the indicators you used, which timeframes, which assets and expirations. You also write down your position, your mood, time of day and your trading device. After the transaction is over, you note the result.

After a while, you can analyze your logs. You may find that you have won more trades in the morning than in the afternoon, that you are a better trader with your phone than with your PC, or that you can interpret the moving average more efficiently than with candle formation.

Spot trends to identify strengths and weaknesses

Regardless of what you find, the results help you focus on the elements of your trading and money management strategy that work for you and leave everything else out. You will get better and better, and eventually, you will be good enough to make a profit. Keep writing in your journal, and you’ll be able to spot mistakes creeping in before they cost you a lot of money.

In theory, anything could be your transaction log. Some traders take screenshots, others keep an Excel file, and some write old-fashioned books. Choose the diary that’s right for you, and you’ll be fine.

Conclusion of sub-strategy

A binary options strategy is your guide to successful trading. While it may seem difficult at first to find the right strategy, with the right information, things are quite simple. You need a trading strategy, money management strategy and analysis and improvement strategy, and you should be fine.

Examples of specific strategies:

Expiration 60 seconds

This basic strategy aimed at 60 seconds (Listed as a 1 minute option at some brokers) goes like this:

1. Find support and resistance levels in the market where short-term bounces are possible. Pivot points and Fibonacci retracement levels can be especially helpful, just as they are on other timeframes while trading long-term instruments.

2. Make a trade setup on the first touch of the level. When you are trading assets with a high level of ‘noise’. I believe having higher trading volume can really work to your advantage. 60 seconds/1 minute transactions definitely fall into this category.

For those unfamiliar with this form of analysis on long term expiry: The advice is to look for an initial rejection of the marked price before trading. So marking support and resistance is very important. If it rejects the level, this further confirms the strength of the price level. Transactions on any subsequent contact . This will result in a lower volume of executed trades in exchange for higher accuracy trades. The first touch is not transacted, but is used to confirm later transactions. So less transactions, but more accurate.

60 second trades leads to higher trading volume

Since the noise inherent in every 60 second trade is huge to begin with, I believe that trading more often can actually work to the trader’s benefit. In it, it helps to eliminate the exact fluctuations that appear when trading in such short term expiry times.

The overall accuracy of the ‘for money’ transaction will decrease. This means a lower expected value from each transaction. Higher volume, however, can compensate.

For example, 100 trades with an expected profit of 1.25 will return 125 (Profit 25). But 200 trades with a lower value, say 1.18, would net 236 (Profit 36). So lower strike rate does not always mean lower profit if more trades can be found in the same time.

Let us have a different view. If you are trading 60 seconds options and only make 1-2 trades in a 4+ hour session (i.e. extremely conservative). It is very likely that you will wait a long time before your true level of trading skill becomes apparent.

I can be that you are not profitable using the 60 second option. It is better to find that out sooner rather than later.

3. Don’t blindly trade all touches of support and resistance. Keep looking at  price action  (e.g. candlestick types and shapes), trend direction and momentum. Also open to ‘gut feeling’. Your trading experience will continue to evolve and your ‘feel’ for the market will improve. Sometimes, those instincts can outweigh any other signals. But remember that many trading lessons are learned the hard way – with losing trades.

Momentum strategy

Momentum is an important indicator of the speed at which an asset’s price moves. For binary options traders, it can be a great way to find trading opportunities and a useful tool for choosing the right type of binary option for the current market environment.

What is a transient strategy?

Momentum is a technical indicator that compares the price of an asset now with the price in the past. There are different ways to calculate momentum:

1. Absolute . This way compares current prices with past prices and ignores everything in between. The most common absolute interpretation is the momentum indicator, which compares the previous period’s closing price with the previous 14 period’s closing price (you can also choose any other number, but 14 is the default setting).
2. Orientation process . This way of momentum analysis looks at every period and calculates how far the average period has moved. Many technical indicators calculate this value in slightly different ways, but the most common of them is the Average True Range.
3. Relative . Several indicators compare a market’s current momentum with historical averages. These indicators help you understand whether the current market environment is more suitable for binary options types that generate higher payouts but require strong movements (for example, one-touch options or options. ladder) or for low risk options that can win trades with smaller movements but generate lower payouts.

Most of the time, these indicators show their results as a percentage value of average momentum, with 100 being the underlying indicator. Similar metrics, but also very different. Let’s see how you can use them to trade binary options.

 

 

How can I trade a transient strategy

Binary options offer some great strategies for momentum trading. The simplest of them uses momentum indicators and boundary options.

Boundary options are a great way to trade momentum because they are the only option type that allows you to win a trade on momentum alone. Boundary options define two target prices, one above the current market price and one below the price. Both target prices are equally far away and you win your selection as soon as the market touches one of the target prices.

This means it doesn’t matter when the market moves, as long as it moves. Momentum can help you make this prediction. Assume that an asset is trading for £100. Your broker gives you a boundary option with price targets at £99 and £101 and as you adjust your momentum to meet the expiry it reads 2.

Now you know that the market has moved twice as far in the recent past as it will have to move to win your boundary options. This seems like a good investment opportunity. If momentum is only 0.5, you know it’s going to be a bad time to invest.

5 minute strategy

A good 5 minute strategy is one of the best ways to trade binary options. To get it right, there are a few things you need to know.

What is the 5 minute strategy?

The 5 minute strategy is a binary options trading strategy with a duration of 5 minutes. While there are thousands of possible 5-minute strategies, there are a few criteria that can help you determine the ideal ones for you. In the eyes of many traders, the 5-minute expiry is the sweet spot of the shelf life.

• The market doesn’t move randomly like on shorter timeframes, which reduces your risk.
• You can still make multiple trades in a day, which increases your earning potential.

The 5-minute time limit is as short as possible but as long as necessary. The 5-minute strategy allows you to take advantage of this perfect connection. Let’s take a look at two possible 5-minute strategies. Strategy 1: Trade MFI extremes with high/low options With one exception, all 5 minute strategies are based on technical analysis.

For the next 5 minutes, the fundamental effects are inconsequential – for example, no stock will go up because the company behind it is doing well. The only thing that matters is the relationship between supply and demand on the stock exchange that traders are currently buying or selling on. Technical analysis is the only way to understand this relationship. One of the technical indicators that can best describe the relationship between supply and demand is the Money Flow Index (MFI). The MFI compares the number of properties sold with the number of assets purchased and generates a value between 0 and 100.

• When the MFI reads 0, everyone who wants to trade the asset wants to sell it.
• When the MFI reads 100, everyone who wants to trade the asset wants to buy it.
• When the MFI reads 50, the number of traders who want to sell the asset is exactly equal to the number of traders who want to buy it.

The relationship between buying and selling traders allows you to understand what will happen to the price of the next asset. Since price is determined by supply and demand, a strong movement where too many people have bought or sold exhausts one side of this relationship. The market has to turn around.

• When too many traders have bought an asset, there are too few traders left to push the market up. Demand will dry up, and the market will fall.
• When too many traders have sold an asset, there are too few traders left to push the market down. Supply will dry up, and the market will rise.

MFI helps you identify these situations:

• When the MFI reaches a value above 80, the market is overbought. It will probably start to drop soon.
• When the MFI reaches a value below 20, the market is oversold. It will probably start rising soon.

Binary Options offers you the ideal tool to trade this prediction:

• Invest in a low option when the MFI reaches a value above 80.
• Invest in a high option when the MFI reaches a value below 20.

This strategy works especially great as a 5 minute strategy. During long-term trends (a year or so), MFIs are often in overbought or underbought areas for long periods of time. The fundamental influence is strong on these timeframes and could continue to push the market in the same direction for years. On shorter timeframes, the fundamental effect is not important. It is more important to determine how many traders are left to buy or sell an asset and draw the right conclusions from this guide.

MFI is the perfect tool for this diagnosis and binary options are the ideal way to trade it.

5 Minute Strategy 2: News Trading

If you are uncomfortable with a strategy that uses only math for your predictions, there is an alternative to the technical analysis that is the basis of the 5-minute strategy: news trading. When important news hits the market, there is usually a quick, powerful response. You can trade this reaction with a high/low option, a one touch option or a ladder option, depending on your preference and risk tolerance. This strategy works as well as the 5 minute strategy because longer expiry faces the threat of other events affecting the market and causing price changes. In the next 5 minutes after the release of important news, however, you can be sure that the news will dominate the market.

Rainbow Strategy

Rainbow strategy for binary options combines sophisticated predictions with simple signals. It is ideal for traders who want to increase their profits using a proven, successful strategy.

What is the rainbow strategy?

A rainbow strategy is a three moving average crossover strategy. Most traders use a different color for each moving average, hence the rainbow͛ strategy. The idea behind the rainbow strategy is very simple. Moving averages that use multiple periods for their calculations take longer to react to price changes than moving averages that use less time.

Therefore, in a strong movement, multiple moving averages should be stocked from slowest to fastest in the direction of the current market price.

• The fastest moving average should be closest to the current market price.
• The second fastest moving average should be the second closest to the current market price and so on.

When you see multiple moving averages stacked in the right way you know that the market has a strong sense of direction and now is a good time to invest. This is the basic logic of the rainbow strategy. Theoretically, you can use as many moving averages as you want for this strategy, but the rainbow strategy uses three. Three is a good sweet spot as it keeps things precise but simple enough to handle.

Adding more indicators will not produce a significant increase in accuracy, but using just two moving averages will be much less accurate without simplifying things. These three moving averages determine when you invest.

• When the shortest moving average is higher than the longest moving average, you invest in rising prices.
• When the shortest moving average is below the longest moving average, you invest in falling prices.

You can use any number of times for each moving average. There are two rules of thumb you should at least consider, though:

1. Double the number of periods for each moving average. For example, if your fastest moving average uses 5 periods, use 10 and 20 for the slower periods. This ratio ensures that the moving averages are different enough to produce meaningful signals but similar enough to generate several.
2. Use common values. A trading week has five days, which is why using multiples of five is a good idea for this strategy. These values help you to see the same trading opportunities as other traders, which increases the supply and demand that others will create to your advantage.

 

 

How to trade rainbow strategy with digital options

To trade the rainbow strategy with binary options, you have to wait for your moving averages to be in the right order. When that happens, you have three options for when to invest:

1. Invest now. Some traders invest immediately when the last moving average position arranges itself in the correct order. This way of trading, the rainbow strategy generates the most signals, that’s why it offers the highest potential but also the highest risk.
2. Wait a while. Some traders wait if the moving average stays in order until the next period ends. If so, you have lost little time but gained a lot of security because you know that this signal is more than the result of a sideways movement.
3. Wait two or more times. Some traders wait until two or more periods have confirmed the signal. However, waiting too long will reduce the accuracy of your signals as the market may have already started to turn. We recommend waiting no more than three periods or ignoring the signal. You can trade this strategy with high/low options, one touch options or ladder options. The high/low option is the safest way; ladder option has the highest potential. Decide which type of binary option is right for you based on your personality, especially your risk tolerance.

End of the day strategy

End of day strategies for binary options can find you profitable trading opportunities while requiring only a very limited time investment.

End of the day strategy explained

The end of day strategy is not a strategy that tells you which signals to use and many strategies tell you when to look for a signal. The strategy assumes that the best time of day to trade is at the end of the day.

The end of the trading day shows some unique characteristics. This is mainly due to the fact that day traders stop trading when a stock exchange is about to close.

Day traders are traders who never hold positions overnight. They invest in the short term and argue that a lot can happen overnight, which is why it is unwise to hold a position during this time.

Since there are so many day traders out there, their absence reduces trading volume significantly. The market is a bit slower and does things that can’t be done any other time of the day. Traders with end-of-day strategies wait for this environment, arguing that the signals are clearer and the trading opportunities are better.

End of the day trading options

While you could theoretically trade any trading strategy at the end of the trading day, there are a few strategies that work especially well during this time. Let’s take a look at their most profitable: closing gap trading.

Special close gaps can occur during times of low volume, which is why the end of the trading day is the best time of the day to trade them. Accurate predictions on closing gaps make them especially attractive to traders of higher payout types of binary options such as one-touch options.

A gap is a jump in price action. For example, if an asset trades at £100 and jumps to £100.1 without covering the range in between (doesn’t trade at £100.01, £100.02, etc.), it will creates a 0.1 table gap.

Depending on how this gap is created, it can mean different things. A gap accompanied by a large volume is likely the result of important news coming to the market, perhaps starting a new strong movement. However, near the end of the trading day, such gaps almost never occur.

Instead, what we find are gaps that are likely to close.

Near the end of the trading day, there are so few traders left in the market that a few traders, maybe even a single trader, are enough to make the market jump. The resulting vulnerabilities are weak because they are the result of one’s decisions. Most other traders would consider the advance unwarranted and invest in the opposite direction:

• If the gap points upwards, most traders would consider the new price too high. They will sell their property.
• If the gap points down, most traders would consider the new price too low. They will buy new properties.

For both reasons, gaps that occur near the end of the day are likely to close.

This knowledge allows you to trade a one-touch option. When your broker offers you a one-touch option with a target price within the range of the gap, you know that the market will likely hit this target price. If the expiration is reasonable, too, the investment.

Alternatively, you can also trade high/low options predicting closing distances.

Expiration Strategy

Baseline shelf life

I learned a long time ago how to gauge the duration of a given signal. Well before I start trading binary options. Here I will explain how to develop an expiry strategy. The first thing to do is determine what your signal is. Is:

• bouncing trend line
• random crossing
• change in momentum
• candlestick pattern
• or a combination

Once done, you go back to your chart for a certain period of time and identify all the signals. The timeframe doesn’t matter at this point, this technique works in all. Mark strong signals and weak signals. Now count how many bars or candles are needed for each signal to move into money.

Once that’s done, you can take the average  of the required number of bars. Both for strong people and for weak signals to move into money. These averages now have an expiration date for your baseline. If you are using an hourly price chart and your signal takes an average of 3.7 candles to move into the money, you will want to use an expiry date that coincides with that time. This can be a mid day, end of day, 4 o’clock or other option. Whatever expires in accordance with your signal horizon. If the signals take 3.7 candles and you are using daily chart that means 3.7 days. If using the hourly chart, that means 3.7 hours and so on.

Study the chart below. I will use a basic moving average strategy to demonstrate. I will use a 30 bar exponential moving average. It hugs the price closer than a simple moving average and will give us more signals to count.

 

 

Also, to eliminate the bad signals and improve the results, I choose only the uptrend according to the signals. So there are 15 total signals. 6 signals are weaker and 9 signals are stronger. On average, it took 4.2 bars for these signals to move into the money and reach the top.

That means, since this is an hourly chart, each signal will turn to profit and peak of that movement in about 4 hours. So when it expires, I want to choose the closest to 4 hours. If a good option is not available then no trade can be comfortably executed. Don’t try and force trading in the wrong places.

Breaking it down a bit, weak signals peak in about 2.6 hours compared to stronger signals. Stronger signal takes about 5.3 hours. To put this knowledge in perspective, a weaker signal could be a signal close to resistance. A stronger signal could be one that is not close to the resistance level. Alternatively, a stronger signal could be one where the price action produces a long and decisive white candle moving above or from the moving averages while a weaker signal could only produce negative signals. Small candle and spinning top.

Additional Tips for Choosing Expiry Binary Options

Choosing the expiry date is one of the most important factors for making a trade. The other important factor is direction. I often get questions about why a trade goes bad in the last moments. One of the most common areas of error I find is in choosing expiration.

Of course there can also be errors in analysis, trends or random events. But the focus of this discussion is expiration. Obviously you don’t want to use 60 second expiry when trading on weekly charts. Obviously, you wouldn’t want to use end-of-day expiry when trading in the 60 second chart. So how do you determine what the best expiration would be?

One question you must ask yourself is: if you are trading with or against the trend.

When trading against the trend, I would suggest a shorter term than a longer term. Simply because there is little chance of an extended move to the trend. Your expiry date should be more precise. When you trade with your trend expiration may be a little further.

A post-trade trend is more likely to close so it doesn’t have to be that exact. A signal to follow the trend is more likely to be money than a signal to go against the trend.

Another factor that can have a big impact on which expiry is best for a given trade is support and resistance. The relative price level of a support or resistance line is a factor in a trade’s ability to move in a certain direction.

If the price is near an S/R line and moves away then it is more likely that your option closes out than if the price is near the S/R line and moves in that direction. When the price is moving towards one of these lines, the chances of the movement being stopped and/or reversed are much higher than when the price is moving away from a line.

So how does this apply to expiration? If you are receiving a signal with a higher chance of being stopped or reversed then you will want to choose a shorter shelf life than if the analog signal is not facing S/R levels. I purposely didn’t say call either put, or go up or down, because this applies to both bullish and bearish trades. Also, keep in mind that support and resistance can take the form of lines drawn at areas of price action or interesting tops, moving averages, envelopes, envelopes, and bands.

 

 

1 hour strategy

Binary options can make you profit of 70 percent or more in just 1 hour. Compare that to stocks, and you understand why binary options are so successful. To trade the 1 hour strategy with binary options, there are a few things you must know. This article explains them.

Specifically, you will learn three important steps to trading 1 hour strategy with binary options, which are:

• Step 1: Find the right indicators
• Step 2: Find the right timeframe
• Step 3: Find the right type of binary option

With these three steps you will instantly be able to create and trade a successful 1 hour strategy with binary options.

Step 1: Find the right indicators

The first step to trading the 1 hour strategy with binary options is to decide what type of indicator you want to use to generate your signals.

To find the right indicator for you, there are a few things you must consider:

1. Your skills. Some strategies are ideal for traders with excellent pattern matching skills; others are ideal for great traders with numbers. To create a successful strategy, you must match your strategy with your skills.
2. Your character Some indicators generate many signals but are risky; others generate reliable but little signal. Depending on your risk tolerance, you should choose an indicator that will help you sleep at night and not get bored.
3. Your daily schedule. Some indices require you to trade during a specific time of day. For example, traders of closing gaps can find the best signals in the slow market environment of the closing trading day. In addition, some indicators require more time to analyze than others. Make sure to choose a metric that you have enough time on and that fits your schedule.

With clearly defined criteria, let’s take a look at a few indicators for each type of trader. For the sake of simplicity, we will focus on strategies that you can trade all day. Later we will cover a few strategies that you can only trade during special times.

As our main criterion, we will divide strategies into pattern and number matching strategies.

• Pattern matching strategies require you to find certain patterns in the asset’s price movement,
• Numerical strategy requires you to interpret numerical values.

In addition, we will differentiate strategies into high and low reward/risk strategies, and into quick and detailed strategies.

• High-reward strategies are risky but have a lot of potential, low-risk strategies are safe but have limited potential.
• Quick strategy requires less time, but you have to trust your stats blindly, detailed strategies leave more work to you, but it will be easier for you to believe its signal.

Let’s see how different strategies fit these criteria.

	Pattern matching strategy	Digital strategy
High rewards, fast	Simple candlestick analysis. This strategy trades special forms consisting of only one to three candles. Finding these formations is quick and easy, but they lack the reliability of more complex signals. Because there are so many candlesticks, however, good execution of this strategy will help you to win more trades than other strategies.	Trade the extreme areas of the MFI. The Money Flow Index (MFI) produces a value between 0 and 100 that indicates the strength of a movement. Values above 80 indicate that the market has very little room to rise, values below 20 indicate that the market has very little room to fall. All you have to do to trade these predictions is to invest in a low option when the market reaches a value above 80 and a high option when the market reaches a value below 20. This strategy can produce many signals, but since it is based on a single technical indicator, it is also risky.
High reward, detail	Swing trading. During a trend, the market moves up and down. Swing traders try to capitalize on each of these movements. This strategy will give you many trading opportunities in a trend, but trading a single swing is always riskier than trading the trend in general.	Trade ATR & ADX with boundary options. ATR calculates average range of past movements, ADX strength of direction. With both values, you can predict whether the market has enough energy to hit one of the target price levels. This strategy can generate a lot of signals and generate a high payout, but is also risky.
Low risk, fast	Three moving average cross. Combining three moving averages can produce highly secure signals. You have to do almost nothing to execute the strategy. Just sit back and wait for your software to generate a signal. On the other hand, this strategy will generate some signals, which limits its potential.	Trade MFI divergence. When the movement of the MFI does not reflect the market, the current trend is deeply troubling. For example, when the market makes a new high in an uptrend but the MFI also fails to make a new high, the market will soon turn down. You can take advantage of this prediction by investing in a low option. This strategy can generate safe signals with little time investment.
Low risk, detailed	Pattern continuation and reversal. Continuation patterns are large price formations that allow for accurate predictions. These models are rare, but you can win a high percentage of your trades.	Incorporating multiple specifications. On their own, all technical indicators are unreliable. But when you combine multiple indicators, you can filter out bad signals and create a more reliable strategy. For example, it makes sense to combine MFI with RSI or ADX. These strategies will generate less signals because you filter some of them.

 

Step 2: Find the right timeframe

Once you have found the right indicator, you have to think about which timeframe to use. We are creating a strategy with a shelf life of 1 hour, giving you the first indication. However, depending on which indicator you are using, you should trade a very different timeframe.

The timeframe of your chart determines the amount of time aggregated in a single candle. For example, when you are viewing a chart with a time frame of 15 minutes, each candle in your chart represents 15 minutes of market movement. When you are looking at a chart with a time frame of 1 hour, each candle represents 1 hour of market movement.

 

 

When you generate your signals in a chart with a time frame of 15 minutes, you generate other signals with a chart with a timeframe of 1 hour. To trade the 1 hour strategy successfully, you must find the perfect signal type for your indicator.

For the 1-hour strategy, each indicator requires a specific timeframe that matches the expiry date with which the indicator’s prediction is valid. Take a look at our pattern matching examples:

• Simple candlesticks work best with a timeframe of 1 hour. Candlesticks simply consist of one to three candles, that’s why their prediction only applies to the next candle. Then other influences are likely to override the candle and it loses predictability. Therefore, you must ensure that you only trade the expiry prediction in the next candle. On 1 hour expiry, this means using the 1 hour timeframe.
• For swing trading, keep your timeframe around 5 to 10 minutes. Swings take some time to develop. When you trade a chart with a timeframe of 5 minutes and expiry of 1 hour, you are given 12 candles to develop. This is a good value for most trends. If you find that your time is a bit slow, you can also try the 10-minute chart.
• The three moving average crossovers work best with the 1 to 5 minute timeframe. When you trade three moving average crossovers, you are looking for a movement with many candles. It is probably best to trade the three moving averages on the 5-minute timeframe, but if you want to give your movement more time, you can also switch to the 1-minute chart. Everything else will be too long or too short, respectively.
• The reversal and continuation pattern offers many opportunities. You can trade continuation and reversal patterns by trading the long movement they indicate or by trading the short breakout that occurs after the pattern’s completion. In the first case, you should use a time frame of 5 to 10 minutes to give the movement enough time to develop. In the latter case you should trade the 4 hour or even 1 day timeframe to ensure that you are actually trading the breakout and not much more.

As you can see in this list, the indicator type predetermines the timeframe you have to use within 1 hour. Some indicators predict where the next candle will go, in which case you need expiry to adjust the length of a candle according to the expiry date. Other indicators predict long movements, in which case you have to trade a shorter timeframe to give the market enough time to develop the full movement.

This rule also applies to digital strategies:

• Trading the MFI extreme zones works best with the 5 to 10 minute timeframe. This strategy allows for two trading styles. Some traders want to invest when the MFI enters an extreme area; some investment when it leaves the extreme. The first type must use a shorter timeframe to give the market more time, ideally 5 minutes. The latter can trade longer timeframes, ideally 10 minutes.
• For MFI divergence, use 1-minute or 5-minute timeframe. When the MFI decouples from the market, it can take several periods until the market catches up. To generate these signals in the ideal environment for a 1-hour strategy, keep the timeframe short. The 1-minute or 5-minute chart provides the ideal environment for this strategy.
• For many technical indicators, use the 15-minute chart. When you combine multiple technical indicators, you generate short to medium signals. They work best with the 15 minute timeframe. Of course, your ideal timeframe depends on your ultimate strategy and the technical indicators you use. If necessary, adjust your timeframe.

These recommendations are a good place to start for each strategy. However, keep in mind that they are only recommendations. Every trader is different and if you find that you can get better results with a different timeframe than our recommendation, use whatever works. There is no right and wrong apart from what makes you money or lose your money.

Step 3: Find the right transaction type

After you match your indicator to the timeframe, you have to match it to the binary option type. Binary options offer many different types and each has its own risk and reward relationship.

To explain how binary options types relate to your strategy, let’s take a closer look at the different options types. You will find that it is difficult to give general recommendations, but some binary options suit some strategies better than others.

• High/Low option is a classic option type with which you can predict whether the market will go up or down over a period of time, in our case 1 hour. Because high/low options can give you a trade with the smallest possible movement in the right direction, they are how low-risk trading works for all of these strategies. Done well, each strategy will give you a high enough rate to make a profit.
• The one touch option defines a target price and you win your option when the market reaches this target price. The market doesn’t have to stay at this target price, which is a big plus, but you need a stronger movement because the target price is farther away. The one-touch option is suitable for trading breakouts of continuation and reversal patterns and simple candlesticks that predict strong movements, such as large candles. Possible
  The ladder option defines multiple target prices and allows you to determine whether the market will close above or below each target price. They allow for risky predictions that can produce the highest payouts of all binary options and for safe predictions that allow for a high win rate. Especially traders of pattern-matching strategies may be able to disproportionately profit from this premise.
• Boundary Options are one-touch options with two target prices, one above the current market price and one below the price. Obviously, boundary options are ideal for trading ATR and ADX. Boundary options are the only option type that you should trade this strategy. For all other strategies, boundary options are a bad fit. These strategies all provide a clear prediction of where the market is going. The boundary option doesn’t ask you to predict a direction, which means you waste part of your prediction. If you trade one touch option, you will get higher payout and win more trades.

1 hour strategy requires special trading time

The beauty of all the strategies in this article is that they work well in any market environment and at any time. Therefore, any trader can use them. However, there are also strategies that specialize in a particular trading environment or a particular time. These strategies may be more suitable for traders who plan to trade these environments.

The most prominent example of this type of strategy is trading closing gaps. The gap is the jump in market price when the market jumps from one price to a much higher or lower price.

• When gaps are accompanied by a high volume of trading, they can indicate the beginning of a new movement or strengthening of an existing one. Many traders back into the gap, and have enough momentum to continue pushing price into the direction of the gap.
• When gaps are accompanied by low volume, they are likely to close. Very few traders back the gap, and most traders might consider it an unwarranted advance. They will invest in the opposite direction, and the gap will close.

The beauty of closing the gap is that they give you one of the most accurate predictions you can find with binary options. The gap is likely to close in the next period, which gives you the exact duration and the size of the gap gives you a clear target price.

Alternative types of trade

With this information, you can trade a one-touch option or even a ladder option. You get a high payout and you will be able to win a high percentage of your trades which means you have a strong strategy in hand.

The downside of this strategy is that gaps that come with low volume are hard to find most of the time trading. There are simply too many traders in the market to create a gap with low volume. As a result, low volume gaps mostly occur near the end of the trading day.

Many traders are day traders. They close their positions at the end of the day and never hold a position overnight. These traders will stop trading when the market is about to close because there is not enough time to make another trade.

Trading hours

Once the traders have left the market, trading will drop significantly. Now you can find the closed gap. Monitor all timeframes from 15 minutes to 1 hour and trade any gap you find with a one-touch option with a 1-hour term predicting closing distances.

Traders who work during the day and can only trade after work can use this strategy to make profits despite their work.

The important point here is that you can trade successfully, even if your time is limited. If you have to trade during your lunch break, you can also find successful strategies for this limit.

As with anything in life, success means making the most of your limitations. With binary options, your limits can help you trade more successfully than if you didn’t.

1 hour strategy overview

The 1-hour strategy is one of the most popular types of trading strategies. It combines a term that seems natural to us with a wide range of possible indicators and binary options types, which means that every trader can create an ideal strategy for them. .

Whether you prefer pattern matching or numerical strategies, high potential or low risk approaches and simple or complex predictions, you can create a 1-hour strategy based on any combination of attributes. this.

Unless you trade boundary options with ATR and ADX, we recommend starting with high/low options – they are the easiest for newbies.

Double red strategy

The double red strategy is a simple to implement strategy that allows binary options traders to find many trading opportunities. Here’s how you do it.

What is the double red strategy?

The double red strategy is a trading strategy that wants to identify a bearish market. The double red͟ in the name refers to the fact that the strategy waits for two periods of consecutive price declines before it generates a trading signal – periods with periods of decline are usually red in the trading chart.

The logic is simple: at significant prices, the market usually takes a while to sort itself out. However, after it arranges itself, the downward price movement is usually stronger and more linear than the upward movement, which is why it is a great investment opportunity.

For example, suppose that there is a resistance. Once the market approaches this resistance, it will never turn around immediately. It will edge on its own and get closer and closer, test the resistance a few times, and eventually turn around. While the turnaround would be a great trading opportunity, finding the right timing is difficult. During the correction closer and closer to the resistance, the market will create a few periods with price declines that will not lead to a turnaround. You must avoid investing in these periods.

To find the right timing, the double red strategy waits for a second consecutive drop to confirm the turnaround. When such a period occurs, the market has clearly stopped moving around the resistance and has started moving away from it again. Double red traders will invest now.

How to do the Double Red Strategy

To do a double red strategy with binary options, this is what you do:

1. Choose a short time period for your chart. Binary options are short term investments and your chart period should reflect that. Choose a time period somewhere between 5 minutes and 1 hour.
2. Find a resistance level. Sometimes, you will find a direct resistance level in the chart. If the price itself has no resistance, you can add technical indicators. Bollinger bands and technical indicators with a significant amount of time (e.g. 20, 50, 100, 200) often provide major resistance levels that will affect the market.
3. Invest when you find two consecutive red periods. Once the market approaches resistance, monitor price movements closely. When you see two periods in a row, predict a price drop. Most traders use low options for this strategy.

If you add another indicator (e.g. Average Range) and want to be a bit more adventurous, you can also use a touch option or a ladder option.

Keep your shelf life short. The red double strategy generates signals based on two candles, which means its predictions are valid only for very few candles. Ideally you would limit your expiry to one or two candles. For example, on a 15 minute chart, you would use 15 to 30 minute expiry.

 

Strategy for beginners

We have three of the best strategies for beginners, from high potential to risk averse

What do beginners need to know?

• Risk-averse strategy: follow the trend
• A high potential strategy: swing trading
• An intermediate strategy: trading distance

With this information you can find the best strategy to start trading binary options as a complete novice.

What do beginners need to know?

Binary options strategies for newcomers must meet some special criteria. They have to be simple but effective, quick to understand but profitable. There are many complex strategies that can make money if a trader executes them perfectly.

Beginners, however, will be overwhelmed, make mistakes and lose money. The goal of a good strategy for newcomers is to produce the same positive results while simplifying the strategy.

Let’s take a look at a few strategies that might meet these criteria. We will present a risk-averse strategy for traders who want to play it safe, a riskier strategy for those who want to maximize their earnings and the intermediate version.

Strategy for the risk-averse beginner: Follow the trend

Following the trend is a safe, simple strategy that even novices can implement. Trends are long-term movements that take the market to new highs.

• Movements that take the market to new highs are known as uptrends,
• Movements that bring the market to new lows are known as downtrends.

The trick with trends is understanding that they never move in a straight line. The price of an asset is determined by the relationship between supply and demand and there is no perfect movement as supply always exceeds demand or vice versa. Simply all traders can continue to buy or sell continuously. There must always be short periods in which the market gathers new momentum.

These stages are called consolidation. During consolidation, the market turns or moves sideways, until enough traders are willing to invest in the direction of the main trend.

The alternation of movement and consolidation creates a zigzag line in a particular direction. This is a trend.

• An uptrend takes the market two steps up, then one down, and then two steps back up. And such.
• A downtrend takes the market two steps down, then one up, and then two down. And such.

Look for trends

When you look at the price chart of a stock, currency, or commodity that has gone up or down over a long period of time, you will see the trend behind all of them. Trends can last for years, but the more you zoom in on the price chart, the more you will see that every movement that appears to be a straight line when you look at the daily chart becomes a trend on chart 1 hour. What appears to be a straight movement on the 1-hour chart becomes a trend on the 10-minute chart and so on.

There are many levels of the trend. No matter what timeframe you want to trade, there is always a trend you can find.

To follow a trend once you have identified it, you have a few different options:

• Invest in a high/low option:  This is the simplest strategy. When you spot an uptrend, invest in a high option; When you find a downtrend, invest in a low option. Choose your shelf life as long as a full cycle. If an uptrend takes 30 minutes to make new highs and lows, choose a 30-minute duration. Then the market must definitely be higher than it is now. If you want, you can also use the expiration twice or thrice as long as one cycle. Just stay with more typical cycle lengths. Once you feel comfortable with this strategy, you can think about tracking the failure change with the Money Flow Index (MFI) and the Relative Strength Index (RSI) to gauge remaining strength. trend or add a moving average to your strategy.
• Invest in a One Touch Option:  Once you have found a trend, you can predict how fast the market will go up or down. For example, if you know that a trend has increased the price of an asset by £0.1 every 15 minutes, you can calculate the trajectory of the trend and invest in a one-touch option. When your broker offers you a one-touch option with a target price of £0.15 above the current market price and a 30-minute expiry, you know that there is a high chance the market will hit the target price this. Find a trend, check your broker’s one-touch options and if you find one within reach, invest.
• Combine Both Strategies: You can also combine both strategies. When you find a trend, invest in a high/low option in the direction of the trend and calculate if it makes sense to invest in a one-touch option. If so, invest in both options; otherwise, stick with the high/low option alone.

Since these are relatively safe strategies, you can afford to invest a little more per trade. We recommend somewhere between 3 and 5 percent of your overall account balance.

High Potential Beginner Strategy: Change Trading

Swing trading is a variation of our first strategy, following the trend. A swing is a single movement within a trend, from high to low or vice versa. Each cycle of a trend consists of two swings: an upward and a downward move.

Instead of trading a trend in general (like trend followers), swing traders like to trade each swing in an individual trend.

The advantage of this strategy is that every trend offers them multiple trading opportunities, not just one.

More trading opportunities means more potential winning trades and more winning trades means more money.
The downside of this strategy is that swing trading is riskier than trend trading in general. You are trading a higher potential for higher risk – if it is a good idea depends on your personality.

• Some traders lose interest if they only trade one option in a trend. They run the risk of straying from their strategy and making bad decisions. Traders will do better with a swing trading strategy.
• Some traders will become nervous when they follow the trend for the third or fourth consecutive in a trend.
• Fearing that the trend will end soon, they will stray from their strategy and make bad decisions. Traders can do better by following the trend in general.

Investment grade

If you decide to become a swing trader, we recommend a low to medium investment per trade, ideally between 2 and 3.5% of your overall account balance. Only risk-averse traders should invest more, but never more than 5% of their total account balance.

Choose your shelf life according to the length of a typical swing. If you expect a regular upswing and upswing to take about 30 minutes, use the 30 minute expiry. Picking the right deadline is no exact science, and you’ll need a bit of experience to find the perfect timing.

To determine the ending change, you can use technical indicators. Momentum indicators like the Relative Strength Index (RSI) or the Money Flow Index (MFI) are popular choices, like the moving averages.

Strategy for Intermediate Beginners: Trading Gap

Trade gap combines intermediate risk with good opportunity for high profit. This strategy is simple enough for beginners to learn it within a few hours.

The gap is the price jump in the market. At the end of a period, something strongly influenced the market, and the price jumped to a higher or lower level with the opening price of the next period. Candlestick charts are ideal for finding gaps because they clearly visualize the gap between the closing price of one period and the opening price of the next.

Types of distances

The most common distance is the overnight gap. When the stock market opens in the morning, all new orders are placed in a flood night. If traders are optimistic or pessimistic, there is a good chance that most of these orders are in the same direction. The market opens significantly higher or lower, and there is a gap between yesterday’s last price and today’s first price.

Such a gap is an important event because the same property is suddenly much more expensive. The market may react in shock, some traders may take their profits; or the market may push forward, providing the feeling that this is the beginning of a strong movement.

To know how you can profit from gaps, you must know these three types of gaps:

• Separation distance. Separatist gaps occur in sideways movements. During these periods, the market is uncertain about where it wants to go and builds momentum for the next movement. When the price rose or fell and this jump was accompanied by a large volume, the market created enough momentum to start a new movement.
• You can profit from this knowledge and invest in a gap-driven high option. Since you are expecting a longer movement, choose your expiry to be longer than a period on your chart. For example, if you are trading a 15 minute chart, use at least 15 minute expiry.
• Acceleration distance. Acceleration gaps occur within a trend. While the asset has been trending up or down, something has happened that has enhanced this momentum. The market jumps in the direction of the trend and creates. In an uptrend, the acceleration gap always occurs in the upward direction; In a downtrend, the acceleration gap always occurs in the downward direction.
• Like breakaway gaps, acceleration gaps are accompanied by a high volume. Use a similar deadline as with the breakaway gap. Acceleration gap also allows you to invest in a one-touch option because after the gap, the trend will move faster than before the gap. If your broker offers you a one-touch option that will be out of reach of the previous trend, you know that there is a good chance that an accelerating trend will hit. This could be a good opportunity.
• Exhausted. Exhaustion gaps are very different from the first two types of gaps because they signal an impending reversal. Exhaustion gaps occur during a strong movement in the direction of motion – much like acceleration gaps. The difference between both types of gap is that the exhaustion gap is accompanied by a low volume and the market has started to reverse during this period. After an exhausting gap, the market is likely to close the previous gap, which gives you a great opportunity to trade a one-touch option or a high/low option.
  Common gaps. Gaps commonly occur in sideways movements. They are accompanied by a normal volume and represent random movements with little long-term significance. Since regular gaps are likely to close, you can invest in a one-touch option or a high/low option.

Price jump

The basic principle of all four gaps is the same. Gaps are significant price jumps, which is why many traders now have an incentive to take their profits or enter the market. Both thrust in the opposite direction of the gap and have the ability to close it. In order for a void to remain open and create a new movement, the void must be accompanied by a high volume. This high volume shows that many traders support the gap, and there are very few who will take their profits or invest in the opposite direction immediately after the gap.

Strategy for Beginners – Conclusion

Even beginners and beginners can find a simple yet effective strategy that can help them make money.

• Risk-averse traders can follow the trend in general.
• Traders are willing to take the risk if it increases their potential to trade swings.
• Traders who want a good mix of risk and potential can trade gaps.

Risk-free strategy

With binary options Risk-free strategy is the dream of any financial investor. While it’s impossible to have any investment, binary options can get you closer than anything else.

Is a no-risk strategy possible?

When you invest, there is always some risk. Despite all efforts to predict what the market will do next, no one has found a strategy that is always right. Sometimes, markets move in unpredictable ways and do things that seem irrational.

In hindsight, we often find good explanations for these events. As a trader, you must avoid letting this confusing bias confuse you. When a trading day ends, it’s easy to say that this event has moved the market the most. But once a trading day begins, it is almost impossible to predict which of the many events of the day will have the most impact on the market and how it will affect the market. Even outside of the stock market, financial investments always involve some risk.

• When you invest in fixed-rate securities, there is always a chance that the bank that issued them has to file for bankruptcy. Many countries protect your money up to a certain amount, but beyond that, the risk is yours.
• When you buy government bonds, there is always a chance that the government goes bankrupt. Since bonds have a shelf life of up to 30 years, a lot can happen during this time.

Simply put: a risk-free strategy is not possible for any asset. But binary options offers a few tools that allow you to get relatively close to zero risk. Let’s see how you can do that.

How to get close to a risk-free strategy

Most binary options brokers offer a great tool: a demo account. The demo account works like a regular account but allows you to trade with play money instead of real money. In the risk-free environment of the demo account, you can learn how to trade.

You can try different strategies, find the one that works best for you, and perfect it. You can wait until you switch to real money trading until you have a solid strategy that you know will make you money at the end of the month. Although many stockbrokers also offer a demo account, binary options has one big advantage: binary options work on a shorter time scale, which means you learn faster and better. than.

• When you buy a stock, you have to wait months or years until you know if you made the right decision. Meanwhile, many unique things happen which is why you will eventually conclude that the situation is not repeatable and you learn nothing.
• When you trade binary options, you will know within minutes whether you have made the right decision. Meanwhile, no event will skew your results. When your option expires, you will get a clear result. You know whether what you have worked or not. Since binary options work on such a short time scale, they allow you to create and test strategies much better than any other type of investment.

Once you have traded a strategy with a demo account and made a profit for several months in a row, you know that there is a very high probability that you will make a profit when you start trading real money. There will still be some risk, but binary options has helped you eliminate as much of the risk as possible.

For those who are still looking for zero risk trades,  Arbitrage  is another option.

Breakthrough strategy

The breakout strategy uses one of the most powerful and predictable events in technical analysis: breakouts.

What is a breakthrough?

Breakouts occur whenever the market completes a chart formation. These completions indicate significant changes in the market environment. The market will pick up momentum either up or down, which means many traders have to react to the change.

• Some traders will close their positions because the event negates their prediction. When a trader predicts a price increase but an event indicates a price drop, this trader closes their position before they lose money.
• Some traders will open new positions in the direction of the new trend.
• Many traders will do both. When a trader can predict where the market is going, there’s no reason why they shouldn’t trade this prediction. Traders who realize that their initial prediction was wrong will likely invest in the opposite direction.

All three of these abilities create a strong momentum in the same direction.

• When the market completes a downward formation, some traders will short the asset; some will sell their long positions. Both actions create downward momentum.
• When the market completes an upward formation, some traders will buy the asset; some will close their short positions. Both actions build momentum.

Since most traders predict the payout, they will place automatic orders that are triggered when the market reaches a price that completes the price formation. The orders strengthen the momentum further.

How can I trade breakouts with a strategy?

Digital Options offers several strategies for breakout trading. Here are the three most popular strategies:

1. Breakout trading with high/low options . When you predict a breakout, wait until the market breaks out. Once it happens, invest in a high/low option in the direction of the breakout. If a breakout occurs to the upside, invest in a high option; if breakout occurs to the downside, invest in a low option. Using expiration is equivalent to the length of a period. This is the low risk/low reward way to trade breakouts.
2. Breakthrough trading with one-touch options. Breakouts are powerful movements that’s why they are perfect for one-touch options trading. The one touch option determines the target price and you win your trade when the market touches this target price. When you see the market exploding, invest in a one-touch option in the direction of the breakout. This is the average risk/average reward for breakout trading.
3. Breakout trading with ladder options . When an asset breaks out, invest in a ladder option in the direction of the breakout. Choose a target price that you are comfortable with but that still provides you with a high payout. This is the high risk/high reward way of breakout trading. All three of these strategies can work. Choose the one that best suits your personality.

 

 

Three strategies for Bollinger bands

There are hundreds of strategies using Bollinger Bands . Regardless of which strategy you use, there is almost no downside to adding Bollinger Bands to your charts. Even if you don’t deal with them directly, having the extra three lines won’t confuse you. On the contrary, it will subconsciously influence to make better decisions.

However, we will now present three strategies that not only feature Bollinger Bands but also use them as their main components. Understand these strategies and you will also be able to use Bollinger Bands in your strategy.

Strategy 1: Trade the Outer Bands with High/Low options

This is the simplest strategy and the least risky one. It can be explained in two simple steps:

1. Compare the current market price with the Bollinger Bands price range.
2. If the market is near the upper end of the Bollinger Bands, invest in bearish with a low option. If the market is near the lower end of the Bollinger Bands, invest in the bulls with a high option.

That’s it. Even novices can immediately implement this strategy.

There’s one thing you should know, though. As each new period moves the Bollinger Bands, the upper range of the current Bollinger Band may not be the upper range of the next periods. A fast bull market will also push the Bollinger Bands high; and a rapidly falling market will bring down the Bollinger Bands.

Due to this limitation, the strategy works best if you keep your binary options expiry shorter than the time until your chart creates a new period. If there are 30 minutes left in your current period and the market approaches the upper end of the Bollinger Bands, it is advisable to invest in a low option with a duration of 30 minutes or less.

If you want, you can also double-check your prediction in a shorter period of time. Switch to the 15-minute chart and if the market is near the upper range of the Bollinger Bands, you also know that it will most likely crash soon. However, if it is in the middle of this trading range, you may consider moving this trade.

You may also consider upgrading this strategy to trade binary options with higher payouts. By adding a momentum indicator, you can invest in the types of options that require strong movement. To understand how to add this indicator, consider our next strategy example.

Strategy 2: Trade Central Bands with one-touch options

The middle Bollinger Bands have special characteristics. While it provides a level of resistance or support, the market can break through it. Then, Band changes its meaning.

• When the market trades above the middle bollinger band, this band acts as a support. If the market breaks this support, the middle band will become resistance. The market has been stuck between the upper and middle bands and is now stuck between the middle and lower bands.
• When the market trades below the middle Bollinger band, this band acts as a resistance level. If the market breaks through this resistance, the middle band will become support. The market was stuck between the lower and middle bands, and is now stuck between the middle and upper bands.

Both events change the entire market environment. When the market breaks through the middle band, it suddenly gets enough room to move to the outer band. This means that you know the direction the market is likely to move and the distance, which is a great basis for trading high paying binary options.

Here’s what you do:

1. Wait until the market crosses the middle Bollinger Bands.
2. When the market crosses the middle Bollinger Band, invest in a one-touch option in the direction of the next Bollinger Band. When the market crosses the middle Bollinger Band in an upward direction, invest in a one-touch high option. When the market crosses the middle Bollinger Band in a downward direction, invest in a low one touch option.

The most important aspect of this strategy is choosing the right deadlines.

• Long expiry moves your one-touch option’s target price further.
• Short expiry keeps the target price of your one-touch option closed.

For this strategy to make sense, you must use a one-touch option with the target price being in the Bollinger Bands. On the other hand, the shelf life should be long enough to give the market enough time to reach the shelf life. Finding the right mix of proximity and enough time can take some experience. You can also use momentum indicators like the Average True Range (ATR) to provide a mathematical basis for your estimate.

Strategy 3: Trade the outer bollinger bands with low risk ladder options

The market has a high probability of going beyond the outer Bollinger Bands. This knowledge is a great base for trading low risk ladder options.

The ladder option defines a number of different target prices, usually five or six. Some of these prices are higher than the current market price; some are below it; some close, some far Due to these characteristics, some target prices will be in the price channel of the Bollinger Bands; some will be outside it

Since the market is very unlikely to move outside the Bollinger Bands, it is very difficult to reach the target price outside the Bollinger Band price channel. The ladder option allows you to make this prediction and win a simple trade.

To implement this strategy, here’s what you do:

1. Set the time of your chart to the expiration of your ladder option.
2. Compare your broker’s ladder option target price with Bollinger’s price channel.
3. Choose the target price with the highest payout that is still outside the Bollinger Bands. It is predicted that the market will not be able to reach this target price.
4. If the target price is below the Bollinger Bands, predict that the market will trade above the target price when your ladder option expires.If the target price is above the Bollinger Bands, predict that the market will trade below the target price when your ladder option expires.
5. Repeat the process for all ladder options your broker offers.

To execute this strategy well, make sure that your chart period matches your shelf life. Bollinger Bands change with each new period and a target price that is out of reach of the Bollinger Bands in the current period may be within their reach in the next period.

When you trade a one hour expiry ladder option based on the price chart over a 5 minute period, a lot can change before your option expires making Bollinger Bands almost meaningless. By timing your chart with the expiry, you ensure that the Bollinger Bands stay in place until your option expires.

Volume Strategy

Volume is one of the most underrated metrics. Combined with binary options, a volume strategy can produce great results.

What is volume strategy?

Trading volume is a simple but important metric. Volume indicates how many assets are traded over a period of time. The direction of these trades is not important to the volume.

• A period during which ten shares exchange hands will have ten volumes, regardless of whether the price goes up or down during that period.
• A period during which 20 shares exchange hands will have a volume of 20, regardless of whether the price goes up or down during that period.

Trading volume is important because it helps you interpret market movements:

• High volume adds meaning. When a period is high in volume, many traders favor the price movement of the period, which means that the market is likely to continue in the same direction.
• Low volume question makes sense. When a period is low in volume, some traders favor the price movement of the period, which means that many traders will question the movement of the period and possibly invest in the direction of the period. vice versa to profit from them assuming a wrong move.

As you can see from these examples, the volume has meaning only in relation to the previous periods. A 300 episode says nothing until you know if the previous stages have a higher, lower, or similar volume.

The volume strategy uses the volume of each period to generate predictions about future price movements:

• When a period is high in volume, a volume strategy predicts that the market will continue to move in the same direction.
• When a period is low on volume, the volume strategy predicts that the market will reverse.
• When a period has an average volume, the volume strategy ignores it.

How to execute a volume strategy

To execute a volume strategy with binary options, follow these steps:

• Look for significant time periods. Look for gaps, periods of strong movement, or dojis (times where the opening and closing prices are almost identical).
• Analyze the volume of these periods . If trading volume is high during this period, predict that the market will continue to move in the same direction; if the trading volume is low, predict that the market will reverse; if volume is average, ignore time.
• Invest accordingly. Trade bullish with high options, bearish with low options, and stagnate with ladder options predicting little movement. Keep your deadlines short with this strategy. Ideally, limit them to the next period. In a 30 minute price chart, you would use a 30 minute expiry for example.

Long term strategy

Binary options are mainly short term investments. But if you want to invest for the long term, binary options also have a lot to offer you.

How to trade a long term strategy

While binary options are mostly short term investments with maturities ranging from a few minutes to a few hours, most brokers have also started offering long term options that allow you to make predictions. for the following months and the following year.
These strategies are high/low options with a longer shelf life. You predict whether the market will trade above or below the current market price when your option expires.

A long term binary options strategy should be based on the trend. Over the course of a year, long-term trends dominate the market and dictate what happens next. Identify these trends, and predict that they will continue. To avoid weakening trends, you can use technical indicators like the Money Flow Index (MFI), which allow you to identify trends that are running out of momentum.

Why Trading Long Term Strategy Can Be Profitable

When you trade long-term predictions with conventional assets, you can average returns of about 10 percent a year. That’s a great result, but binary options could do better. Let’s say you’ve found a stock that you’re almost entirely sure it will trade higher a year from now. Look at the current price chart of Google, Amazon or Tesla. Such stocks would provide the ideal basis for such an investment.

When you predict that these stocks will rise with binary options, you can get a payout of about 75 to 90 percent – in a year. No matter how well these stocks do, when you buy them directly on the stock market, you will never make the profits that this competitor offers.

Now, of course, you have to factor in the risk. When you lose a trade – however you don’t think the event is possible – you lose all the money you invested. This is why it is advisable to invest all your money in a single trade. Spread your money across multiple stocks, currencies, markets, and commodities, and never invest more than 5 percent of your overall account balance in a single trade. Also, never invest all your money. With this strategy, you can still earn a higher return than you would with the stock, but you reduce the risk.

Walking strategy

With digital options, the settlement strategy is easier and more profitable than with other types of financial assets.

Here’s how you do it

What is Straddle Strategy?

A strategy that follows one simple goal: it wants to make money for you regardless of the direction of the market. With conventional assets, this strategy is difficult to execute. Traders had to buy short and long assets at the same time and hope that the profits from the successful investment outweigh the losses from the unsuccessful one.

With stocks, for example, the trader would take a stock and short it at the same time. They will then set a stop loss for both trades.

• If the market goes up, they will lose their short trade and hope that the long investment will make enough money to cover these losses.
• If the market goes down, they will lose their long trade and hope that the short investment will make enough money to cover these losses.

With conventional assets, this strategy is a mess. There are fees per transaction which are complicated and it is not possible to make two investments at the same time. The time delay means a belt is never perfect. In the end, the profits from the winning investment are often not enough to outweigh the losses from the losing trades.

Fortunately, binary options can simplify the belt and make it more profitable.

How to trade the Straddle Strategy

Binaries took the belt and packed it into one asset – the boundary option. Instead of having to invest in two assets at once (which is not possible), the boundary options allow you to create a pool with just one click. Boundary options define a price channel around the current market price.

• If the market leaves this price channel, you win your option;
• If the market leaves no price, you lose your option.

Both channel target prices are far from the current market price, which means you automatically create a perfect grouping. Many binary options brokers offer two types of boundary options:

• A type of boundary option that uses two nearby target prices and offers payouts of 70 to 75 percent.
• A type of boundary option that uses two distant target prices and offers payouts of up to 300 percent (or higher).

Choose the type of boundary option you like best and you can easily trade the line strategy with binary options.

 

 

Robot strategy

To execute a binary options strategy well, you must banish all emotions from your trading and do it over and over again like a robot. Some traders have taken the next logical step and let the robot do all their trading.

This is how you execute a robot strategy.

What is Robot Strategy?

When you trade binary options, you have two basic options:

1. You trade for yourself, 2.
You let someone else trade for you.

A robot falls into the second category. A robot is a computer program. These computer programs are trained to execute trading and investment strategies on behalf of a trader.

Specifically, the robot does three things:

1.Robots monitor the market,
2.Robots find profitable trading opportunities and
3.Robots invest in these opportunities.

When you use a robot, you outsource your entire trading process to a computer program. You can literally walk away and make money while you sleep.

Why use Robots?

Robots have significant advantages over traders:

1. Robot never misses an opportunity . People need sleep and have errands to do; robots do not. They can spend the whole day trading, which means they can take advantage of every opportunity. With a profitable strategy, more trading means more money, which is great for you.

2. The robot does not make mistakes . People are exhausted; robots do not. They can execute the strategy for years without making a single mistake.

3. The robot can monitor hundreds of assets at the same time . Humans can only focus on one thing at a time; Robots can focus on a million things. This is why robots can monitor hundreds of assets. Monitoring multiple assets leads to more trades and more trades, with a winning strategy, leads to more money.

Combined, these three advantages can make you more money than if you were to trade on your own. However, it increases the risk. If the start strategy fails, the robot will not pause and allow zero adjustment execution time, it will continue to execute trades that match the criteria. Performance has to be checked manually too.

How can I get a robot?

These ‘bots’ are usually offered as a service. Read about specific providers on our robots and autotrading page .

Boundary or range options

An innovative trading style introduced by brokers is ‘boundary’ trading. The same style of trading may be referred to by  some binary companies as   ‘range’ options but essentially the same.

What is the Boundary Option?

Boundary options deal with a wide range of prices of an asset. Instead of predicting whether the price of an asset will go up or down, traders need to predict whether the price of an asset will stay within certain limits (‘boundaries’) .

In boundary options, the predefined price above and lowerwill be specified by your binary options broker. You are free to choose the expiry date. If you choose a larger shelf life, the asset’s range will expand, i.e. higher prices will increase and lower prices will decrease. As a trader, you have to choose from two options: ‘ In ‘ or ‘ Ra ‘.

Upper and lower range or boundary

If you feel the price of the property will stay within the specified limits, you should select ‘Print’. On the other hand, if you feel the asset’s price level will end up exceeding the specified price, choose ‘Ra’. The ‘Out’ option will be applied for two cases. One where the price is expected to go above the upper limit and the other is where the price is expected to end up below the lower limit.

One aspect to keep in mind is that brokers may set different upper and lower limits for ‘in’ and ‘out’ options. For example, a higher for the ‘In’ selection could be set near the current price – for example, 100 with the current price of 90. The upper value when selecting ‘Out’ could be 110. Not all Brokers all apply this ‘extra’ spread, but some do, so it’s worth being aware of. It is a method by which a broker can add to their own profits and protect themselves during particularly volatile periods, or from one sided trading sentiment.

A percentage will be assigned by your binary options broker indicating the payout. If your prediction is correct, you will earn a profit equal to a predetermined percentage of the invested amount. Profits are credited to your trading balance as soon as the outcome of the trade is decided. However, in case your prediction is incorrect, you will lose the amount invested in the trade. The profit percentage depends on the broker and you can find different binary options brokers offering different payouts for the same assets.

Marginal trading strategy

 

 

You should now establish that range or range options trade based on the volatility of an asset. It is different from traditional High or Low trading because in that case price movement up or down matters. No binary options signal provider offers boundary options signals and you will have to use your own knowledge and analysis.

If you want to trade boundary options, the first thing to do is gather information about the asset you want to trade. Let’s say you want to trade Apple stock through boundary options. First of all, you should research how the price of the asset has been moving over the past few days. You should have an overall idea if the asset is volatile or stable.

Next you must be aware of all the news related to the company. This can greatly improve your win rate. For example, let’s assume that Apple will launch the next version of its flagship mobile phone today. Now if the launch is successful and consumers like it, the stock price will go up. If the product fails to impress the audience, the stock may drop in price. There is a small chance that despite such a big event, the stock price is stable.

This would be an ideal time to trade Apple through the boundary options by selecting the ‘Out’ option. But if you don’t know about the company’s new product launch, you’re missing out on an opportunity to make money. Therefore, it is highly recommended to stay up to date with all the news like quarterly reports, decentralization reshuffles, product launches, etc. related to the asset you want to trade.

Touch / No Touch Options Strategy

As the binary options market has evolved, so have the needs and requirements of traders. Experienced clients have requested options similar to traditional Rise/Fall binary options , but allowing trading according to volume and market volatility. Brokers also want to offer a product that can be traded in both flat and highly volatile markets. From here, the  Options of  Touch Touch / No Touch Continuity was born, allowing for risky trading with limited volume and volatility.

Touch options explained

The ‘binary’ element of the One Touch option remains, as well as limited risk. Let an option of Touch Touch to complete the money; the asset value must touch or exceed the barrier (or ‘target’) level at least once before the option expires .

The No No No No option represents the opposite – the asset value will not reach the barrier (or ‘target’) level at any point prior to expiration .

In most cases, the barrier level is set by the broker. However, at certain brokers, traders can set up barriers. It may be higher than the current property value or it may be lower. The gap between the current asset value and the target price will often dictate the payout structure. These images represent  trading Touch and No Touch successful ;

 

 

One significant difference with the Touch option, is that it can end up with the winnings before expires. If the Touch target is met, the option pays out immediately, no matter what happens to the asset value afterwards.

Broker difference

Traders who wish to use Touch options need to pay special attention to their choice of traders. Firstly, some brokers don’t offer them at all. Touch options at some other brokers are not particularly flexible. Nor is the target level. However, there are some brokers that offer a huge amount of flexibility. Here, traders can set their own target levels (the payouts adjust accordingly). This provides tremendous opportunity to use advanced trading techniques. Setting the Touch option at a time interval to control risk and return can guarantee a trading advantage. Traders can also set targets above and below current value, creating tunneling options.

When to use Touch Preferences

Advanced traders will be able to use One Touch options successfully throughout their trading day, others may specialize. For example, volume and market volatility can be expected to change significantly following the release of specific data or events. Likewise, a market can run smoothly for a period of time running up to an announcement – and be volatile thereafter. If a trader feels that trading volume will be particularly low or particularly high, the Touch option allows them to take a position on that view.