strategy

binary options strategy

Welcome to our Binary Options Strategy section. Here you will find a beginner’s guide to strategies, leading to more advanced information on things like money management and articles on specific strategies.

Basic Strategy for Successful Trading

Strategy is one of the most important factors in successful binary options trading. It is the framework from which you base your trading decisions, including your money management rules, and how you go about making money from the market. Unfortunately there is no holy grail, if there were we would all use it!

The two most basic categories of strategy are:

• Original
• technology.

Fundamental strategy focuses on the underlying health of companies, indices, markets and economies and while important to understand, is not as important to binary options as the technical aspect of trading.

Technical trading, or technical analysis, is the measurement of charts and price action, looking for patterns from those measurements and patterns, and making educated guesses, speculations.

The strategy simplifies your trading, takes the guesswork out of selecting entries and reduces overall risk.

The text book definition reads like this; The art of planning and directing operations to achieve victory, a plan of action designed to achieve a goal or overall objective. When it comes to business the goal is 1) to make money and 2) not to make money.

The number one way to achieve this goal is to use a rule-based approach to selecting entries that relies on old, tried and true technical analysis indicators. There are thousands, possibly hundreds, if not thousands, of methods on the market, all strategies. They can be classified in terms of the instruments used, the time frame they are intended for, the amount of risk attached and many other ways, these being the primary ones.

• Price Action / Scalping Strategies – Price action strategies rely on market momentum to time entry. These can be trend following long or short term and can use bullish or bearish positions.
• Trend Following / Directional Strategies – Trend following strategies trade assets that are trending strongly to indicate a series of profitable entries with a high rate of success.
• Range Bound / Short Term Strategies – 99% of the time the market, or an individual asset, is trending rather than trading in a range within a high and low mark. These strategies focus on support and resistance levels, range reversals and short-term trends as asset prices move from support to resistance or vice versa.
• Long Term / Momentum Strategies – These are the less risky of the strategies as they target stronger signals and longer time periods. These signals have a higher chance of success but take longer to develop than other types of signals.

A technical analysis indicator is, most often, a mathematical formula that maps price action to an easy to read visual format. Common types of indicators include, but are not limited to, moving averages, trend lines, support and resistance, oscillators, and Japanese candlesticks.

money management

Strategy is 1 of the 2 pillars of risk management, the other being money management. You control risk by targeting only good signals, clearly weeding out bad signals, and never putting so much money on a trade that it will wipe out your account.

Money Management is the control of your overall trading funds. It should clarify the business size, and long-term financial management – leaving you to focus on trading only. A well thought out money management structure should simplify:

• size of business
• risk management
• future growth
• Tension

A trader with a clear financial plan need not worry about whether they can trade tomorrow, or if their trade size is right or how they can scale up their investments as they progress. All those decisions are handled by managing their overall capital with a clear plan.

Read more on money management.

japanese candlesticks

This is the most common way of viewing a price chart. Candlesticks give an easy read to see the price, high low and close, that makes the chart jump in a way that no other charting style can. They are the basis of most price action strategies and can be used to give signals as well as confirm other indicators.

Read more about candlestick strategy

support and resistance

These are areas of price action on the asset’s chart that are likely to stop prices when reached. Support is found when prices stop falling, this is when buyers step into the market and that is said to be the “support price”. Resistance is found when prices stop moving, this occurs when sellers enter the market (or buyers disappear) and are said to be “resisting higher prices”. These areas, often represented by horizontal lines, are good targets for entries and potential areas where price action may reverse.

trend lines

These lines connect the highs and lows made by the asset’s price as it moves down and sideways. A series of higher highs and lower lows is considered an uptrend and is a sign that prices are likely to move higher, a series of lower highs and lower lows is considered a downtrend and is a sign that prices are likely to move lower. Is. The trend line can be used as a target for support and resistance, as well as an entry point for a trend following strategy.

Its going on

The moving average takes the average of an asset’s prices over X number of days and then plots those values as a line on a price chart. Moving averages come in many forms and are often used to determine trends, provide targets for support and resistance, and indicate entries. There are dozens of methods for deriving moving averages, the most common being simple moving averages, exponential moving averages, volume weighted moving averages, and many others. They can be used on any time frame, and can be set on any time frame for multiple time frame analysis and to give crossover signals.

oscillator

Oscillators may be the largest division of indicators used for technical analysis. They include tools such as MACD, Stochastic, RSI and many, many others. These tools, in general, use price action and moving averages in combination as methods to determine market health. They are displayed as a stand alone instrument, usually as a line that is between two extremes or above and below a midpoint, which indicates the trend, direction, support/resistance, market strength, momentum. And can help determine entry signals.

trading psychology

As with any form of trading, psychology can play a big part. Lack of confidence can mean missed trades, or investing too little capital in winning trades. On the other end of the spectrum, over-confidence can lead to over-trading, or risk aversion – either of which can wipe out an account very quickly.

That’s why the trading psychology of the trader is very important. It can be actively controlled or managed (at the very least, accepted). This is another often overlooked area of business acumen, but one well worth spending the time to consider.

Read more on trading psychology and learning from experience.

A Basic Binary Options Strategy

Here is an example of some basic rules for a binary options strategy.

• The trend is your friend, take trend only after entries.
• Enter an uptrend only when prices are near support, enter a downtrend only when prices are near resistance.
• When prices are near support/resistance, wait for a candlestick signal confirmation.
• When the candlestick signal waits for confirmation from the Stochastic and/or the MACD, a bullish crossover in an uptrend or a bearish crossover in a downtrend.
• Enter the trade when rules 1 to 4 are met, using only 3% of the account on each trade.
• Use 2XCandle length when choosing expiry. IE, 2 minute expiry if you are using 1 minute candles, 2 hour expiry if 1 hour candles.
• If the trade fails check why it didn’t work, make adjustments if necessary and move on to the next trade. If the trade action moves on to the next trade.

top broker

No strategy will be profitable if you trade with an unreliable broker. These are our top recommended trading platforms to test your strategy on.

	Broker		regulated	minimum deposit	Payment	Bonus
	Binary.com			$ 5	90%		»go to
	high Low			$ 50 USD / $ 10 AUD	200%	$50 CASBACK	»go to
	IQ Option			$ 10	91% *		»go to
	the dark shadow			$ 10 (ETH)	up to 200% *		»go to
	BDSwiss			$ 10	N/A		»go to