Binary Trading — Trading Strategies Formats
In order to assist your financial enlightenment and provide practical recommendations on highly efficient binary options trading, we prepared a list of basic operating strategies for trading on binary market. In this article we will present the basic methods of forecasting used by market professionals and successful online investors to obtain high and stable results.
What mainly defines the outcome of binary options trading is correctness and stability of the forecasts of the underlying asset’s movements. To obtain advantages over the market, investors use trading strategies based on two main areas of analysis:
- Fundamental — this type of analysis assesses the macroeconomic indicators of the market over a wide time range, as well as global factors influencing the market
- Technical — the object of evaluation in this type of market analysis is current quotes; the aim is to identify cyclical patterns of the asset’s price movement and generate forecasts of high probability for trading in the binary market
These analysis formats allow to develop and use a wide range of various trading strategies on the binary market. The strategies are subdivided into categories depending on technical tools and approaches to determining the market trends.
- Graphic strategies
- Indicator systems
- Pattern strategies (trading on a clean chart)
- Strategies for fundamental analysis
All strategies have different parameters of efficiency, universality and stability of performance, but in any case, traders can gain certain advantages over the market in terms of making a profit. Let’s see some practical examples.
This format of binary trading strategies is based on various cyclic patterns that are identified with the help of specialized graphic services: lines, geometric shapes, market zones. The most common example of this type of strategies is the most effective forecasting system based on trend levels identified by graphic lines that can be tested on a terminal equipped with necessary tools. We recommend the Binomo operator’s platform, which features the technological service of graphical analysis tools, as well as optimal conditions for effective professional trading:
The trend levels trading strategy is quite simple and has a high level of signal accuracy. To apply it, we need to choose the “Line” graphical analysis tool that will determine the trend levels of support or resistance, depending on the current direction of the quotes fluctuations:
When using this trading system, we conclude deals on the rebound from the trend line. This type of signals has an efficiency of at least 85%, allowing the trader to profit from binary options in a stable and simple mode.
This forecasting approach is based on special mathematical algorithms aimed to assess the current performance of quotations of the underlying asset and generate forecasts for trading options. The advantage for the trader is the simplicity of the signals, the choice of technical tools for automatic analysis (the indicators), as well as the accuracy of generated forecasts. Indicator strategies are the most common and popular category of trading systems, used by beginners and professional investors alike. The example given below is a simple combined strategy based on trendy high-tech indicators:
The signals for trading are shown in the screenshot above. This trading system is a professional approach for generating forecasts, which gives traders an opportunity to get more than 87% of forecasts with positive outcome.
Strategies for trading on a clean chart
This category of technical strategies for the binary market basically uses a variety of patterns that help investors identify trends in the movement of quotations. It includes, for instance, the candlestick patterns — patterns and figures formed by quotations in the form of Japanese candles, the wave models of market movement. As an example, let’s consider the candlestick pattern of the “Absorption” trend reversal. It does not require any special tools — only attention and good reaction. To create a forecast based on this pattern, one need to identify the conditions in which the candlesticks form such a combination: a downward candle has formed on an upward trend and covered the previous growing candle:
This pattern indicates a reversal of quotations toward a decrease, which means it can be used as a trading signal — it has high repetition and efficiency rates (up to 90%).
Fundamental analysis strategy
This category includes a fairly wide range of strategies, all of which have a high level of complexity and require profound professional knowledge. For this reason, they are rarely used by non-professional investors. However, to give you an example, we can discuss a simple approach to the use of fundamental analysis in binary trading — the “Trading on the news” strategy. It uses a simple mode of assessing the fundamental market data and a trading mode understandable even to beginners. All that is required to apply the strategy is an information service with market statistics and a trading terminal with quick execution of contracts — we will be using the Binomo broker terminal.
We use the time the data is released as a trading signal. The forecast for deals is generated on the following principle: positive data — trade UP, negative data — trade DOWN. A real life example: the data on the decrease of oil reserves is published, which would logically increase the demand for the asset. The market immediate reaction was the growth of quotations:
Knowing the exact time the data is released (and that’s what the information service is for), you can place a bet up once the statistics is published and guarantee yourself a positive result in the binary market.
This list of technical strategies for market valuation has many derivatives that traders develop based on their own experience and preferences. While following our recommendations, you can choose an optimal mode of market forecasting most suitable for your style of work in the binary market.