Strategies For Binary Options
Binary options have been rapidly gaining popularity on the financial market. It is very simple to work with them: any newcomer can learn the options. However, the hitch with binary options is that when a trader enters into transactions at a random time, they will be closed by the same ratio of profit and loss – 50% to 50%. But even this ratio would not be sufficient for a profitable trade. The average profitability of each transaction is up to 85%, but the loss is already 100%. Therefore, to earn a profit, it is necessary that the number of completed profit transactions reach 65% and higher! A trading strategy is a kind of scenario for the trader to increase the number of positive deals to levels above 65%.
First, you need to define what your trading strategy is.
The trading strategy is an algorithm of the actions of a trader, which he uses in trading binary options in accordance with the market.
The essence of trading strategies is to use the system of rules based on automatic analysis tools (indicators), simple regularities of market movements (technical analysis) and fundamental indicators.
The technical analysis is the review of the price movement. It can be based on its own unique metrics and technical indicators that generate signals on certain conditions on the charts of the assets for a profitable deal.
Trading strategies based on the fundamental indicators depend on the events occurring in the world, which affect the quotes of an asset. For example, a strategy trading on the news is based on data that’s published; it can be the quarterly reports of companies, political news or the speeches of heads of central banks.
Strategies for earning in binary options
Beside the most important trading strategies used by stock-market players with the aim of obtaining stable income and the analysis of the market situation on the futures market, there are many methods contributing to the significant increase in the efficiency of the applied trading methodologies, resulting in improved statistics for binary options trading. Typically these methods are paired with a basic trade strategy.
The averaging method of trading positions
This method for increasing trading efficiency is most often used for channel and trend trading strategies when making the inertial movements of the financial product quotes outside of the channel levels and trends. This method is a very simple. According to the rules of trend trading, trading positions are opened at the moment when the price chart touches the support or resistance levels. When the trade signal works, the private trader immediately enters into the transaction. But it also happens without any indication, quotes of the trading asset break through a level. The method of averaging deals begins to operate in this moment.
How does it work?
During the inertia, beyond the level of the main trend it is important to take additional trading positions in the direction of the slope of the trend channel and the trend movement. As a result of this trading, we will receive income on a series of trading positions, and there will be an increase in total income. This method for an increase in trading efficiency can be combined with trading strategies that include the oscillator indicators with the ability to accurately determine trend reversal and the end of the local corrections.
This method is used to receive extra money in the options market and to reduce financial risks.
What is the method of hedging options?
This method of improving trading efficiency is to implement additional trading positions in the opposite direction of the original transaction when the main trading position is located in a zone of profitability. It is important to note that after the execution of the transaction, UP quotes of the traded asset stars to rise, then a price reversal is issued to hedge the trading position. As a result, we will earn a profit for one of the transactions or both. In the first case, there is a compensation of losses for one of the transactions; in the second you will receive the additional earnings.
Martingale on binary options
What is the working principle of the Martingale method with binary options? It is based on the system of doubling rates every time you lose. As a result the losses sustained are canceled out by the eventual win, and you have a small increase in the trading deposit. It is important to double the size of the trade to get a profitable deal. Thus, the total trade statistics will always be profitable.
Best strategy for binary options
The best strategy for binary options depends on the personal qualities of the trader, his preferences, choices of trade, and the timing of expiration.
If you are impatient, short-term (turbooptions) options, where you need to quickly analyze the market and make the decision, are more suitable for you.
Focus on thoughtful analysis and long-term work to deal with the options with a long expiration date.
In any case, you need to understand that a safe strategy doesn’t exist; if you try to get profit without risk, you’ll get no reward.
Thus, there is no perfect strategy for all. Every trader over time finds the idea for the best trading strategy that he adheres to.
We can offer you the best, in our opinion, strategies for binary options to date:
- Trading strategy of «Scalping on RSI»
- Strategy «the Puria Method» for 30 minutes
- The strategy of «Divergence RSI»
- More than 50 strategies on our blog
Types of strategies in binary options
Strategy for binary options are divided by expiration dates, i.e., by the time when the option expires and trader sees his income gain or loss.
Below, you can find links to informational articles on strategies for the most popular expiry times:
And also for the most popular methods of creation of strategy: