What is the best boundary binary options trading strategy Read here!

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Contents

Binary Options: Trading or Gambling?

To answer this common question, let’s take a closer look at the definition of gambling.

“Gambling is the wagering of money or something of value (referred to as “the stakes”) on an event with an uncertain outcome with the primary intent of winning money and/or material goods. Gambling thus requires three elements be present: consideration, chance and prize.”

By the above definition, trading in binary options does indeed fall into the gambling category but so does every other form of trading such as stock trading or currency trading. In fact, so many things that we do in life can be considered gambling. For instance, you may think that the new job you got was a good thing because the salary is 30% higher but turns out the workload might be 50% more and the new boss has a terrible personality.

Binary Options Trading vs Casino Gambling

Upon closer inspection of this question, I suspect what most people are really asking is whether binary options trading is like casino gambling in which the odds are already fixed against the player.

I believe many people have this notion because of the many immediate similarities between binary options and casino games like blackjack in which there are only two possible outcomes:

  1. Your cards are higher than the dealer’s and you get paid or
  2. The dealer’s cards are higher than yours and you lose.

Furthermore, with binary options payout being comparitively lower at only around 70%, many people are wondering why not just play blackjack where your payout appears to be much better at 100%.

Random vs Non-Random Outcomes

When comparing these two activities, what most people do not take into account is that for casino games such as roulette or blackjack, the outcome of each game is entirely random and is not dependent on any external factor. However, in binary trading, the outcome is greatly influenced by real world events.

For example, when the BRExit event happened on June 23 2020, the British pound fell sharply. People who did their homework, studied the rise in nationalism across the European Union and predicted that BRExit would happen had a much higher chance of correctly ‘guessing’ which way the price of the British pound will go after the BRExit referendum vote.

However, in the case of casino gaming, there is simply no way the casino game player will ever be able to gain an edge in guessing the outcome of any individual game no matter how much effort he is willing to put in.

Best Binary Options Brokers 2020:
  • Binarium
    Binarium

    The Best Binary Options Broker 2020!
    Perfect For Beginners!
    Free Demo Account!
    Free Trading Education!

  • Binomo
    Binomo

    Good choice for experienced traders!

Observed Odds vs True Odds

Hence, in binary options trading, the true odds you will get is highly dependent upon how much information you have in relation to the bet you are making.

Conversely, for pure casino gambling, the odds are already fixed against the player and the house ensured that the player can do nothing to increase his odds of winning. The casino will take every measure to ensure this and even suspected card counting Blackjack players are quickly banned from their premises.

Continue Reading.

What are the Main Types of Binary Options?

Learn how the One-Touch, No-Touch and Range/Boundary binary options differ from the common high-low viety and how to trade them. [Read on. ]

What Assets can be Traded using Binary Options?

Many of the most popular financial instruments such as currency pairs, equities and commodities are available to trade using binary options. . [Read on. ]

Binary Options: Trading or Gambling?

Is binary option a legitimate financial instrument or just another form of gambling. [Read on. ]

Binary Options & Trading Robots: A Perfect Match?

Unlike humans, robots have no emotion and do not need to rest, so they can make a lot more trades than humanly possible, combined with perfect consistency. [Read on. ]

Is Binary Options Trading a Scam?

Learn how you can get scammed when trading binary options if you are not careful. [Read on. ]

How to Select a Binary Options Broker?

With so many scam brokers out there, before you learn how to trade, one must know how to separate the wheat from the chaff and find a trustworthy binary options brokerage. [Read on. ]

Binary Options: Calculating Breakeven Win-Rate for a Given Payout

How often does my trades need to be successful in order to be consistently profitable in the long run when trading binary options. [Read on. ]

New! Best Binary Options Strategy that works – Beginner Friendly

New! Best Binary Options Strategy that works – Beginner Friendly

5 Comments

Last Updated: Sep 3, 2020 @ 2:02 pm

Binary Options Strategy that works

Binary options have been available to the general public since 2008, but have only gained real momentum over the past few years, with more people recently becoming aware of this unique (and possibly lucrative) trading opportunity.

Still, while many people have heard of binary options and quite a few have even tried it, it remains a mystery to many how it works and how they can take advantage of it to turn a profit. The purpose of this article is to inform those who are interested in making a profit in Binary Options how to go about doing so.

We will touch on the basics of binary options and how Binary Options work, we will then explain the different systems and strategies available and finally we will find out what the best Binary Options strategy is, or which one actually works. By the time you are finished reading this article, you should have a good working knowledge of Binary Options and a good idea of how to turn a profit.

The basics

Binary Options trading is basically speculating whether an asset will go up or down in a certain amount of time. A Binary Options trader will put his or her money on either a “Call option” or a “Put Option”. A “Call option” is a speculation that the current assets value will be higher than the opening price in a set amount of time. If the assets value is higher, then the trader wins. On the other hand, a “Put” option is the opposite, in that it is speculating the assets value will be below the opening price. The underlying asset can be a stock, a forex currency pair, a commodity or an index.

There are also a few different types of binary options. Digital Binary options are your standard up or down options. This is the most common binary option. All you are doing is deciding whether the price of the underlying asset will be higher or lower (up or down, call or put). Another type of Binary Option is Range Options (also known as Boundary Options). Range options

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Another type of Binary Option is Range Options (also known as Boundary Options). Range options allows you to predict if the underlying asset will expire in or out of a set price range. Another variety of Binary Option trading is called “Touch”. Basically, this option provides you with a price and you have to decide whether the underlying asset will hit that price during the time allotted. If it “touches” or goes past that price, then you win the option.

One of the best things about binary options is that the risk is fixed as is the return. It doesn’t matter how well the underlying asset does, if you call it, and it’s in the money, you get it. Whether it has largely surpassed all expectations or just barely made it, as long as it has expired in the positive, you get your return. The expiration time is also fixed, so the trader knows exactly when it is set to expire before he even clicks on the trade. It’s so simple and easy, anybody with a computer and a bank account can start trading and even winning right away.

Of course, even if it is that simple to trade in binary options, it’s not that simple to actually make a profit from trading. You have a 50/50 chance of guessing the results in a binary options, which isn’t really that awful bad, but you can do much better if you have a strategy going into it. Without any sort of strategy, chances are you are not really going to make much in binary options trading and you will usually be lucky just to break even.

**Hot Tip** – If you don’t want to stress yourself combining many different strategies, then consider using a trusted signal service like Signals365 which makes use of the trading strategy we explained on this page as well as other top binary options trading strategies. They really made everything interesting, simple and easy to follow!

Binary Options strategies and systems

There are many binary options strategies out there, but not all of them are successful. In order to maximize you potential return, it’s necessary to understand the different strategies, finding the best strategy, and then continuing to change and tweak your strategy as the market changes. You may have also seen some systems online that promise high yields just for signing up on their website (often free) and using their program to make money. While this might sounds pretty good on the surface, most of the time these programs and systems are nothing more than scams. The catch to most (if not all) of these systems is that they require you to use their broker, which ends up giving you less of a return and often no return at all on your investment.

Your best bet would be to steer clear of any types of programs or systems that claim to make you rich in binary options, as these are more than likely just out to get your money, not to make you money. You should, instead, concentrate on learning and developing a strategy to track and gauge trends in order to make a more educated guess on how the underlying asset is going to do. While there are many, many binary options strategies out there, most of them require you to use a price chart to gauge the activity of assets.

An important thing to remember about binary options is that there are constant fluctuations in the price of any given asset. This is especially true over short periods of time, like 15 minutes or 30 minutes. Of course the longer the period of time is, the easier it is to predict certain trends in the fluctuations, but the longer you will have to wait for your return.

Most binary options trading is done in the short term, even though it’s much harder to predict. This is because short term binary options offer an almost immediate payout, so your money is not tied up for a long period of time. Most binary broker’s payouts are not sufficient to tie up your money for a long period, and immediate payout can increase your funds much quicker. This is where a good price chart becomes an invaluable strategic tool in gauging the actions of any given asset. A good price chart can give you an accurate representation of how quickly prices might change and allow you to see how quickly future trades will materialize.

By using a price chart, you can see minute to minute movements of different assets in order to more clearly predict what the asset is likely to do in the near future. It may take a little time to get used to reading a price chart in a way that helps you to predict the outcome, but after a while you will start to learn how to see trends in the market, and by understanding and using these trends, you can accurately gauge the direction an asset is most likely to move.

Using a candlestick chart

The best type of price chart to use for gauging the movement in any given asset is called a “Candlestick Chart”. A candlestick chart will give you the most information on the performance of any given asset over a short period of time. The first thing you will need to know is how to read a candlestick chart before you can actually utilize it for predicting your assets movement. At first glance, candlestick charts might seem complicated, but in reality once you understand the basics, they are very easy to use and quite intuitive.

A candlestick chart will show you the opening, highs and lows and closing value for a set time frame of an asset. The chart is made up of vertical rectangles which are either red or green with lines on the tops and/or bottom of the rectangles. The rectangles are called the bodies and the lines are called the wicks. The wicks (also called the shadows) tell us the highs and lows where the top line define the upper value of the stock and the bottom line defines the lower value. If the asset closes higher than the opening price, then the body is shows as a hollow rectangle (usually green) with the bottom of the body representing the opening price and the top of the body representing the closing price. If, on the other hand, the asset closes at a lower value than it’s opening price, the candlestick is drawn as a filled rectangle (usually read) with the top representing the opening price and the bottom representing the closing price.

Usually, the longer the body of a candlestick the more intense the buying or selling of that asset is at that period of time. Conversely, the shorter a candlestick is, the less movement there is in the price of the asset. A long hollow candlestick shows aggressive buying and a long filled candlestick shows strong selling of any given asset. The longer the hollow candlestick is, the higher the close is above the opening, and conversely the longer the filled candlestick is, the lower the price of the closing is above the opening.

By simply studying the candlesticks over a period of time you can see patterns in the opening and closings and without any further information, you can often accurately determine the next action of the given asset. For instance, you will notice on many price charts that there will be a filled candle, hollow candle, filled candle, hollow candle, etc. If you the last option closed higher than it opened, then the probability will be that in the next period of time it will close lower than opening and you would then place a “put” option on that asset, and vice versa. This is probably one of the simplest, yet successful strategies used by Binary Option traders today.

Another thing to look at when you are reading the candlestick chart is the wicks (lines or shadows) on the candlesticks. The wicks on a candlestick shows you the actual movement during the session of buyers and sellers of any given asset. The longer wick on top and shorter wick on bottom indicates that the buyers dominated the session and bid higher prices, however sellers forced the price lower toward the end of the session and the weak close created a long upper shadow. If, on the other hand, the lower wick is longer and the top wick is shorter it shows that it was dominated by the sellers for that session, with the buyers driving the price up toward the end of the session with the strong close causing a longer lower wick.

Best Strategy for gauging binary options

By understanding candlestick charts you can use the information to accurately predict how any given asset is going to move. Of course, you can never be 100% sure on how it’s going to play out, but by understanding and using the candlestick you will increase your chances of success quite a bit.

The thing you need to remember is to not only look at the candlesticks, but also the wicks (or shadows) as well. If there is quite a wide fluctuation in the wick, it will be much more difficult to gauge than if the wicks are fairly stable. The less volatile a market is, the easier it is to predict high and low trends, so a good strategy is to look for less volatile assets, such as foreign exchanges (Forex) that tend to oscillate in a fairly predictive pattern. Once you have discovered those assets that seem the most stable, all that’s left is following the asset in real time over a certain period of time and then utilizing the trend to predict the next call or put option.

In order to predict the next option, you should look at whether the asset closed higher or lower than it opened in the latest session. Usually, in a stable market, if the asset closed higher than it opened, you would want to use a “put” option and conversely if it closed lower than it opened you want to do a “get” option. This is usually the case, but not always, which is why it’s important to track the asset to see if there are any exceptions, so that you can accurately predict how often the particular asset goes down or up, how high it usually goes before it goes down, and other such relevant information. The longer you track an asset, the more reliable you can gauge the underlying activity and the more accurately you can predict its movements.

You should keep in mind, this strategy works best when dealing with a calm market. If the market is more volatile then it’s much harder to predict what the asset might do, so sticking with the less volatile markets is key to winning, using this strategy. Also, the longer you track the assets highs and lows, the easier it is to predict the pattern and the greater chances you will be successful in your trading.

**Hot Tip** – If you don’t want to stress yourself combining many different strategies, then consider using a trusted signal service like Signals365 which makes use of the trading strategy we explained on this page as well as other top binary options trading strategies. They really made everything interesting, simple and easy to follow!

Some final things to keep in mind

Now that you understand how to use the candlestick chart to predict an assets movement at any given time you are on your way to making a profit in Binary Options trading, but there are a few things to keep in mind in order to create the most profit. One of these things, and this is a very key thing, is to check out as many brokers as possible, before settling on the best one. You should look at brokers that offer the best payouts, with the most options. There are many different brokers available and this will take some time on your part to do the research necessary in order to best decide. Some brokers will even give you a portion of your money back when you predict wrong, usually around 15%. You’ll want to check out what others are saying about particular brokers and decide for yourself which is right for you. Some other things to keep in mind when deciding on a broker is how much of an initial deposit is required and how much the minimum investment is. As a new trader, you will want to start with small investments until you see a definite trend in profits over losses.

Another thing I highly advise for new traders is to find a good broker that allows you to play the binary options without actually putting your money down first. These “practice accounts” allow you trade binary options using fake money. By using a practice account first, you can get to know and understand the options and practice using the candlestick chart before you plunk down your hard-earned cash.

You will be able to see where the best assets are, how much the best investment to make is and how often you win/lose on your trades. Once you feel comfortable and are making a profit (albeit a fake one), you can then open an account by making an initial deposit with the broker. Hopefully, by the time you actually put your real money down, you’ll be knowledgeable enough to make sound decisions, based not on guesswork or hunches, but on real, proven strategies! Just remember, even using the best strategy there is no guarantee that you will be successful every time, but by using a candlestick chart and understanding and utilizing the trends, you will definitely increase your chances of an accurate prediction by a very large percentage. Good luck and happy trading!

Hopefully, by the time you actually put your real money down, you’ll be knowledgeable enough to make sound decisions, based not on guesswork or hunches, but on real, proven strategies! Just remember, even using the best strategy there is no guarantee that you will be successful every time, but by using a candlestick chart and understanding and utilizing the trends, you will definitely increase your chances of an accurate prediction by a very large percentage. Good luck and happy trading!

7 Binary Options

Binary Options Trading Requires Very Little Experience

The common misconception is that binary options trading and forex trading can only be done by one that has a certain amount of experience in the area. There is no requirement to have any previous experience in financial trading and with a little time, any skill level can grasp the concept of binary options trading.

The basic requirement is to predict the direction in which the price of an asset will take. The price will either increase (call) or fall (put). Successful binary options traders often gain great success utilizing simple methods and strategies as well as using reliable brokers such as IQ Option or 24Option.

From this page you will find all the relevant strategies for binary options trading.

Get started with 3 easy steps:

Choose a broker from the list below

General Risk Warning:

Binary options trading carries a high level of risk and can result in the loss of all your funds

Binary and digital options are prohibited in EEA

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. Between 74-89% of retail investor accounts lose money when trading CFDs. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. The financial products offered by the company carry a high level of risk and can result in the loss of all your funds. You should never invest money that you cannot afford to lose.

(*Amount will be credited to account in case of successful investment)

Register a broker account

I personally use six different brokers for trading and would recommend all serious traders to open a few accounts with different brokers in order to build up a good variety of assets.

Start trading with four easy steps:

How to minimize the risks

Our goal is to provide you with effective strategies that will help you to capitalize on your returns. These are simple techniques that will help to identify certain signals in the market that guide you make the proper moves in binary options trading. Risk minimizing is important for every trader and there are a few important principles that aim to help in this area. Binary options trading can present several risks but to decrease them, take the following into consideration.

• Never invest the entirety of your capital at once
• Review the dynamics of your trading asset prior to investing
• Exercise the strategy by investing only 5 to 10 percent of your equity per placement

Reasons for Having a Binary Options Strategy

You don’t need a strategy to trade binary options. You could simply go with your gut, making decisions in the moment and on instinct. However, you won’t make any money with this approach. In fact, you will probably lose a lot. So, while it is not essential to have a strategy in order to trade binary options, to be successful and profitable you must have a binary options strategy.

To be more precise, you need three different types of strategy. Below is an introduction to each.

  1. Trading Strategies – What They Are and Why You Need One

There are two main reasons for having a trading strategy and sticking to it. The first is that it removes the possibility of you making emotional or irrational decisions. Instead, decisions are based on pre-defined parameters that are developed with clear thinking. The second reason for having a trading strategy is that it makes it possible to benefit from repetition. Without this type of strategy, you probably won’t know what worked or why. Even if you did, it would be hard to repeat it.

In other words, a trading strategy ensures your trades are based on clear and logical thinking while also ensuring there is a pattern that can be repeated, analyzed, tweaked, and adjusted.

For example, you can analyze your strategy after a set number of trades or a set time period. Is it making you money? Is it making you enough money? Maybe it is making you money but not as much as you hoped. In this situation you may decide to let it continue knowing it will be profitable in the long term. Or you might decide to make carefully considered and structured changes to improve profitability. This is all possible, but only if you have a trading strategy in the first place.

The alternative is haphazard and impossible to optimize. Imagine you looked at your performance after a set number of trades or a set period of time but did not have a trading strategy to judge it against. What would you do if you lost money? All you could really do is hope you make better decisions in the future. However, you would have nothing concrete to base your adjustments on. The same applies if you were making money but not as much as you had hoped. In fact, the same also applies if you did make money – you would have no way of knowing for sure that you could replicate the performance again, as each transaction is a standalone trade and is not part of an overall strategy.

It is a completely impractical way of trading. Look at a scenario where you don’t use a trading strategy. In the scenario, you make a 50 percent profit one month and then a 50 percent loss the next month. How would you ever know why one month was successful and the other wasn’t? How would you know what to change, if anything?

You simply wouldn’t. The best you can probably hope for is break even, and that is no use to anyone. In reality, you will probably lose money because you have to win more than you lose. Without a trading strategy, that is almost impossible.

  1. Money Management Strategies – What They Are and Why You Need One

Many people make the mistake of only developing a trading strategy – i.e., a strategy that determines the type of asset they want to trade and the level of risk they want to be exposed to. Little thought is given to the money management strategy. That is a mistake because a money management strategy will help you manage your balance so you can get through bad patches and maximize winning streaks.

To illustrate this further, let’s look at an example of someone who doesn’t have a money management strategy. Because of this they invest 10 percent of their balance on a single trade. If that trade loses, they will need a 20 percent gain on their account balance just to break even. If they lose three trades in a row, they will need a 30 percent gain on their account balance just to break even. You can see how this can easily creep up – a common losing streak of three in a row could see the account balance of that trader drop by 30 percent. When you consider the fact that many losing streaks are much longer than three-in-a-row, you will appreciate how important a money management strategy is.

Without one, your account balance is at risk of hitting zero, even if you have a good trading strategy in place. Losing streaks and unprofitable trades are a part of life, so you must have a strategy in place that deals with these inevitabilities. This means managing your money to maximize profits, limit losses, and, crucially, get back to a profitable position after a bad patch.

  1. Analysis and Improvement Strategies – What They Are and Why You Need One

There is no such thing as the holy grail of binary options trading strategies. Markets change, and every successful trader constantly works to improve, update, enhance, and make better. Even traders with many years of experience and large profits in their bank accounts still work hard to analyze and improve how they trade. It applies even more to new traders and those with minimal experience.

An analysis and improvement strategy gives you a structured way of maximizing the good parts of your trading and money management strategies while simultaneously fixing or removing the parts of your strategies that are not working. This helps you become more profitable in the long term, and it helps you adjust to changing market conditions.

Without an analysis and improvement strategy, you will plod along. If you have good strategies in place you might make money, but nothing is guaranteed. In addition, you might not be making as much money as you could. Why leave these profits behind when there is a way of getting them? That way is through analysis and improvement.

Types of Binary Options Strategy

Binary options strategies are all different, but they have three common elements:

  1. Creation of a binary option signal and getting an indication of how to trade this signal
  2. How much you should trade
  3. Improving your strategy

The precise strategy can vary on each step, so there are a huge number of possibilities. The most important part of developing a successful strategy is understanding as much as possible about each element. This will be covered in the next section, starting with the creation of signals.

Step 1 – Creation of Signals

A signal is basically an indication that the price of an asset is about to move in a particular direction. Of course, prices of assets move all the time. What you need is something that predicts that move before it happens. That is what a signal does.

There are two ways that signals are created. The first is to use news events, and the second is to use technical analysis.

Generating signals from news events is probably the most common approach, particularly for new or inexperienced binary options traders. It involves looking at what is happening in the news, such as an announcement by a company, an industry announcement, and the release of government inflation figures. In many simple cases, positive news means prices are likely to rise while negative news is likely to lead to a fall in prices.

The starting point for making this strategy work is knowing what news events to expect and when. This is why you will find economic calendars on most good binary options trading platforms. If you know that a company’s earnings report is due in two days’ time you can plan your analysis and trading activities around this.

The best platforms will also tell you what to expect from the news event. For example, it is helpful to know that a company’s earnings report is due in two days’ time, but it is even more helpful if you also know what the market expects to see in that report. You can then make decisions in advance of the report in an attempt to predict its contents and the subsequent market movements. You can also make decisions after it is published based on market expectations and reactions.

There are positives to a news events approach to trading. In particular, it is easy to understand and learn. There are disadvantages to the approach too. The biggest problem is unpredictable markets. For example, a company might release an earnings statement that shows an increase in profits. This is a positive news event that you would expect on first reading to cause the market to react positively. However, within the report there might be additional information that spooks the market, such as profits not being as high as expected. This could mean the market moves less than you anticipated and, in some cases, can even move in the wrong direction – prices falling even though the news event is categorized as positive.

It is also difficult to predict how long a movement will last and how far it will go. If you go back to the example of the company earnings report, it is a positive report so prices in the company’s shares are likely to rise; but how long will the rising price situation last and when will the price max out? These questions are unknowns.

Trading based on technical analysis offers an alternative. It is a strategy that seeks to predict the movement of asset prices regardless of what is happening in the wider market.

Essentially, the process involves looking at how the price of a particular asset moved in the past. From this, it is possible to establish patterns that can be used to predict price movements in the future.

It sounds complicated, but our brains are used to doing this on a daily basis. A good example is when you meet a new person. If that person greets you warmly, you are likely to predict positive things for the relationship. On the other hand, if the person is standoffish or unfriendly, you might anticipate difficulties in the relationship. You come to these conclusions based on your experiences in the past of meeting people and forming relationships.

Technical analysis does something similar. It looks at the current conditions of an asset and decides, based on past experience, if the price will remain largely unchanged or if it will rise or fall.

Once you get into the technical concepts and terms, it does, of course, get a bit more complicated. However, the overall concept is the same as the day-to-day task of making a prediction on future outcomes based on past events.

Now for the big question – should you use a news event approach to trading or a technical analysis approach? This comes down to a number of factors, and the answer will be different for everyone. The best advice is to try both to see which you are most comfortable with and which generates the most profits. Of course, you are probably not in a position to test strategies with your hard-earned money. Luckily there is another option – using a demo account. Most of the reputable binary options trading platforms on the market offer a demo account facility. This allows you to trade binary options with virtual money rather than real money. You can’t make any profits with a demo account, but you will not lose any real money either. What you can do is test strategies and trading styles without any risk.

One final point to remember when looking at signals and strategies is to focus on the short-term. There are investment strategies that aim to predict the price movement of an asset over a long period of time, such as 10 years. This type of information is of no use in binary options trading. Instead, you need to know if a price is going to move over the next couple of minutes, the next hour, the next day. A prediction of the price in 10 years’ time is not relevant.

To achieve that you need short-term signals and short-term strategies.

Step 2 – How Much You Should Trade

This is essentially a money management strategy. They vary in complexity and level of success, starting with a strategy that involves investing the same amount on each trade. Two other common strategies are the Martingale strategy and the percentage-based strategy. For long term success, the latter is the best option.

Investing the same amount of money on each trade is just like having no strategy at all. It is the riskiest strategy, as it does not take into account either your overall level of profitability or the amount of money you have in your account. Both of these are essential factors, and ignoring them can result in quickly depleted balances.

Let’s look at the other two common strategies now, starting with the Martingale money management strategy.

The core concept of the Martingale strategy is to recover losses as soon as possible. This means investing larger amounts of money in trades following a losing trade. For example, you could have a set value of money that you trade, which you then double when you have a loss. If that trade wins, then you are back in profit again rather than being somewhere around break even.

Problems with this strategy occur when you go on a losing streak with multiple losing trades in a row. Each losing trade in a Martingale strategy involves an increase in the investment on the following trade. This quickly adds up. For example, imagine you went on a 10-trade losing streak. That is a lot, but it is not an unrealistic or unreasonable situation. On a 10-trade losing streak, your 11th trade would have to be 1,024 times the value of your original trade in order to stay with the Martingale system. There are not many budgets that could withstand that sort of increase, even if the value of the original trade was low.

The question comes down to how accurate your predictions are and whether you can prevent or minimize losing streaks. It is always important to remember that nothing in binary options trading is a sure thing. Even trades that you are certain will be successful can end up as losses. Losing streaks are inevitable, regardless of how good a trader you are. It is simply impossible to be right enough times to prevent them. Therefore, for most people, a Martingale money management system is a risky option.

A percentage-based system is less risky, so it is usually the preferred choice for most traders, particularly those who are new to binary options trading. The concept is fairly simple – the amount invested on a trade is based on your account balance. If you lose a trade, your account balance will fall, so the amount of money invested on the next trade decreases. If, on the other hand, you win a trade, the amount of money invested on the next trade increases because your account balance has increased.

This strategy helps to keep your balance intact so you can realize steady profits over time.

The question then comes down to what percentage of your balance do you want to invest. As a guide, a trader who is comfortable with risk might choose a number somewhere around five percent, whereas a trader who doesn’t like risk would select a value somewhere around two percent.

Let’s look at an example, assuming you invest five percent of your balance. If your account balance was $500, your trades would be $25. If your balance decreased to $300, your trades would decrease too – each investment would be $15. If, on the other hand, your balance increased to $800, your trades would each be $40.

This is a strategy that helps you only invest an amount that you can afford. It is a strategy that lets you increase your profits while also protecting your account balance during difficult periods and losing streaks.

Step 3 – Improving Your Strategy

One of the best ways to improve your trading strategy is to analyze your performance using a diary. This is a simple but highly effective concept. It involves keeping a diary where you note down every trade that you make. You can then look for patterns and trends to see what is working and what isn’t.

This is a particularly effective approach if you are a new trader and are still trying to establish a profitable strategy. A common approach in this scenario is to place trades using both technical analysis signals and news events signals. A diary will help you keep those trades separate so you can judge which performed better. For example, you might find you are getting double the profits from trades you make based on technical analysis. However, you know from experience that you spend more time on news event signals than you do on technical analysis. The information in your diary would indicate that you should consider a change of approach.

Basically, it is all about knowing what trades are working and which ones are not. The only way to do that is by keeping a record, so a trading diary is a highly effective tool.

A trading diary also lets you focus on the details to fine tune your overall trading strategy. After all, you will get to a point where you are seeking a one or two percentage point increase in your profitability. This is simply not possible to do in a sustained way if you don’t keep good records. On the other hand, doing it successfully could result in hundreds or even thousands in additional profits.

Remember to use your trading diary to check all parts of your trading approach, not just the trading strategy. This includes how you manage money and how you decide on the value of each trade. It also includes looking at the best assets for your trading approach and style.

You can then go into even deeper detail. For example, you can look at the best days of the week or the best times of the day. This information might lead you to adjust your approach. You can also look at things like which brokers work best for you and much more.

There are many things that a trading diary will tell you. One of the problems is trying to work on too many of them at the same time. If you do that you won’t know which changes are having a positive effect and which are not. The easy way to fix this is by focussing on single changes, analyzing their impact, and then moving on. Again, your trading diary is crucial to this process.

If you don’t keep a trading diary at the moment, start as soon as possible. It will become an indispensable tool.

Trading Strategy Examples

Let’s now look in more detail at some specific trading strategies. The strategies below are among the most common, but there are others you can use as well. Also, many traders adapt, alter, or combine strategies to suit their objectives, attitude to risk, and trading goals. There has to be a starting point somewhere, and the strategies below are a good place to start your learning about binary options trading strategies.

Before going on, it is important to remember that none of them will be effective if you don’t also combine them with a money management and improvement strategy, as explained above.

The price of an asset generally moves according to a trend, i.e. it moves up in price for a period of time or it moves down in price. These price movements are never linear. Instead, they zig-zag, sometimes moving up in price and sometimes moving down, but overall moving in one general direction. As these zig-zag movements are predictable in particular situations, they present an opportunity for binary options trades.

In simple terms, you have two main options: you can trade the overall trend or you can trade each swing. Trading the overall trend means ignoring the minute-by-minute up and down movements in price to instead focus on the overall trend direction for a period of time. This gives you multiple opportunities to profit from the trend, particularly given the fact that most trends persist for medium to long periods of time, i.e. they are well within the boundaries of the short term trading style required to be successful in binary options trading.

Trading each swing involves placing more trades. It involves more risk as a result, but there is also the potential for greater rewards. This approach is based on thinking about the highs and lows in either an upward or a downward trend:

  • Upward trend – New highs and new lows will generally be higher than previous highs and lows in an upward trend.
  • Downward trend – New highs and new lows will generally be lower than previous highs and lows in a downward trend.

Remember the point made at the start of this section though – there is no reason why you can’t combine both so you use both approaches at the same time. They are not mutually exclusive.

The most common way to trade trends is by using High / Low options. All binary options trading platforms offer this type of trade. Basically, you trade on whether an asset’s price is going to be higher than it is now after a set period of time (a high option) or lower than it is now (a low option).

A riskier but potentially more lucrative option is to go for a one-touch option. This is another popular binary options trading selection. Instead of simply predicting whether a price will finish higher or lower, you predict whether or not the price will reach a certain point. This is called the target price.

Again, you can use a combination of both to diversify your risk while increasing your chance of making higher profits.

Trading Strategy Example 2 – Trading Based on News Events

Trading on assets based on events in the news is one of the more popular styles of trading. The theory is fairly simple. Good news, such as a company reporting profit information that was above analyst expectations, would see the price of that asset go up. Similarly, profit information that was disappointing would see that company’s share price go down. You can make profitable binary options trades in these conditions.

It is not an exact science, however. Other styles of trading, such as technical analysis, produce parameters that are precise. Trading based on news events leaves a lot to chance, as there is no sure way of knowing how much an asset’s price will increase or decrease or how long the price movement will last.

You can adopt specific strategies and approaches to help increase your chances for success. Here are three you can work into your overall binary options strategy:

  • Boundary options – This is the strategy to use when you know an asset’s price is going to move, but you are not sure which direction it will go. A good example of a situation where this is suitable is before a major news event, as you won’t know if it is going to be positive news or negative news. With a boundary option, two target prices are defined – one above the current price and one below. The difference between these two numbers is known as the price channel. If the price of the asset hits either of these two price targets, you win. If it stays within the channel, you lose. As you can see, it is a strategy that works best when you expect significant movement in the price of an asset.
  • Trading the breakout – The breakout is the period of time immediately following the release of news that impacts the market. In binary options trading, this is a very short period of time – anything from 30 seconds to a few minutes. The theory behind the strategy is that the most significant movements in the price of the asset will occur during this breakout period as traders seek to adjust their positions to take make a profit or limit their exposure to risk. The type of binary options trade you would use in this scenario is a simple High / Low option, but you select a very short expiration time. This is sometimes known as a 60-second option.
  • Intelligent High / Low trades – In simple terms, positive news means prices will rise, and negative news means prices will fall. As already explained, the market does not always react according to this rule. Sometimes news that is positive on the surface – falling unemployment figures, profit reports by a company, or inflation numbers that are within government targets for example – cause markets to react in a negative way. This comes down to expectation, i.e. the market expected the unemployment numbers, profit announcement, or inflation figures to be better and had already made adjustments before the news was released in anticipation. When the news isn’t as good as the market expects, it adjusts in the other direction, prompting prices to fall even though the news is generally positive. If you can predict when these events will happen, you can make good profits using High / Low trades.

Trading Strategy Example 3 – Using Candlestick Formations

For new traders, this might be the most difficult of the strategies to explain, but it is the easiest to implement and make money from once you understand it.

When you look at an asset’s price chart over time, it is typically a line chart showing the price at each point in time. For example, looking at the price over a month is likely to show you the price the asset closed at on each day. However, this is only one piece of price data. Candlesticks give you much more.

Candlesticks are represented on an asset’s chart over time, just like a line graph, but they are designed to give you much more information. The bottom of the candlestick represents the low price it reached during the specific time period, and the upper part of the candlestick represents the high price it achieved. In between, you will also see both the opening and closing price. In other words, a candlestick lets you see, at a glance, the price range that a particular asset fluctuated between during that specific period of time.

Using candlesticks as a trading strategy involves recognizing various candlestick formations that you can use to predict an asset’s price movement.

A Candlestick with a gap is one example. This occurs when the price of an asset moves from one price to another that is significantly higher or lower. The difference between these prices is the gap. It is an unusual occurrence because price movements are typically much more gradual, with the asset hitting all or most of the price points as it moves through the range.

So, what can you learn about an asset when you spot a gap in a candlestick, and how can you use this information to make a prediction?

  • A gap that occurs during times when there isn’t much trading volume can be an indicator that a quick correction is likely to occur. One of the situations where this might happen is shortly before a market closes for the day when there are not many traders left placing trades. Large trades in these situations can produce the gap, but that is not necessarily reflective of the strength of the asset, i.e. if the trade had taken place when the market was more active, the gap would not have occurred. You can therefore predict the gap in the price of this asset and base your trades accordingly.
  • Gaps that appear during periods of high trading activity but where the price is not generally moving very much can be an indication of a new breakout, i.e. that the asset’s price will start moving in that direction. You can use this information to predict the price and make a trade.
  • If there is already a trend in a particular direction and the volume of trading is normal, the gap might indicate an acceleration of the trend. In other words, the movement of the price in a particular direction is likely to accelerate. You can use this information to base your next trade.

A candlestick formation with a gap is just one of many. However, knowing and having confidence in several will greatly improve your binary options strategy.

Developing a Binary Options Strategy Without Risking Money

As explained in detail throughout this article, a binary options strategy is essential if you want to trade profitably. It gives structure to your trading, removes emotion-led decision making, and lets you analyze and improve.

How do you test a strategy without risking your money? After all, how can you find out that a strategy doesn’t work without trying it? If you try a strategy that doesn’t work using your own money, you will lose it. That could result in you going through your available funds before the testing phase ends, leaving you with nothing to trade with.

There is a solution – a binary options demo account. All reputable and good quality brokers and trading platforms offer demo accounts. They let you test the platform, but, crucially, they also let you test your trading strategies using real market conditions. The testing is done using virtual money instead of your own, so there is no real money at risk. Of course, you can’t make any money either, but that is not the point. The point of a demo account is to solidify a binary options strategy that is profitable.

The Strategies

There are several assets to select from in binary options trading. However, the oldest and most effective approach to minimize risks is to focus on a single asset. Trade on those assets that are most familiar to you such as euro-dollar exchange rates. Consistently trading on it will help you to gain familiarity with it and the prediction of the direction of value will become easier. There are two types of strategies explained below that can be of great benefit in binary options trading.

1. Trend Strategy

A basic strategy most adopted by beginners as well as experienced traders. This strategy is often referred to as the bull bear strategy and focuses on monitoring, rising, declining and the flat trend line of the traded asset. If there is a flat trend line and a prediction that the asset price will go up, the No Touch Option is recommended.

If the trend line shows that the asset is going to rise, choose CALL.

If the trend line shows a decline in the price of the asset, choose PUT.

This method works the same as the CALL/PUT option except in this case, you select the price at which the asset must not reach before the selected period. For example, Google’s share price is $540 and the trading platform is on the No Touch price of $570 with percentage returns of 77%. If the price doesn’t reach $570 after the specified time, then there is a gain.

2. Pinocchio strategy

This strategy is utilized when the asset price is expected to rise or fall drastically in the opposite direction. If the value is expected to go up, select CALL and if it’s expected to drop, select PUT. This is best practiced on a free demo account from one of the brokers.

3. Straddle Strategy

This strategy is best applied during market volatility and just before the break of important news related to specific stock or when predictions of analysts seem to be afloat. This is a highly regarded strategy utilized throughout the global community of trading. This is a strategy best known for presenting an ability to the trader to avoid the CALL and PUT option selection, but instead putting both on a selected asset.

The overall idea is to utilize PUT when the value of the asset is increased, but there is an indication or belief that it will being to drop soon. Once the decline sets in, place the CALL option on it, expecting it to actually bounce back soon. This can also be done in the reverse direction, by placing CALL on a those assets priced low and PUT on the rising asset value. This greatly increases chances of success in at least one of the trade options by producing an “in the money” result. The straddle strategy is greatly admired by traders when the market is up and down or when a particular asset has a volatile value.

4. Risk Reversal Strategy

This is indeed one of the most highly regarded strategies among experienced binary options traders across the globe. It aims to lower the risk factor associated with trading and increase the chances of a successful outcome that results in positive profit gains. This strategy is executed by placing CALL and PUT options simultaneously on an individual underlying asset. This is especially beneficial when trading on assets with fluctuating values. Naturally, binary options can experience two possible outcomes and trading on a two for two opposite’s predictions over an individual asset at once, guarantees that at least one will generate a positive outcome.

5. Hedging Strategy

This strategy is commonly known as Pairing and most often used along with corporations in binary options traders, investors and traditional stock-exchanges, as a means of protection and to minimize the associated risks. This strategy is executed by placing both Call and Puts on the same asset at the same time. This assures that regardless of the direction of the asset value, the trade will generate a successful outcome. This provides the investor with profits of an “in the money” outcome. This is a great means of protecting yourself as an investor in whichever scenario is produced. It’s sort of an insurance method that prepares you for any scenario.

6. Fundamental Analysis

This strategy is mostly utilized during stock trading and primarily by traders to helm gain a better understanding of their selected asset. This increases their chances of accuracy in the prediction of future price changes. This approach involves conducting an in-depth review of all of the financial regards of the company. This info should include earnings reports, market share and financial statements.

This review helps the trader to better understand the previous activity of the asset and its reaction to certain financial or economic changes. This review helps the trader to make a strong prediction under familiar circumstances in future trading strategies. Keep in mind, that using a good binary trading robot can help you to skip these steps completely.

The best way to practice is to open a free demo account from one of the brokers.

Binary Options Range – Bound Trading: More than One Way to Skin a Cat

Full Review of the Range – Bound Trading Strategy for Binary Options

I always say that it’s best to trade with the trend and join an already established trend, but…there’s more than one way to skin a cat as they say. So why don’t we find a good strategy for ranging markets? Well, the first problem would be how to identify a range – bound area in a timely manner, not in the evening when we look at charts and feel bad for all the missed trades. If we could identify the sideways movement early enough, we could then use some Boundary options and assume that at the expiry time our option is inside the Boundary and thus In the Money. Once again forex-strategies-revealed.com lends us a helping hand and shows us how we can identify range bound price action with the help of the MACD indicator.

How to Use MACD for Identifying Ranging Markets

Although it is not a complete strategy, this can come in handy and we can work from here to adapt it for Binary options trading and a way could be the one I suggested above. Ok, here’s what the originator of the idea is proposing: apply a MACD indicator that plots a histogram on the chart of the asset you are trading and then draw two additional levels to it: one at 0.0005 and one at -0.0005. The settings differ depending on how many decimals your broker is using so you might have to adjust to fewer zeros or more zeros. According to the concept, once price is trading between the two lines, we can consider that we are in a range – bound market. A picture is worth a thousand words so…

Notice that once the MACD histogram enters the space between the two levels, a ranging period begins and price moves almost sideways. Now please don’t imagine that those levels are some form of magical prison that will confine price forever or some sort of vacuum that sucks it in. Just as easy, the histogram could enter the zone and immediately exit it and that’s why it’s best to wait a little to see how price behaves once the histogram is in the zone or use additional indicators that hint us about a possible range – bound market. Read more about the MACD Tool for Binary Options here.

Using the MACD Range for Binary Options

Let’s assume that we correctly identified a range bound market. Ok, what’s next? Well, I guess the next thing to do is buy a Boundary option with the obvious choice being IN. But this depends a lot on what strike prices are offered by our broker for this type of option. There is another way though, but you will need some knowledge about Support and Resistance: draw the support and resistance levels corresponding to the ranging period and buy Calls when price touches support and Puts when price touches resistance. For this to work you will have to trade after the S/R levels can be properly identified (once rejection is seen and S/R levels can be drawn). What do you know, there’s another way of trading this as well: once the histogram clearly exits the ranging zone, trade the breakout, meaning buy a Put if the histogram breaks the -0.0005 level and buy a Call if the histogram breaks the 0.0005 level. This should be accompanied by a corresponding break of the support and resistance level that you have already drawn. If you can find any other ways of trading using this idea, don’t be shy of sharing on the Forum.

Why does the MACD Range Suck?

The MACD histogram will enter the zone between 0.0005 and -0.0005 very often and most of the time it will not remain there. This is true even if price is not trending, just moving strong enough for the histogram to surpass our levels so trader skills cannot be replaced by drawing two lines on a histogram. Also different assets have their own particularities and the suggested levels will not be appropriate for all pairs or all types of asset. In fact the author recommends us to change the levels and adapt them to the pair that we are trading. Again, trader skills come into play.

Why the MACD Range doesn’t suck?

Identifying a range bound market as soon as it begins is difficult even for an experienced trader and although this method is not bullet proof, it can give us a heads up about the possible beginning of the ranging period. Also it allows us to trade in several ways, using Boundary options, normal Calls and Puts and a potential breakout once the histogram leaves the range zone.

Wrapping it up

Even if it’s not a sure thing (nothing is in trading), this method of identifying a market that moves sideways by using the MACD histogram is definitely an extra help and I’ll take almost any free help that I receive. The histogram will move outside the levels many times during a trading session, but once we see it remaining inside the zone for a longer time, we can start to look for other hints that indicate a range bound market. One thing is certain: while the histogram is hovering around the zero level, the volume is low and price is not going anywhere. Overall it’s a good tool to have but don’t expect it to work some magic and fill your accounts.

Learn More about the Range Boundary Strategies for Binary Options on our Forum!

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