7 Rules For Binary Options Trading Plan No Need For ‘Plan B’

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Strategy for a day in binary options trading

Binary options for the day — medium-term strategy for those who can’t hold a computer for several hours and constantly watch for the appearance of signals. Short-term strategies require maximum concentration and attention, while the forecast for one day or even a week is a part time job, a nice addition to the main work. The trader needs 10-20 minutes per day on the search of signal and understanding the indicators on the long frames. About the rules of trading on long time frames and examples of binary strategies read on!

The rules of options trading with an expiration period of one day

Binary options trading with an expiration period of one day or more has several advantages:

  • on the minute charts indicators strategies show a lot of false signals because of price noise, the nature of which is unpredictable fluctuations, confounding the understanding of the direction of the trend. Daily chart price keeps out noise and keeps the price slide (slip on the minute indicators zero deposit);
  • day tactics are often used to trade at the end of the day one of the sessions, when binary options trading activity is on the decline;
  • low risk in comparison with scalpers strategies.

Trading rules and strategies of work with binary options for day:

  • choose a broker that gives the possibility of early closure of option. If the trend went the wrong way and wait for the end of the day makes no sense, prematurely closed binary option will save time and minimize the loss;
  • try to close positions before the weekend. The weekend markets are closed. In addition to swaps (payment of a fee for transferring of your position), the trader may lose money because of the gap — the gap between closing price and opening day;
  • binary options for day does not mean you have to put the expiration of 24 hours. This means that the analysis uses daily charts, and expiration can be set for a few hours.

How to trade binary options 24 hours: tactical strategy

1. Strategy on the news

In short time frames the strategy on news in binary options is not recommended, you can not say about long ones. At the time of news the market is volatile (volatility may last a day). Institutional investors (they set the basic direction of prices) estimate associated with the solution (news) the factors and make a decision. The first 30 minutes of mood are not clear, but the direction of the price will gain direction. Make a deal for a few hours and make money with big investors!

  • Example: on the eve of the weekend on Friday at 15.30 05.05.17 report was published Nonfarm Payrolls (to be released in the last day of the first week). With the forecast of 185 thousand new jobs fact amounted to 211 thousand That’s how the dollar responded this day:

At 15.30 at the time of publication of information the investors chose to temporarily close positions, that led to small dip in the first 30 minutes. Another 30 minutes took the traders to an assessment of the situation and by the evening of Friday, the dollar reached a maximum, which instantly collapsed on Monday morning. Insights:

  • binary options can bring a guaranteed profit when you open an hour after news in the direction of the main trend. Expiration of about 1-3 hours;
  • before the weekend, at the end of the week binary options shall be closed.

2. Strategy on indicators

2.1 Binary strategy Momentum and EMA

Binary strategy, close to classical designed for medium-time frame with the opening of the transaction at the end of the day. You can trade any liquid pairs. The main rule of binary options — with forecast to clearly observe the coincidence of all indicators together. Trading conditions:

  • expiry time for binary option — the end of the day;
  • time frame — 1 hour;
  • indicators: candles, Momentum (18), EMA (24).

Signals for purchase of binary option:

  • the candle body is wholly or at least 80% crossed EMA upwards;
  • Momentum indicator above the zero level.

Signals for sale of binary option:

  • the candle body is wholly or at least 80% crossed EMA upwards;
  • Momentum indicator below the zero level.

The end of the week, chosen at random. At this point novice traders go out of the market, leaving the strong players that will not destabilize the market. You can trade without the risk that the deal will suddenly unfold for unknown reasons.

2.2 Binary strategy “the Last hour”

I could cite you examples with a complex indicator strategies of binary options allegedly modified under the trade in the last hours of the day (SuperWoodieCCI modified oscillator Signal of MA Crossover modified sliding). But it makes no sense. All these strategies by the end of the day have not the slightest relationship. We offer you a simple candlestick analysis, which can supplement MA:

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In this figure it is seen that the rising candle started to form at 19.30 (GMT) and at 21.00 you could earn. The essence of the strategy in the following:

  • at the end of the day the traders begins to lock position. If to the last hour the trend was decreasing (the majority of opened positions), the fixation position is going to mean growth of the trend. Conversely, if the market grew, the position fixing would mean a sharp turn;
  • set timeframe strategies 5 minutes or 15 minutes. Waiting for the last hour, enter the market with the expiration of a maximum of 30 minutes. For the last 15 minutes usually there is a collapse.

In the picture above before opening a position at the end of the day was flat. So on the circled candle it would be dangerous to enter, entrance no later than 19.45. But with understanding of trend direction, everything becomes simple. Below is a more accurate entry signal.

Up to 20.00-formed downtrend, 20.15 candle draws a turn, enter the market. At 20.45 close option. On the chart it will look like this:

At 20.00 Began to form a drop-down reversal of the trend (fixation of position), at 20.15, the trend went up (yellow circle), at 20.15, the option was closed. By the way, we are not alone work by this tactic, it’s the only explanation why in the last 15 minutes (20.45) the price has gone down.

  • Important! We have put together two options of the situation. In the first case, the entrance to 20.00 would bring a loss and the second – profit. The reason the preliminary state of the market. The strategy only works when before the last hour there was a pronounced decrease or increase.

Summary. Forecast of transactions in binary options one day is done by the hour or daily charts. We recommend you to view both timeframes. If the direction of the price is the same, then it’s the signal to open trades with expiry equal to the lesser timeframe. Day strategy is recommended for those who have most of the work, not ready to be at computer and seeking regular trading. We will be glad if you share your strategies of binary options for the day or leave a few tips for our readers in the comments after the article!

Strategies for Short-Term Binary Options

How to trade short-term binary options? We select the appropriate strategies, disclose the nuances of binary options trading with an expiration period from minute to day.

Binary options trading is quite diverse. And if in the foreign exchange market the trading strategy depends on the characteristics of the currency pair, then for binary options one more component is added that affects the applied strategy – this binary option expiration date.

Today we will tell you how to trade short-term binary options. And a little on the topic, if someone does not know what expiration is and how to choose it correctly.

Why do traders prefer short-term BOs?

Short-term options include binary options, the expiration period of which lies in the range from 1 minute to 1 day. Why do traders choose short-term options for trading?

Like intraday trading in the foreign exchange market, trading in short-term binaries is very popular among traders. They even have some similarities – these are increased trading risks, since price movements over short time intervals are difficult to predict.

However, unlike the foreign exchange market, when trading binary options, the trader knows in advance the size of the possible profit and possible loss. It is this factor, together with the ability to conclude a large number of profitable transactions during the day, that determined the demand for short-term binary options among traders.

In addition, if trading on higher timeframes complicates the application of classic trending and other strategies, then tactics designed for intraday trading, scalping and pipsing in the foreign exchange market, can be successfully applied in the binary options market with little or no adaptation. Strategies should be discussed separately.

What strategies are suitable for trading short-term binary options

What is good about short-term binary options is that they are suitable for the whole range of tools of a currency trader – this is technical analysis, indicators and trading strategies. Trends, technical levels, methods of risk and capital management, including the notorious Martingale method, are relevant for them.

For example, for trading short-term binary options are well suited channel trading strategies. Having determined the price channel, the trader buys the Call option near the lower border of the channel (support level) and the Put option near the upper border (resistance level). This method will be profitable both with flat and with a pronounced trend.

Well established for trading short-term BOs technical analysis figures and patterns Price Action. With their help, you can easily determine the pivot points of the price and the direction of purchase of the binary option. Naturally, for the correct definition and trade, it is necessary to know their classification, the rules for the formation and interpretation of trading signals.

It is worth noting that candlestick patterns can also be used when trading binary options, however, a large number of false formations can occur, since it is believed that candlestick analysis gives more accurate signals on timeframes from daytime and older, which is not suitable for short-term binary options.

Do not forget about technical indicators. Indeed, trading strategies are built on their combinations. In addition, some indicators are suitable as a source of trading signals, as well as for analyzing price charts, determining trends, corrective movements and price reversal points.

Total

Summing up, we note that trading short-term binary options can bring quite tangible profits. However, you need to remember in which market you are not trading and which asset and trading strategy you are using, trading is always risky. Therefore, competent money management when trading short-term BOs is very important. Following the rules of money management and knowing how to trade short-term binary options, you can rest assured that your profit will not be long in coming.

Trading the 80 Percent Rule with Binary Options

Trading Daily Binaries can be beneficial for people who don’t have the time to babysit the markets and watch the charts all day long. It’s really just a matter of staying in the right side of a trend, knowing how to manage losses, and setting profit targets.

Cam White, Trading Pub
April 21, 2020

In today’s trade, we are going to use a popular trading strategy called the 80 Percent Rule with a daily market bias using binary options.

The 80% Rule is a common futures strategy that uses Volume Profile. Simply stated, Volume Profile will display the Value Area, which is the zone where 70% of the previous day’s trades occurred. Volume Profile is available on many popular charting platforms, including ThinkorSwim and Ninja Trader. Below is a screen shot of trading educator, Sean Jantz with BinaryTradeGroup.com, painting the Value area as a gray box on his charts.

There are three key elements to the Value Are Box:

  • Value Area High – This is the ceiling of the box.
  • Value Area Low – The floor of the box
  • Point of Control – The price level where the greatest number of trading activity occurred

The value area box represents where the marketplace of buyers and sellers believe “fair value” resides. If price travels too far above the value area box, it becomes too expensive, and selling pressure will likely settle in. If price drifts too far below the box, then it will start to attract buyers.

ThinkorSwim Workspace prepared by Sean Jantz at BinaryTradeGroup.com on Thursday, April 20 2020

The 80 Percent Rule is a trading strategy which uses Market Profile or Volume Profile is defined as follows:

If the market travels into the Value Area Box from above or below the box, and stays inside the box for 2 consecutive 30-minute periods, then there’s an 80 percent chance that the value area will get filled. A Google Search on this strategy will give you plenty of additional insights.

Looking at the chart above, the US 500 index drifted below the Value Are Box, and then came back into the box for an hour. This created the expectation that the market would travel from Value Are Low (2336) all of the way up to Value Area High (2348).

Placing a Binary Options Trade Based on the 80% Rule

7:30 am EDT : The US 500 was trading at 2341, with the expectation of a move toward Value Area High (2348). The Daily (4:15 pm) time frame was selected, and the following trade was taken:

BUY US 500 (Jun) >2348.0 (4:15 PM) $25
Maximum Risk per Contract Traded: $25
Maximum Reward Per Contract Traded: $75

The plan for this trade was to exit the trade once the market touched Value Area High at 2348. The reason for taking profit was that Value Area High can act as resistance. It was a target that could yield a 1:1 risk reward or better.

Trade Results

In this example the 80 Percent rule worked as expected filling the value area box and more as the market kept moving upward past 1256.

Since the Market hit Value Area High at noon, there was no way of knowing that it would keep chugging upward for the next 4 hours. The decision was made to exit the trade on the touch of Value Area High, which yielded the following:

Daily Binary: $22.50 Profit against $25 Risked, for a 90% return on capital risked (exchange fees not included)

However had the trade not worked out, using binary options our trade risk was always well defined and capped at $25 if choosing to hold the position until expiration.

Cam White

The information contained above may have been prepared by independent third parties contracted by Nadex. In addition to the disclaimer below, the material on this page is for informational and educational purposes only and should not be considered an offer or solicitation to buy or sell any financial instrument on Nadex or elsewhere. Please note, exchange fees may not be included in all examples provided. View the current Nadex fee schedule. Nadex accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representations or warranties are given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk and any trading decisions that you make are solely your responsibility. Trading on Nadex involves financial risk and may not be appropriate for all investors. Past performance is not necessarily indicative of future results. Nadex contracts are based on underlying asset classes including forex, stock index futures, commodity futures, cryptocurrencies, and economic events.

Trading can be volatile and investors risk losing their investment on any given transaction. However, the design of Nadex contracts ensures investors cannot lose more than the cost to enter the transaction. Nadex is subject to U.S. regulatory oversight by the CFTC.

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How to Start Investing in Binary Options

Damyan Diamandiev
Contributor, Benzinga

Invest With TD Ameritrade – Now Commission Free

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Open an account with Benzinga’s best online broker, TD Ameritrade. $0 commissions on online stock, ETF, and option trades plus award-winning platform and customer service.

If you’re looking for a simple way to trade and invest in financial assets, why not consider binary options? They’re easy to understand and preferred among newbies, so you’ve pretty much already got a head start in the right direction. Benzinga will help launch you the rest of the way.

Table of contents [ Hide ]

What is Binary Options Trading?

Binary traders profit from price fluctuation just like other traders, but binary options have a preliminary stated risk and profit potential. That’s why this type of contract is called a “binary” option. You get one of the two possible outcomes: suffer the risk or profit from the reward.

In binary trading, you bet if the price will be higher or lower after a certain time passes: the expiration. If you’re right, you win. If you’re wrong, you lose. When you lose, you lose the amount you’ve bet in the trade. When you win, you win around 80% of the amount you’ve bet (this depends on the broker as well).

Let’s say you believe the price of the EUR/USD will be higher in one minute and you bet $10. If you’re correct, you’ll profit around $8, depending on the broker. If you’re wrong, you lose your $10.

There’s some specific terminology wrapped with binary options. Can you sell an option? No, but you can buy a “put” option.

This is how it works:

Call Option

You buy a call option when you expect the price to increase. This means you enter a deal where you bet that the market will increase in price.

Put Option

You buy a put option when you expect the price to drop. This means you enter a deal where you bet that the price will go down.

Calls and Puts

It’s easy to understand the difference between “buy” and “sell,” and which corresponds to bullish and bearish markets. However, it might be tricky to remember the difference between calls and puts. Here’s an easy way to remember:

Imagine a phone is on a table. When you want to “call” you need to lift the phone “up,” an increase. When you want to “put” it down, it needs to go downward, or “drop.”

How To Start Trading Binary Options

Step 1: Build your strategy

Test different approaches and check which one is profitable for you. You can also combine different indicators to build your strategy. Some indicators could be:

  • Price levels
  • Trend
  • Candle patterns
  • Chart patterns
  • Moving average indicators
  • Fibonacci levels
  • On-chart indicators
  • Area indicators

These are not the only indicators available; there are many more and each of them works in a different way. Match signals from different indicators to reduce the chance of getting a bad signal and incline the scales in your favor.

Step 2: Calculate the returns

Say that your broker will give you 80% return if you guess the right price direction. You risk 100% of the invested amount, a return of 8:10. How successful should your strategy be and where is your break-even point?

Say that you do 100 trades by investing $10 in each. This means that you’ve invested a total amount of $1,000. Your strategy has a 55% success rate, meaning that you will get an approximation of 55 successful trades out of 100.

If you guess correctly, you’ll win $8. If you guess incorrectly, you’ll lose $10. Since you’ll get around 55 winners, this means you will make 55 x $8 = $440. Since you’ll get around 45 losers, then you will lose 45 x $10 = $450.

A profit of $440 – $450 (loss) = -$10 per 100 trades with this strategy, which isn’t ideal.

Here’s another test with the same brokerage conditions: 80% return on a successful guess. Let’s say our strategy has a proven record of 70% success rate. This means we’ll have 70 winners and 30 losers after 100 trades:

70 x $8 = $560 (profit)

30 x $10 = $300 (loss)

Net profit = $260

Step 3: Money management strategy

Don’t forget to factor in luck. If you deposit $100 in your account and you invest $20 in each trade, you’ll likely fail. The reason for this is that you will be able to handle only five losing trades in a row, which is very likely to happen.

It’s safe to have money for at least 100 trades. What is the chance to get 100 losing trades in a row? It’s just like flipping a coin and getting 100 heads in a row: pretty unlikely.

Step 4: Choose your binary options trading broker

Pay attention to some important rules when you choose a broker. There are scam brokers who will not let you withdraw your money, so research in advance. Good brokers:

  • Are regulated and conform to the laws of a country.
  • Have existed for a while. Scam brokers get caught and typically close after a year or two.
  • Have good reviews online. What are people saying about the broker? Can you withdraw your winnings?
  • Offer a variety of trading assets. You don’t want to have only five currency pairs available for trading.
  • Have a friendly interface.
  • Include a rich set of trading indicators. These indicators will assist in your analysis and help you build a successful strategy.

Step 5: Create and fund your trading account

This is the easiest step as long as you have the money! Follow your broker rules for creating an account. You’ll need to identify yourself and to confirm your account, then deposit the amount you are willing to start with.

Make sure you conform to the money management rules we already discussed. If you’re willing to invest $10 in a single trade, this means you’ll need to deposit at least $1,000. This way, you’ll have enough money to conduct 100 trades and you’ll be able to handle an eventual downswing.

Step 6: Execute your first trade

Now you’re ready to go! If you’ve deposited $1,000 in your account, then it is safer to invest only 1% per trade, or $10.

  • Change the investment per trade to $10.
  • Choose the expiration time of the binary option.
  • Do your analysis and apply your strategy.
  • Click “call” if your analysis shows that the price will go up or “put” if you believe that the price will go down.
  • Wait until the binary option expires.
  • Track results.
  • Repeat.

Final Thoughts

Binary options are an innovative and easy way to invest in the financial markets. Rules are simple (that’s why many traders prefer this type of trading) and there is a limited risk per trade, based on the amount you invest.

You’ll still need to conform to the well-known trading rules if you want to be successful. Build a strong strategy, calculate the amounts, manage your bank well and be smart, and you’ll increase your chances of success. A demo account is always a helpful test before jumping in with real money.

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