5 Minute Trading Strategy For Binary Options

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Best Binary Options Strategies

Jay Hawk
Contributor, Benzinga

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Binary options offer financial markets speculators an easy way to trade with limited downside risk. Unlike the underlying assets themselves that have potentially unlimited trading risk, binary purchases generally require a fixed price or premium to perhaps receive a given payout.

A major advantage of using binaries arises from eliminating the risk of order slippage that can occur in especially volatile markets. Not all binary option types suit all market views, so it makes sense to study what each type has to offer.

Before trading binaries, choose a reputable binary option broker and work out a binary strategy that remains a winning strategy on a consistent basis.

Quick Look: The Best Binary Options Strategies

  • Directional or Trend Trading
  • Swing Trading
  • Range and Range Breakout Trading
  • News Trading
  • Candlestick Pattern Trading
Table of contents [ Hide ]

Overview: Binary Options Strategies

The key elements of your binary options trading strategy should include:

  1. The type of binary option used
  2. When to use it
  3. The amount to trade
  4. Your exit plan.

You will also want to determine what the best binary options type will be for your particular trading style and objectives.

For example, many binary option brokers will provide pricing in up/down, one or no touch, boundary and double one or no touch binary options. Each of these types can suit a particular directional view.

What Makes A Great Binary Options Strategy?

As most experienced traders will tell you, the binary option trading strategy you choose paves the way for your eventual success or failure. In general, a great binary option strategy will be one that involves a trading method or which generates a signal that makes your binary option trades consistently profitable.

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Some of the best binary option strategies operate in very short time frames suitable for short term expirations of one minute to one hour. Other strategies might focus on forecasting end-of-day or end-of-week levels that correspond to daily or weekly close binary expirations.

Any great trading strategy consists of one that works in practice to generate respectable profits given the time invested. Also, test a strategy in a demo account and have a sound money management strategy to complement your trading signals.

The sections below will discuss some of the more popular trading strategies that binary option traders use. You can also combine some of these strategies or create your own from a combination of technical trading signals.

Strategy 1: Directional or Trend Trading

When an asset’s price or an exchange rate generally moves in one direction or the other within a given time period, a trend exists in the direction of the overall movement.

If the market value moves upward and makes higher highs in the process, it forms an uptrend. Conversely, if the market generally declines and makes a series of lower lows, it creates a downtrend. Trends can show up on charts on any time frame, so binary option traders can usually trade them effectively. The schematic diagram below shows what uptrends and downtrends look like.

Those who trade trends with binary options generally overlook small swings in market valuation. Instead, they put their attention on discerning the overall directional move within a particular time frame using technical analysis techniques and indicators.

Trend trading involves taking fewer positions for bigger gains than most other trading strategies, so commissions usually seem minimal. A trend trading strategy seems appropriate to use with high-commission brokers that offer a wider range of binary products and asset classes.

A popular trend trading method, which virtually all binary options brokers offer, involves the use of the call/put binary option. A call binary option pays off if an asset’s price ends up higher than its strike price after a set period of time. A put binary option pays off if the value finishes lower than its strike price.

Trend traders can also use the riskier, but potentially more profitable, one-touch binary option. This involves predicting a target level that you expect the market will reach within the trend to achieve a payout once that level trades.

Some trend traders even use a combination of both binary option types. This generally costs less than using call/put binaries and helps them increase potential profits if their directional view pans out.

Strategy 2: Swing Trading

Instead of trading the overall trend, you could achieve higher gains by trading each swing in an asset’s value as it moves up and down in a non-linear fashion. Such price swings also tend to occur in predictable patterns and proportions. This can give savvy binary option traders an opportunity to profit.

While trend traders tend to ignore these market fluctuations by focusing on the overall direction, swing traders nimbly switch directions to profit from them. Swing traders tend to trade more often than trend traders, which can increase transaction costs.

Swing trading also involves having a good sense of market momentum. This requires you to reverse positions when market trends wane, while holding positions in the direction of the trend while the trend remains strong.

As a swing trader, you have several chances to use binaries to benefit from a trend and its various corrections, instead of just holding a binary option position in the direction of the trend. Since these swings tend to be of a shorter-term duration than the overall trend, you can often position for them using binary options.

For example, you could buy a call binary when a downswing occurs within an upwards trend in anticipation of a subsequent move higher. In another scenario, you could purchase a put binary when an upswing materializes in a downtrend, since the market might then reverse and continue its overall move lower.

Furthermore, you can buy a put or call binary when the market looks respectively overbought or oversold in anticipation of a counter-trend correction.

Strategy 3: Range and Range Breakout Trading

Range and range breakout traders consist of those who identify trading ranges and attempt to profit from them. Trading ranges occur when a market fluctuates within upper and lower boundaries.

If you plan on employing a range trading or breakout strategy, you will tend to use boundary binary options. In boundary binaries involve setting an upper and lower value that you expect the market will remain between by the time the option expires.

Alternatively, if you wish to trade a breakout of a trading range, you can instead use an out boundary binary option. This lets you set a range with boundary levels that you expect the market to trade outside of at expiration.

Strategy 4: News Trading

Fundamental traders sometimes rely on key news releases to create market volatility they can profit from. When a news outcome improves on the market’s consensus, the result seems favorable for the asset or currency affected. This typically leads to a higher market valuation. Conversely, when the result disappoints the market, a negative effect on valuation tends to occur.

One of the major risks involved in trading such news events consists of stop-loss order slippage. Requotes and/or market order execution delays can also result in a serious unanticipated loss for a trader. These issues seem especially likely to occur even with reputable brokers in the volatile or “fast” markets surrounding a key news release.

Using binary options to trade the news can eliminate this execution risk completely and make a news trading strategy much safer. Still, it pays to keep in mind that news trading outcomes remain quite unpredictable due to significant variation in the size and duration of news-related moves.

Depending on what you expect to occur, these possible binary option alternatives could fit into a news trading strategy:

  • If you expect a large move in either direction by expiration, you can buy an out boundary option. This pays off if the market ends up outside the specified range upon expiry.
  • If you expect a large move in either direction shortly after the news release, you can buy a double one-touch binary that pays off if either trigger level gets breached before expiration. The trigger options used in this strategy will often have a very short time until expiration, such as 60 seconds, to maximize returns and minimize cost.

If you observe a large move shortly after the news release and you expect a retracement to follow, then you can buy a call binary if the market fell after the release or a put binary if the market rose. If the market does indeed snap back, then buy a put binary once the correction higher seems to wane or a call binary if the correction lower starts to fade.

Assuming both options have the same strike price, the goal of this news strategy involves legging into a long binary straddle position that has a 100% chance of paying out no matter whether the market rises, falls or stays the same.

Strategy 5: Candlestick pattern trading

Candlestick charts display some well-defined patterns that technical analysts often consider to have predictive value. While a detailed discussion of how to trade based on candlestick formations seems outside the scope of this article, an excellent book to learn about with the subject in detail is Japanese Candlestick Charting Techniques by Steve Nilson.

An example of a candlestick pattern you can use in binary option trading: if you observe a gap on the candlestick chart under normal trading conditions, then it may indicate a future move in the direction of the gap.

For example, if the market gapped higher, it would suggest purchasing a binary call option. A gap to the downside would indicate buying a put binary.

Final Thoughts

Binary option strategies can only get you so far, since your broker and various other factors can also impact your success. Selecting a suitable trading partner from among the best binary option brokers for your trading style and strategy contributes another key element to a winning binary option trading plan.

60 Seconds Strategy Binary Options

Binary options of 60 seconds are options for which the completion of the contract (expiration) is 1 minute. This means that you purchase an option and 1 minute later get the result of trade.

The minute binary options have their own undeniable advantages: they offer an opportunity to trade at any time (session), carry out a large number of transactions in a short time (accordingly increasing the chance of winning), and an incredibly large choice of broker-platforms, which provide a range of profitable conditions (bonuses, an extended variety of assets, absence of commission).

Many strategies are used in the 60-second binary options trade. The most well-known methods are suitable for these trades, but the strategy is still different: it requires very fast decision-making behavior and instant reacting to the situation of the market.

60-second strategy binary options with usage of indicators

One of the most usable indicators in strategies for 60-second binary options is the RSI (Relative Strength Index). This instrument of technical analysis has an advancing nature and shows a possible change of trend. The indicator has 2 accurately differentiated fields (overbought and oversold). If the curve of graphs confidently leaves the zone of oversold in the bottom-up direction that means it is possible to trade for the purchase «Rise» (Call). In an alternative situation (when the curve leaves the zone of overbought), options trade on falling (Put).

Another interesting indicator for strategies of 60 seconds is Ichimoku. This is compared with clouds that show key areas (of resistance and support). If the curve comes out twice from the cloud in the up-bottom direction, that means buying an option Put is a good idea. The price will probably continue to fall and a trader obtains a profit. When the curve leaves the cloud in the bottom-up direction, that means you need to put all your attention on options Call (up).

Working with the Bollinger Bands indicator (in other words – bands or waves of Bollinger, BB), the constant increasing of rates after winning is not used (compare to Martingale). Profit is guaranteed by a large number of winning bids. The Bollinger Band indicator allows the trader to mark the break at the price movement. The «Breakdown trade» is used more often. When the graphics break through channel lines, in most of cases the price rolls back to the middle (to the next candlestick).

Deals are opened only in the moment of Bollinger Bands convergence (sideways). The number of profitable deals can be up to 70%.

One more Moving Average Indicator for 60-second binary options appears as the red line.

The Moving Average Indicator for binary options can be used for options with an expiration period up to 5 minutes, but this indicator also successfully works with 60-second turbo-options.

60-second strategy for binary options without indicators

Although many traders prefer the hints of indicators, there are strategies where they are not needed. It is enough for a player to draw a so-called trend line and as soon as the line rebounds three times, the trade is started. The picture shows when a deal is made with a PUT purchase.

It is a very interesting example with the addition of a lower trend line for the same graphics. This is called a wedge pattern (graphic). Such a situation happens infrequently in the market; that’s why it is necessary to use the wedge pattern. Wait for a final formation of the wedge (about 3 waves), and when the curve breaks through the upper or lower trend line, open the deal.

Another strategy for 60-second binary options

Many trading strategies are suitable for very short-dated options that expire in just 1 minute. But there are several methods that are rather bad. For example, a hedging method (insurance). Its essence is to buy “safety” option in another market to minimize losses. This is suitable for Forex but not for binary options. Here, the price can vary in the course of a minute, resulting in losses for both deals.

Strategies of Support and Resistance Levels

These levels give the most accurate signals of the price movement. These are lines within which the price moves. The levels are displayed on the tops of the candlesticks. An option is bought at the rebound from the level and only on the third candlestick (the first candlestick is a signal, the second is a conformation, and the third is a command to buy a 60-second option).

A few disadvantages

60-second binary options are the riskiest. Even leaning on a competent strategy and armed with indicators, it is still very difficult to guess exactly the market movement, because too many factors influence it. There is an extremely high chance of being in the red.

Best Binary Options System

Every investor wants to make an investment that would bring the highest returns within a short span of time. Binary options trading, also known as digital option trading, promises huge profits for an average investor with limited or no knowledge of the financial operations in the market. Through the call or put trade, the investor can make predictions regarding the behavior of assets in the market. The best binary options system provides the user with the right equipment and information to make predictions according to the data. A number of binary options systems are available that can either be bought at certain price or can be downloaded for free.

Global Money 24
Global Money 24 is considered the best binary options system by some people as it makes the binary options trading easier through the real time graphs. These real time Meta graphs are simple to read and can be used to make correct and informed predictions about the value of the assets. This is known as Graphic Trend Analysis. The binary options system allows the trader to make small investments at a time and gradually earn huge profits through these investments.

60 Second Profits
60 Second Profits is a binary options trading system that employs a strategy of quick profit earning through limited period investments. It is the best binary options system for the traders who want to earn profits in a short time. The trader can earn by predicting on the small fluctuations in the value of assets over a short period. If the trader predicts at the correct time, he can make money within seconds as the shortest expiry starts from 1 minute. The profits might be small for short expiry periods but it is definitely a worthwhile investment for new investors.

The Binary Options Strategy
The Binary Options Strategies works on the same principle as the 60 Seconds Profits but the shortest expiration period is 15 minutes. This system also allows the traders to predict by choosing call or put option on small fluctuations in the value of assets including stocks, currencies and other commodities. It claims to be the best Binary Options System as it is one of the oldest systems in practice. This system also provides a trader insight utility that guides the traders to make educated and low-risk-inducing choices. The trader can choose to predict according to or against the statistics displayed by the Trader Insight. The new investors are recommended to follow Trader Insight only if it is 75% or above.
Every trader wishes to choose the Best Binary Options System that would enable him to make huge profits and always be in the money. Risk is always involved in all types of trades but the risk in binary options trading is far less as compared to other options. Only the amount invested in choosing the call or put option is at stake. If the trader makes wise decisions at the right time and uses the features provided by the systems effectively, he would always be in the money.

Best Binary Options Brokers 2020:
  • BINARIUM
    BINARIUM

    Best Binary Options Broker 2020!
    Ideal for beginners!
    Free Demo Account + Free Trading Education!
    Get a Sign-up Bonus:

  • BINOMO
    BINOMO

    2nd place in the ranking!

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