Binary options trading strategy – How to trade binary options [Video]
In this article, I want to show you a simple binary options trading strategy.
In the previous article, I’ve shown you how binary options work.
If you haven’t read that article yet, please do this first so that you know the basics before we actually start trading binary options.
Because in this article, I will show you:
How to configure your charts How to find the right market to trade How to find the best expiration to trade and… As promised: A Binary Options Trading Strategy.
How To Configure Your Charts For Trading Binary Options.
In the previous article, we talked about all the markets that you can trade:
Indices like the S&P 500, DOW Jones, Nasdaq, etc. Currencies like EUR/USD, USD/JPY. AUD/USD, etc … and you can trade commodities like Gold, Silver ad Crude Oil as well.
And as you know, Binary Options can expire…
in 5 min, in 20 min, hourly, at the end of the day … etc.
For this very simple trading strategy, I want to know which Binary Options expire in the next 20 min, so I’m selecting this here:
Right now, we see that only the indices are expiring in the next 20 min.
Depending on the time of day, you might also see currencies and commodities here.
But let’s get started with the indices:
Simply click on one of the indices, e.g. US 500 And then select any strike price.
This will bring up the chart and an order ticket. For now, we only need the chart.
This is what it looks like:
For this simple Binary Options trading strategy, I want to remove the RSI, and I want to add the Bollinger Bands as well as the Bollinger Bandwidth.
And I am changing the settings of these 2 indicators to 12 and 2:
Here’s what I’ve found when using Bollinger Bands:
If prices are moving higher and the Bollinger Bandwidth gets larger, prices usually stay ABOVE the Moving Average. And if prices are moving lower and the Bollinger Bandwidth gets larger, prices usually stay BELOW the Moving Average.
A Simple Binary Options Trading Strategy.
Here’s how I use this for trading Binary Options:
When I see prices moving HIGHER and the Bollinger Bandwidth gets larger, I BUY a binary option with a strike price at the Moving Average When I see prices moving LOWER and the Bollinger Bandwidth gets larger, I SELL a binary option with a strike price at the Moving Average.
I like to use LIMIT orders and I want to see at least $10 in profits.
$10 might not sound a lot, but if you can do this every 15-20 minutes, it adds up.
And you could always buy more contracts:
If you would buy 10 contracts, you would make $100.
Keep in mind that there’s always the risk of losing money!
But you already know that, right?
After placing the order, all you need to do it wait until expiration. In this example:
If prices close above 1581.4 in the next 6 min, you would make $10. And if prices close below 1581.4 in the next 6 min, you would lose $90.
If you need a refresher on how exactly Binary Options work, read the previous article.
Can Binary Options Make You Rich?
What you have just seen is a very simple strategy for trading Binary Options.
And there are a few restrictions when trading this strategy:
You have to be in front of your computer during the day when the markets are open. And not everybody has time to do that. You have to wait for the right setup that I just explained. The strategy has a low risk/reward ratio.
I personally use a more advanced trading strategy for Binary Options that allows you to place the trades at night so that you don’t have to worry about it during the day.
I’ll show you this strategy in the next article.
Trading Futures, options on futures and retail off-exchange foreign currency transactions involves substantial risk of loss and is not suitable for all investors. You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge, and financial resources. You may lose all or more of your initial investment. The lower the day trade margin, the higher the leverage and riskier the trade. Leverage can work for you as well as against you; it magnifies gains as well as losses. Past performance is not necessarily indicative of future results.
Editors’ Picks.
EUR/USD: 100-DMA defends bulls around 1.1450.
EUR/USD edges higher past-100-DMA, tests pullback from three-month-old horizontal resistance. Hidden bullish divergence, sustained trading above 100-DMA keeps buyers hopeful. October-November lows add to the upside filters, 50-DMA also tests sellers.
GBP/USD holds in corrective territory ahead of key events later in the week.
GBP/USD is sideways in Asia as markets consolidate ahead of catalysts later in the week. UK GDP and US CPI could move the needle in financial markets. It's been one of those starts to the week where there is no momentum one way or the other as the markets digest the events of the prior week and await the next catalyst.
USD/JPY tracks rebound in US Treasury yields above 115.00.
USD/JPY takes the bids to refresh intraday high around 115.20, consolidating the week-start losses as Tokyo opens for Tuesday. The yen pair’s recent run-up could be linked to the cautious optimism in the market, as well as recovery in the US bond coupons after a sluggish start. It’s worth noting that mixed data at home and virus woes challenge the recent advances ahead of the US trade numbers.
Editors’ Picks.
EUR/USD: 100-DMA defends bulls around 1.1450.
EUR/USD edges higher past-100-DMA, tests pullback from three-month-old horizontal resistance. Hidden bullish divergence, sustained trading above 100-DMA keeps buyers hopeful. October-November lows add to the upside filters, 50-DMA also tests sellers.
GBP/USD holds in corrective territory ahead of key events later in the week.
GBP/USD is sideways in Asia as markets consolidate ahead of catalysts later in the week. UK GDP and US CPI could move the needle in financial markets. It's been one of those starts to the week where there is no momentum one way or the other as the markets digest the events of the prior week and await the next catalyst.
Gold battles support-turned-resistance near $1,820 amid firmer yields.
Gold buyers jostle with short-term key hurdle following the biggest daily gains in three weeks. Sustained trading beyond 200-DMA joins RSI, MACD conditions to keep buyers hopeful. Market’s cautious optimism helps gold buyers amid light calendar ahead of US CPI, trade, geopolitics can entertain short-term traders.
Solana price hits make-or-break point following 50% gains.
Solana price action has seen persistent bullish pressure over the past three trading days. As a result, buyers continue to push SOL higher inch by inch, precisely on top of the single greatest resistance cluster on its daily Ichimoku chart.
Tesla: Is this a dead cat bounce?
Tesla rallied well on Friday to end the week solidly after some volatile swings. Meme stocks took a battering, and high growth names did not fare much better. Overall, it was a wild ride for the markets with hawkish moves from all the main central banks sending yields sharply higher.
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Trading foreign exchange on margin carries a high level of risk and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to trade foreign exchange you should carefully consider your investment objectives, level of experience and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading and seek advice from an independent financial advisor if you have any doubts.