Table Of Content10 BINARY OPTIONS STRATEGIES
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Contents
Introduction ..................................................................................................................................................2
What are Binary Options?.........................................................................................................................2
Why trade Binary Options?.......................................................................................................................2
Advantages of trading Binary Options:.....................................................................................................2
Major Economic News Strategy....................................................................................................................3
Aggressive Trading Style Strategy.................................................................................................................6
Straddle Strategies........................................................................................................................................8
Corrective Strategies...................................................................................................................................10
Retraction Strategies...................................................................................................................................13
Pair Option Strategies.................................................................................................................................15
Hanging Man and Shooting Stars Strategies...............................................................................................17
Binary Options Breakout Strategy ..............................................................................................................20
Binary Option Put Trade Using Breakout Strategy .................................................................................21
Support / Resistance Strategy.....................................................................................................................22
Binary Option Trades Using Support/Resistance Strategy .....................................................................23
Follow-the-Trend Strategy..........................................................................................................................24
Binary Option PUT Trades Using Follow-the-trend Strategy ..................................................................25
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Introduction
Welcome to the exciting world of Binary Options where you can earn up to 81% on your money as
quickly as 60 seconds.
We have reviewed many trading strategies and have chosen those that best suite binary options trading.
We have included strategies that range from beginner to advanced. We will provide you with ten
proven strategies that you can use to be successful in Binary Options trading.
Understanding a tested trading strategy is not the only component needed to become a successful
trader. You must also maintain proper discipline and composure as you trade. The final ingredient to
begin earning 75% a minute is choosing a broker to implement your strategy. For your convenience we
have paired each strategy with a trusted broker where you can start earning your 81% today!
What are Binary Options?
Binary options are a simple way to participate in the movement of financial assets. They are Binary in
nature in that there are only two possible outcomes. Either you win the predetermined profit % or you
lose your investment.
Why trade Binary Options?
Binary Options affords traders and investors alike the opportunity to gain huge returns on their
investments up to 81% in short time periods without the need for a large capital investments.
Advantages of trading Binary Options:
High Returns
Short Expiries
Small Investments
No Commissions or Fees
24/7 Trading
Access to multiple markets
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Major Economic News Strategy
The publication of key economic national data is highly anticipated by investors as
they can produce substantial price surges. Excellent examples of these types of
events that are regarded by traders as of the utmost importance are: National
Interest Rate Changes, US Non-Farm Payroll, US Trade Balance and US
Unemployment Claims, etc.
Trader Level: Intermediate
Risk Level: Medium
The dates and times of all the important releases are published well in advance and
are accessible to everyone. Your Forex broker will normally provide you with this
information in the form of an economic calendar, as shown in the next diagram.
Trading news releases can be a very lucrative activity if performed correctly.
Basically, there are a number of ways of performing this task. In each case, you
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need to focus on those major news releases that are capable of generating large
increases in volatility and, as such, provide the best opportunities of good profits.
You can improve your chances of success if you learn how to detect the
consolidation phase of the currency pair just before a news release. Price tends to
become more stable at these times because the market is anticipating the release.
This means that price is trading within a tight range that is capped between a
ceiling or upper resistance and a floor or support, as displayed on the following
diagram. Traders are hoping that the event will increase volatility so that it is
capable of creating a breakout with sufficient momentum to cause a price surge.
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I.
Identify News Release: Use the economic calendar to identify the times of a
major news release.
II.
Identify Trading Range: Select a currency pair that is range-trading prior to
the news release.
III. Identify Support/Resistance Levels: Find the resistance and support levels
by simply noting the highest points for resistances and the lowest values for
supports, as shown on the chart above.
IV. Initiating Trade: Execute a 60 second CALL binary option if price surges 10
pips above the ceiling of the range. Alternatively, activate a 60 second PUT
binary option if price plunges 10 pips below the floor. Both options need to be
based on the same chosen currency pair.
This strategy provides good opportunities for exploiting major economic news
releases for quick profit. As such events are notorious for whipsaw actions, your 60
second trades provide the optimum opportunity to secure profits before price has
time to retract.
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Aggressive Trading Style Strategy
One-touch binary options are ideally suited to those traders possessing more
aggressive temperaments because they provide very high rewards, i.e. up to 500%
albeit at high levels of risk. These are best used when assets are trading distinctive
trends or when levels of volatility are high. Consequently, you should steer well
clear of one-touch binary options until you have acquired sufficient skill and
knowledge to competently handle their increased risk exposure.
Trader Level: Advanced
Risk Level: High
Essentially, you will finish in-the-money if the price of the underlying asset of your
one-touch binary option strikes a preselected value at least once before expiration.
If price fails to achieve this goal, then you will close out-of-the-money and will lose
your deposit. If the target price is higher than the opening value, then you need to
instigate a CALL one-touch option. In contrast, if the target price is beneath the
opening value, then you should open a PUT one-touch option.
For example, consider that the Bank of England has just announced that it has
lowered its interest rates in order to bolster the faltering UK economy. After
investigating the reasons for this decision, you conclude that the GBPUSD will drop
amid increasing levels of volatility. You select a PUT one-touch binary option based
on the GBP/USD as shown in the next diagram.
‘
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I.
Identifying Volatility: Detect an asset that is displaying high levels of
volatility on its charting charts.
II.
Record Key Parameters: Note the target price, the payout ratio; the
rebate ratio and the listed expiry time of the applicable asset.
III.
Initiate Trade: Enter a deposit and execute a CALL one-touch option if you
have concluded that your chosen asset will rise in value. Alternatively,
activate a PUT one-touch binary option if you have deduced that the price of
your price will plunge in value.
IV.
Monitor the Trade: You can track your binary option by using a graph, such
as the one shown on the right of the below diagram. Usually, if the color of
the graph is green then this indicates that the trade is currently in-the-
money.
If red, then your option is presently out-of-the-money. The red vertical line
represents the time your option will expire.
You can buy one-touch binary options throughout every trading day and they will
expire at various times chosen by your broker. You can even initiate them during
the weekend. The following Friday will then be used as the expiry time.
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Straddle Strategies
Straddle strategies are renowned for being straightforward and effective. This is
because the price of assets tends to move in a series of waves with each one
possessing a crest or top and a trough or bottom. The tops and bottoms of these
wave formations are considered to be major reversal patterns that signify a
fundamental change in direction of the current trend.
Trader Level: Immediate
Risk Level: Medium
Straddle strategies are most effective when volatility is low and price is trading a
constricted range. Essentially, you will activate binary options that straddle the tops
and bottoms of this range.
New binary options should then be opened in the opposite direction as price rebounds
against the resistance (top) and support (bottom) levels. For example, open a new
PUT option if price ricochets against a top. Similarly, execute a new CALL option if
price rebounds against a bottom. The following chart shows these features.
The above chart shows a series of waves consisting of Top1, Bottom 1, Top 2,
Bottom 2, Top 3 and Bottom 3. To exploit this pattern, you need to open PUT
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option 1 at Top 1. As price rebounds from Bottom 1, a CALL option should be
opened. Similarly, PUT option 2 needs to be opened as price rebounds from Top 2.
Consequently, one of the prime objectives of the straddle strategy is to detect tops
and bottoms as accurately as possible. Many successful traders base their
strategies on the famous trading maxim which states ‘buy low and sell high’.
The basic steps to open a straddle strategy are as follows:
I.
Detect a Range-trading Asset: Identify assets that are ranging trading by
locating those whose price has been advancing in a horizontal direction for
some extended time. The range of movement should also be restricted by a
ceiling or top and a floor or bottom. Ideally, price should have ricocheted
against these levels numerous times.
II.
Resistance and Supports: Wait till price bounces against either a support
or resistance level. Ensure that the level holds by confirming that the next
candlestick closes above a support (CALL) or beneath a resistance (PUT)
option. Examples are displayed in the above diagram.
Opening Trades: If these conditions are confirmed, execute CALL options
whenever price rebounds against a support and activate PUT options after it
ricochets against a resistance.
To develop successful straddle strategies, many traders study the weekly and
monthly charts of assets in order to identify tops and bottoms. In particular, they
are especially interested in those levels that price has bounced against a number of
times. Once achieved, they then join consecutive peaks to form resistances and
consecutive troughs to form supports. These lines can then present good trading
opportunities whenever you can detect price rebounding against them.
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Corrective Strategies
This strategy should be applied anytime the price of an asset undergoes an
unexpected surge in value either upwards or downwards. Quite often you can
detect when such an event has occurred because a distinctive gap will appear on
the trading chart of the applicable asset, as shown on the chart below.
Trader Level: Immediate
Risk Level: Medium
Under such circumstances, price will then normally perform a corrective action by
reverting back towards its pre-gap level, as displayed on the chart above. This
occurs often because over-eager investors may have generated a price spike that
needs correction. Experts have devised numerous correction strategies to enable
them benefit from such trading conditions.
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For example, the basic steps to open a corrective strategy are as follows:
I.
Identifying Gap: Detect a distinctive price spike or gap of an asset on its
charting chart.
II.
Initiate Trade: Execute a new binary option in the opposite direction of the
gap once price has moved back inside it. For example, in the above diagram,
a PUT option should have been activated.
III.
Closing the Trade: Exit the trade at expiration unless the gap was been
completely filled beforehand. In that case, see if you can prematurely close
your option at profit especially if your expiry time will not elapse for some
time.
Tracking economic developments over the weekend can be a lucrative study
especially if you are able to identify any serious impacts on the proceedings of the
preceding week. If you can accomplish this objective, attempt to ascertain the
primary stimuli that have created these differences. If the financial markets then
open the new week displaying the expected gap, you should consider executing a
new trade based on a correction strategy.
Once price commences the process of gap-filling, this procedure seldom stops
because there are no immediate supports or resistances to prevent it. This is why
detecting price surges or gaps can be a profitable activity.
The next correction strategy has been devised to forecast price retractions. A new
trade must only be executed in the current trend’s direction. Price must then surge
either below a support or above a resistance before retracing to its original pre-gap
level. The gap would then be filled. The next chart demonstrates such a corrective
strategy.
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Next wait until you are able to clearly identify a candlestick confirming that price is
moving back in the original direction of the gap. This action provides confidence that
the new support, former resistance, has not been broken.
This corrective strategy provides quality trading opportunities exhibiting optimum
profit potential at minimum risks. Note specially that although significant gaps are
not created often, correction strategies are associated with a very high success rate
in the order of 85%.
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Retraction Strategies
A very popular trading strategy is termed ‘Trend Retractions’ which possesses one
major benefit in that it allows you to trade in the same direction as the current
trend. The main problem that you will encounter when using it is that you will need
to determine if price is undergoing a retraction or a more serious reversal. This
difference is very important because you will need to know if price is performing a
permanent decline or just a temporary dip.
Trader Level: Intermediate
Risk Level: Medium
So what exactly are retractions? They are brief price dips that are created within a
larger price channel or trend. Their most important feature is that they do not last
for long before price resumes its original direction. Retractions are usually produced
by small investors withdrawing profits and as such do not produce large increases
in trading volume.
Retractions generate only minor chart formations and the ones they do are mainly
limited to a few minor candle patterns. Their lifespan is usually very brief and so do
not last normally for longer than a week or two. Retractions are born normally after
large price movements have been generated.
Essentially, if you detect price retracting within a bullish channel, as shown on the
chart below, then you should execute a CALL binary option after it has bounced
against the lower trend line and proceeded back upwards. Similarly, you should
instigate a PUT option if you detect price retracting upwards within a bearish channel
and bounces against the upper trend line.
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I.
Identify Trending Channel: Locate a currency pair progressing within
either a well-defined bullish or bearish channel.
II.
Identify Trendlines: Create an upper trendline by drawing a line connecting
the recent highs. Similarly, draw a lower trendline by connecting the recent
lows.
III.
Confirm Price Test: When price retracts and hits either an upper or lower
trendline, confirm they are not breached by ensuring that the current
candlestick closes below the upper trendline or above the lower one.
IV.
Initiating Trade: Execute 60 second PUT options if price bounds against
the upper trendline and open 60 Second CALL options if price ricochets
against the lower trendline, as displayed on the chart above.
If you are unable to identify a clear-cut trending channel on the chart of a particular
asset, then leave it and study others. To be successful at this type of trading, it is
essential that you can detect clearly defined trending channels without any
complications.
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