Trend Following Strategies Binary Options

Welcome to our binary options strategy department. Here y’all will detect a beginners guide to strategies, leading on to more avant-garde information about things similar money management, and articles on specific strategies.

Bones Strategy For Successful Trading

Strategy is one of the almost important factors in successful binary options trading. It is the framework from which yous base of operations your trade decisions, including your money management rules, and how you get about making money from the market. There is no i Holy Grail unfortunately, if there were then nosotros’d all be using information technology!

The ii most very basic categories of strategy are:

  • Cardinal
  • Technical.

Fundamental strategies focus on the underlying wellness of companies, indices, markets and economies and while of import to understand, is not as important to binary options as the technical aspect of trading.

Technical trading, or technical analysis, is the measurement of charts and cost action, looking for patterns and making educated guesses, speculations, from those measurements and patterns.

Strategy simplifies your trading, takes guesswork out of choosing entry and reduces overall gamble.

The text book definition reads like this;
a programme of activeness designed to achieve a goal or overall aim, the art of planning and directing operations in order to achieve victory. When it comes to trading the goal is to ane) make money and ii) not lose coin.

The number one method of achieving this goal is to use a rules based approach to choosing entries that relies on ages old, tried and true technical assay indicators. There are dozens, possibly hundreds if not thousands, of ways to trade the market, all strategies. They can be categorized in terms of the tools used, the time frames intended, the amount of take a chance associated with and many other ways, these being the primary.

  • Price Activeness/Scalping Strategies
    – Price activity strategies rely on the move of the market to time entry. These can exist trend following or not, long or short term and utilize bullish or bearish positions.
  • Trend Following/Directional Strategies
    – Trend following strategies target assets that are trending strongly to pinpoint a series of profitable entries with a loftier charge per unit of success.
  • Range Bound/Short Term Strategies
    – 99% of the fourth dimension the market, or an individual asset, is non trending simply trading in a range within a high and depression marker. These strategies focus on support and resistance levels, reversals within the range and brusque term trends as asset prices move up or downward from support to resistance and vice versa.
  • Long Term/Momentum Strategies
    – These are the less risky of the strategies as they target stronger signals and longer term time frames. These signals have a higher chance of success only take longer to develop and longer to unfold than other types of signals.

A technical analysis indicator is, well-nigh oft, a mathematical formula which converts price action into an like shooting fish in a barrel to read visual format. Common types of indicators include only are not limited to moving averages, tendency lines, back up and resistance, oscillators and Japanese Candlesticks.

Money Management

Strategy is ane of the ii pillars of adventure management, the other is money direction. You control take chances past targeting merely good signals, weeding out obviously bad signals, and never putting so much coin on 1 trade that information technology will wipe out your account.

Money direction is the command of your overall trading fund. It should clarify trade size, and long term fiscal management – leaving you to focus only on trading. A well thought out money management structure should simplify:

  • Merchandise size
  • Chance management
  • Future growth
  • Stress

A trader with a articulate financial plan should not need to be concerned with whether they can trade tomorrow, or if their trade size is correct or how they might grow investments in line with their progress. All those decisions are controlled by managing their overall capital with a clear plan.

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Read more on money management.

Japanese Candlesticks

This is the virtually common method of viewing price charts. The candlesticks give an like shooting fish in a barrel to read view of prices, open high low and shut, that jumps off the charts in way that no other charting style can exercise. They are the basis of most price activeness strategies and can be used to give signals as well as to confirm other indicators.

Read more than about candlestick strategy

Support And Resistance

These are areas of price action on the asset chart that are likely to stop prices when they are reached. Back up is found when prices cease falling, this happens when buyers footstep into the market and are said to be “supporting prices”. Resistance is plant when prices stop ascent, this happens when sellers enter the market (or buyers disappear) and are said to be “resisting higher prices”. These areas, frequently represented by horizontal lines, are skilful targets for entries and possible areas where price activeness may reverse.

Tendency Lines

These lines connect highs and lows formed by asset price as information technology moves upwards down and sideways. A series of higher lows and college highs is considered to be an uptrend and a sign that prices are likely to motility higher, a serial of lower highs and lower lows is considered to be a downtrend and a sign that prices are probable to move lower. The trend line can be used as a target for support and resistance, likewise every bit a an entry indicate for trend following strategies.

Moving Averages

Moving averages have an average of an avails prices over Ten number of days and and then plots those values as a line on the price nautical chart. Moving averages come in many forms and are often used to determine trend, provide targets for support and resistance and to indicate entries. There are dozens of methods of deriving moving averages, the most common include Simple Moving Averages, Exponential Moving Averages, volume weighted moving averages and many more. They can be used in whatever fourth dimension frame, and ready to whatever time frame, for multiple time frame assay and to give crossover signals.


Oscillators may be the single largest division of indicators used for technical analysis. They include tools like MACD, stochastic, RSI and many, many others. These tools, in full general, utilize price action and moving averages in a combination of means to determine market place wellness. They are displayed as a stand lone tool, usually as a line that ranges betwixt two extremes or above and beneath a mid point, that can help decide tendency, direction, support/resistance, market strength, momentum and entry signals.

Trading Psychology

With any form of trading, psychology tin can play a big part. A lack of confidence tin mean missed trades, or investing too little capital letter in winnings trades. At the other end of the spectrum, over-confidence tin can lead to over trading, or increased risk – either of which could wipe an account very quickly.

So the trading psychology of the trader is very important. Information technology can also be actively controlled or managed (at the very least, acknowledged). Information technology is another often overlooked area of trading skill, but ane well worth spending time to consider.

Read more than on trading psychology and learning from experience.

A Basic Binary Options Strategy

Here is an case of some bones rules for a binary options strategy.

  • The tendency is your friend, only take tendency following entries.
  • In an uptrend only enter when prices are near support, in a downtrend simply enter when prices are near resistance.
  • When prices are near support/resistance wait for a confirming candlestick signal.
  • When the candlestick indicate appears wait for stochastic and/or MACD to ostend, a bullish crossover in an uptrend or a bearish crossover in a downtrend.
  • When rules 1 through 4 are met, enter the merchandise, but apply iii% of business relationship on each trade.
  • When choosing death use 2XCandle length. IE, if you are using 1 minute candles and then 2 minute expiry, if 1 hour candles then 2 hour expiry.
  • If the trade fails examine why it did not work, make aligning if necessary and move on to the next trade. If the trade works motility on to the adjacent trade.
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Top Brokers

No strategy is going to exist profitable if you lot trade with an unreliable banker. These are our acme recommended trading platforms for trying out your strategy.

Full general risk warning: your capital is at risk

* Amount is credited to account in case of successful investment

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Choosing a Trading Strategy

Developing a trading strategy for the binary options market requires a key agreement of how the market operates in terms of the trade contracts available, the diverse decease times, and the agreement of the behaviour of the individual assets.

Unlike the forex market where the nugget has to movement in i management or the other past an appreciable number of pips to the trader’s favour before profits are made, the binary options market is peculiar. Apart from the Upwards/Down trade which is based on management and mimics the requirements of the trades in other markets (except the pip movements), other merchandise types in the binary option market operate in totally different ways. At that place are different trade contracts for different platforms. Some binary options contracts do not fifty-fifty crave the trader to become the management of the asset correct. For example, trading the OUT contract will need the asset to hit one price purlieus or the other for profit to be fabricated. And then it takes the trader being able to identify a suitable merchandise contract to be able to way a suitable strategy. What is used to merchandise the Up/Downwards contract is not the same equally volition exist used for the In/Out contract. The contract type volition determine the strategy.

For instance, trading the Up/Down contract will require a strategy that can determine if the nugget will make a bullish or surly move. Trading the In/Out contract volition require either a range trading strategy or a breakout trading strategy to identify a fourth dimension when the nugget stays in a range or breaks out of that range. If you are looking to develop a trading strategy for the In/Out merchandise, this is how your mind should be working.

In developing a strategy based on the binary options trade types to be traded, at that place are tools that can assist the trader.  This is where chart patterns, signals services, candlesticks and technical indicators will come up in. A simple tool like the pin betoken estimator can exist used equally function of a Bear upon merchandise strategy with very constructive results. Using tools like these volition take u.s. to the next part of choosing a strategy, which is how to sympathise and set expiry times.

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Understanding Expiry Times

Decease times are very important to binary options, because all trades in this market place take time limits. However, not all binary options trades require time limits to be successful. Trades such as the Up/Downwardly trades must reach expiry before the trade issue is known. In dissimilarity, trades such as the OUT component of the boundary trade or the Affect component of the High Yield Touch or Impact/No Affect trade contract must not necessarily accomplish maturity before the outcome of the trade is known. If a trader bets on a TOUCH outcome and the nugget touches the strike cost well earlier decease, the trade issue is already known and the trade is terminated every bit a assisting one.

So if the trader is not very practiced at setting expiry times/dates (and really, no trader in the market can boast of getting his expiry settings right all the time hither), the binary options trading strategy will take to be tailored towards merchandise contracts which are not totally decease-dependent.

At present when you lot identify and separate trades that are not and then dependent on expiries from those that are, you can better understand what kind of strategy you would be looking at.

Agreement Nugget Behaviour

The binary options market place combines avails from different asset classes into one market place. These assets do not behave alike. Some assets are very volatile with large intraday movements. A very clear example is gold. Some binary options assets are not traded round the clock but only at specific times e.thou. the stock indices. The factors that may trigger a massive motion in a stock index would obviously non exist the aforementioned for a commodity or a currency. Even within the same asset class, no two instruments are exactly the same or comport alike.

An understanding of asset behaviour is therefore key to existence able to develop a trading strategy for the market. It is upwardly to the trader to study the behaviour of assets, empathise the technical and fundamental indicators that volition influence the behaviour and cost movement of that asset, and so create a trading strategy that volition work for that nugget.


In this section, we will demonstrate the application of all the parameters we have mentioned higher up using a simple but effective trade strategy.

–       The strategy we will use determines price bullishness/bearishness, then nosotros volition trade a Call/Put contract.

–       Nosotros will merchandise the strategy on a one hour chart, and then it volition exist have an expiry of ane hour. We do this using our understanding that the issue we want to merchandise on the hourly chart, will happen in an hour.

–       We want to employ this on an asset that is liquid and responds to the strategy. So we will employ the EURUSD.

The strategy has been used to create a color-coded indicator, which shows a greenish arrow on bullish signals and a scarlet arrow for bearish signals. It aims to trade the EURUSD because this currency responds very well to toll stimuli during the London/New York overlap in the forex time zone, and the response can exist delivered in an hr.

As soon as the cerise arrow appeared (equally shown higher up), the betoken was to trade a PUT option on the Call/Put digital selection. Using this signal, the trade was executed on the binary options platform. The price of the asset (EURUSD) fell in i hr from the time the bespeak was generated to the death, producing a trade event in our favour.

This strategy (a custom strategy) fulfilled all our conditions:

a)    It was suited to a merchandise contract on the binary options market.

b)    Information technology was a strategy that was suited to help the trader use a suitable expiry.

c)    Information technology was suited to the behaviour of the asset and in a higher place all, THE STRATEGY WAS A Profitable ONE.


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