Today we will share binary options trading strategy with you. This strategy is designed to help you identify if you want to trade binary and teach you how to trade binary options the right way. If you prefer to play it safe over gambling, you need a strategy or tactic to help you master binary options and other trading activities. This is where our TSG team comes to the rescue. We will provide you with the best binary options strategy.
The main reason we are interested in learning about trading binary options is the fact that binaries simplify what we already do in Forex. At the same time, binary options also allow us to make more money in the process. We also control risk.
Binary options are easy to understand. This is coming from someone who has little or no experience in the area. If your favorite approach to forex trading is to jump on quick price movements and ride the intraday trend as long as the momentum lasts, you can learn how to make money trading binary options quickly.
When we first discovered binaries, a light bulb went on in our heads. We found the same thing we did in Forex can be done. But walking with 75%, even 95% of winning trades because we just need to get the right direction. No need to worry about how many pips we can understand in the process.
And that, my friends, is the true beauty of binary options.
What Are Binary Options?
A binary option is a form of derivative that has a fixed profit or loss. Trading binary options is easy. All you have to do is ask yourself a simple yes or no question. Is the price of the underlying asset worth more than the strike price on the expiration date?
Now, let’s start by understanding how binary options work.
Basically, we can trade binary options for any type of instrument. Be it commodities (Gold, Oil or Silver), foreign exchange currencies (EUR / USD, GBP / USD or USD / JPY), or stocks (Amazon, Tesla or Twitter).
Therefore, the first thing you need to choose is to choose an asset to trade.
Second, before submitting our trades, each of these instruments has a current value at any given time. How to trade binary options depends on our trading skills. It is used to predict where the current value will be some time in the future. In other words, we must use our skills to predict the direction of the market. This will determine our success in binary options trading.
The market can only go up or down. If we believe the current value will go up in the near future, then we buy a Call option. On the other hand, if we believe the current value will go down in the near future, we buy a Put option. Read more about call options vs put options.
Third, we need to determine the most important aspects of binary options trading. Expiration time will ultimately determine whether you make a profit or not.
Trading binary options requires you to accurately predict two things:
- Either the market will go up or down.
- Your prediction needs to be accurate during a specific time period – called the expiration time.
If you are in the direction of the market with the expiration time, you make a profit. Going wrong means you bear the loss. The way binary options work is that if you are in the direction of the market, you will get a percentage of what you originally invested.
Usually between 75% and 95% and in some cases, even 100% of your initial investment, depending on your Binary Options Broker.
If we are wrong in the trade, then we will lose the amount invested in the short term.
We’ve created a nice infographic that highlights four steps on how to master binary options trading.
See below:
Now we will focus on the second step, which is how to predict price movements. If you count this, then knowing how to make money trading binary options will be a piece of cake for you.
Now, before we will outline the method of how to make money trading binary options, we always recommend taking a piece of paper and a pen and taking notes on the rules of the best binary options strategy.
In this demonstration, we will look at buy calls.
Best Binary Options Strategy
Our team at Trading Strategy Trader is ready to share with our beloved trading community a 60 second binary options strategy. We don’t just hope this strategy will make you money, we’re confident it will. The mathematical model behind this binary options trading strategy has proven market advantages.
The only tool you need to trade binary options successfully is the RSI indicator.
Even the RSI indicator isn’t good enough if it doesn’t have the “correct” settings. The default RSI settings require a little adjustment if you want to master the 1 minute time frame. We use 3-period RSI to trade binary options profitably.
Naturally, a lower RSI period means that the indicator will tend to be more stormy than usual. But it is more responsive to immediate price action. Along with RSI setup adjustments, we also play around with overbought and oversold readings. We found that by using an 80 RSI reading for overbought and a 20 RSI reading for an oversold condition, we get a more accurate day trading signal.
* Note: Make sure you adjust the RSI settings before you jump into the binary options trading strategy.
By changing the overbought and oversold lines of the RSI, we have eliminated the noise. So now we are ready to highlight our preferred binary guide step by step:
Step #1: Get an instrument that shows the low of the last 50 candlesticks. Use the 60 second chart (1 minute TF)
Binary options for 1 minute or 60 seconds time frame are the best charts for binary options trading. In other words, the best binary option expiration time is the 60 second time frame.
We recommend highlighting the starting point on your chart. And the low end point of the 50 candle that you have identified. Simply draw two vertical lines on your chart through the starting point and the ending point of your 50 candle low.
When you count the 50 candle low, you should always start from the current candle. Then go from the right side of your chart to the left side of your chart. If you manage to count the 50 candle low, obviously the starting candle point will be the 50 candle low.
Moving forward, it’s time to put the RSI indicator into use and spot if we have extreme oversold readings or not.
Step #2: At the moment the 50 candle low is developing, we need an RSI reading of 20 or lower
Since this is a reversal trading strategy we need the RSI indicator to show a bullish reversal signal. An RSI reading below 20 indicates that the market is in oversold territory and could potentially reverse.
In our example below, the 1-minute EUR/USD chart satisfies both of those conditions.
Keep in mind that to move to the next step, we need 50 low candles. We also need an RSI reading below 20 to occur at the same time.
We added another meeting factor that needs to be met. If used in conjunction with the previous two conditions, it will make you a money-making binary options trader.
See below:
Step #3: Observe the price difference to rise between the RSI indicator and the price.
When reversing a trade, you need to be as accurate as possible. The closer factors you have in your favor are more accurate reversal signals.
What we need to see here is for prices to continue moving lower after the 50 candle low has been identified. At the same time, we need the RSI indicator to move higher in the opposite direction.
If the price moves in one direction and the momentum indicator moves in the opposite direction, it means they deviate from each other. This signals a potential reversal.
Now it’s time to highlight how to find the right entry point for a binary options trading strategy.
Step #4: Buy a Call Option after the first candle that closes above the high of the 50 candle low
The first thing you need to do is mark on your chart the 50 candle high low with a horizontal line. The first candlestick formation above this high is your trade entry signal to buy the 60 second Call option.
That’s easy!
After you decide the amount to invest and choose 60 seconds as your expiration time, it’s time to sit back and wait 1 minute before hopefully collecting your profit.
Step #5: You collect your profit if the next candle closes higher than your trigger candle
If at the time of expiration, the price is higher than the price at which you opened your Call binary option, you are lucky because you will check in a big payout.
For example, if you invest $1,000 and your binary options broker offers a payout of 85%, it means that you accurately predicted the outcome of the trade. You get back your initial investment of $1,000 plus an 85% payout which in our case is $850 in profit.
If you want to buy a binary Put option, use the same binary options guide, but in reverse.
Conclusion – Binary Options Trading Strategy
Before learning how to make money trading binary options, you need a great Binary Options broker. You can’t start hitting houses out of the gate without making sure you have a binary options broker that you want to succeed. Second, you need strategy-based trading techniques to reveal market direction. You only need to predict if the price will go up or down for the next 60 seconds, making it very easy.
We use a heuristic approach to speculate where the price will move in the next 60 seconds. At the end of the day, traders are looking for a reliable binary options system that will help them make money from trading.
The good news is that the best binary options strategy is an accurate system. Our team is built with many experienced traders in the industry, including binary options traders who know how to make superior trades. We are ready to help you every step of the way.
Thank you for reading!