Today we are going to share with you our binary options trading strategy. This strategy is designed to help you identify if you want to trade binaries and you will learn how to trade binary options the right way. If you prefer playing 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 offer you the best strategy for binary options.
The main reason why we are interested in learning more about binary options trading is the fact that binaries simplify what we already do in Forex. At the same time, binary options also allow us to earn more money in the process. We also control the 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 move quickly and ride the intraday trend while the momentum lasts, you can learn how to trade money fast.
When we first discovered binaries, the light bulb went on in our heads. We determined that the same thing we did in Forex could be done. But walk away with 75%, even 95% winning trades, because we just had to get the direction right. You don’t have to worry about how many kernels we can understand in the process.
And that, my friends, is the real beauty of binary options.
What are Binary Options?
Binary options are a form of derivatives that have a fixed profit or loss. Trading binary options is simple. All you have to do is ask yourself a simple yes or no question. Will the price of the underlying asset be worth more than the strike price on the expiration date?
Now let’s start to understand how binary options work.
Essentially, we can trade binary options for any type of instrument. Whether it’s commodities (gold, oil or silver), currencies (EUR / USD, GBP / USD or USD / JPY) or shares (Amazon, Tesla or Twitter).
The first thing you need to decide on is choosing the asset you want to trade.
Second, before entering these 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 in the future. In other words, we need to use our skills to predict the market direction. This will determine our success in trading binary options.
The market can only go up or down. If we believe that the current value will rise in the near future, we buy a Call Option. On the other hand, if we believe that the current value will decrease in the near future, we buy a Put option. Read more about Call Options vs Put Options.
Third, we need to determine what is the most important aspect of trading binary options. The expiration time will ultimately determine whether you make a profit or not.
Trading binary options requires you to correctly predict two things:
- Whether the market will rise or fall.
- Your prediction must be accurate during a certain time frame – called the expiration time.
If you are right on the market at the expiration time, you earn profit. Being wrong means you suffer a loss. The way binary options work is that if you are right on the market, you will get a percentage of what you initially invested.
Usually between 75% and 95% and in some cases even 100% of your initial investment depending on your Binary Options Broker.
If we guess wrong in the trade, then we will lose the entire amount invested in the short term.
We’ve made a nice infographic that highlights the four steps on how to master binary options trading.
See below:
We are now going to focus on step two, which is predicting the price movement. If you get it right, knowing how to make money trading binary options is a piece of cake for you.
Before we outline a method to trade money in binary options, we always recommend a paper and a pen and take notes on the rules of the best strategy for binary options.
In this demo we are going to look at buying calls.
The best strategy for binary options
Our team at Trading Strategy Guides is ready to share our 60 second strategy for binary options with our beloved trading community. We not only hope that this strategy will make you money, we are certain that it will. The mathematical model behind this binary options trading strategy has a proven market advantage.
The only tool you need to successfully trade binary options is the RSI indicator.
Even the RSI indicator is not good enough if it does not have the “right” settings. The RSI default settings need some tweaking if you want to master the 1 minute time frame. We use an RSI for three periods to trade binary options profitably.
Obviously, a lower RSI period means that the indicator will tend to hold more noise than normal. But it is more responsive to the immediate price action. Along with adjusting the RSI settings, we also played with the overbought and oversold readings. We have found that we get an accurate day trading signal by using an 80 RSI reading for overbought and 20 RSI readings for oversold conditions.
* Note: Make sure to adjust the RSI settings before trading in the binary options strategy.
By changing the RSI overbought and oversold line, we eliminated the noise. Now we are ready to highlight our step by step guide to our binary options:
Step #1: Find an instrument that shows a low over the last 50 candlesticks. Use the 60-second chart (1 minute TF)
The 1 minute binary options or the 60 second time frame is the best chart to trade binary options. In other words, the best binary options expiration time is the 60 second time frame.
We recommend that you highlight the starting point on your maps. And the end of your 50 candle low that you identified. Simply draw two vertical lines on your chart through the start point and end point of your 50 candle low.
When counting the 50 candle low, always start with the current candle. Then go from the right side of your map to the left side of your map. If you manage to count 50 candle low, the starting candle point will be your 50 candle low.
Moving forward, it’s time to call on the RSI indicator and see if we have excessive oversold readings or not.
See below:
Step #2: At the moment the 50 candle level develops, we need an RSI reading of 20 or below
Since this is a reversal 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 conditions.
Remember that we need the 50 candle low to go to the next step. We also need an RSI reading below 20 to occur simultaneously.
We have added one more factor of confluence that must be satisfied. If used in conjunction with the preceding two conditions, it will make you a binary options trader.
See below:
Step #3: Look for a bullish divergence between the RSI indicator and the price.
When trading reversals, you need to be as careful as possible. The more confluence factors in your favor, the more accurate the reversal signal.
What we need to see here is that the price is going to move lower after the 50 candle low is 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 that they are diverging from each other. This indicates a potential reversal signal.
Now is the time to highlight how to trade the right entry point for the binary options strategy.
See below:
Step 4: Buy a call option after the first candle that is above the high of the 50 candle low
The first thing you need to do is mark the high of the 50 candle level with a horizontal line on your chart. The first candlestick formation that breaks above this high is your trade entry signals to buy a 60-second Call Option.
It’s that simple!
After deciding to invest and selecting the 60 seconds as your expiration date, it’s time to sit back and wait 1 minute before hopefully collecting your winnings.
Step #5: You earn your profits if the next candle closes higher than your candle
If the price at expiration is higher than the price at which you opened your Call options, you’re lucky because you’re about to make a big payout.
For example, if you invested $1,000 and your binary options broker offers you an 85% payout, it means you accurately predicted the outcome of a trade. You get back your initial investment of $1,000 plus the 85% payout, which in our case is $850 profit.
If you want to buy Put binary options, use the same manual for binary options, but in reverse.
See below:
Conclusion – Binary Options Trading Strategy
Before learning how to trade money in binary options, you need a great broker with Binary Options. You can’t start hitting straight out of the gate without making sure you have a binary options broker who wants you to succeed. Second, you need a strategy-based trading technique to reveal the market direction. You only need to predict whether the price will be higher or lower during the next 60 seconds, which makes it very convenient.
We use a heuristic approach to speculate how the price will move during 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 strategy for binary options is exactly that system. Our team is composed of many traders with experience in the industry, including binary options traders who know how to make winning trades. We are ready to help you every step of the way.
Thanks for reading!