Posted on January 22, 2017

Best binary options strategy for beginners

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Anyone who wants to trade successfully in binary options should take a few particular tips to heart. Successful trading requires the trader to follow a clearly defined strategy, without which, trading becomes closer to a form of gambling. The strategies that are described below can serve beginners as a good basis for their own trades.

Volatility strategy – good for highly variable markets

The trader should always have a clear understanding that there are not always clear trends where binary options are concerned. Market prices for currencies, shares, and commodities can vary extensively, and it is not always possible to identify a clear direction in price movements. Where this happens, the trend-following strategy (which we describe later) is not suitable.

In such volatile situations, the so-called volatility strategy is most effective. The basis for this strategy is earning a profit from significant movements in prices. The direction of those price movements does not matter at all, however, and precisely that indifference to the direction of movement distinguishes this from the trend-following strategy, which intentionally follows a particular kind of price evolution.

The success of the volatility strategy depends entirely on recognising significant price movements. Using the example of a share price, a movement could occur when the enterprise publishes its financial results (which generally takes place on a quarterly basis), or upon the announcement of another important milestone. The advantage of this strategy is that the trader is not required to predict whether the event will lead to falling or rising prices. All that matters is the forecast that a significant price movement will occur at all.

In practice, volatility strategy is deployed by the trader purchasing both call and put options on the same basis price. This strategy only works in respect of one-touch options, as the potential profit needs to exceed 100% per option. At this stage, it should be noted that both options must have exactly the same duration: if, for instance, the price rises as a result of better-than-expected results, the put option (which anticipates falling prices) will incur a total loss. If, however, the call option generates a profit of 300% or even more, the loss on the put option is more than offset. By buying two options, the committed level of capital is obviously higher, and so is the corresponding risk of losses. Nevertheless, both options only incur a total loss in the event that only a small movement occurs. Accordingly, the volatility strategy can be highly effective when deployed correctly!

Trend following strategy – suitable for beginners and pros alike

Trend following strategy is one of the most widely used strategies in binary option trading, and that is why it is frequently recommended to beginners in particular. Trend-following strategy is based on adapting the trader’s own behaviour to follow the general trend. Simply following the trend and behaving like other market participants is a highly promising strategy, because it is significantly more likely that a trend will continue, rather than reverse its course. The art of a successful trend-following strategy consists of recognising a trend at the moment it has started to form, at least as far as it is possible to do so. The optimal entry point is always right at the start of a trend. The challenge for beginners is that trends are significantly easier to distinguish when they are already well-established and have been in existence for some time. Charts allow upward and downward trends to be recognised very easily. An upward trend generally shows higher highs, and more moderate lows, in succession. A downward trend shows the exact opposite, with deeper lows and more moderate highs appearing successively over time. Read more about following trends.

Countertrend strategy – trading against trends

Countertrend strategies are the opposite of trend strategies: the trader takes a position that goes against the prevailing trend. In some situations, even upward price trends can be affected by sudden price falls: in fact, this is highly likely. An overbought or overheated market, for example, can sometimes cause the trend line to change direction with little notice. Certain signals can provide an early warning of an upcoming change in the trend. Strategies that rely on countering prevailing trends suffer from a major disadvantage: a lower hit rate is not offset by greater profits when gains do occur.

Success with 60-second options requires the market to move decisively against the prevailing trend, but it is completely irrelevant whether the price movement is a change in the underlying trend, or simply a short-term correction. The probability that a movement will occur that goes against the prevailing trend is high when the ma


Binary Options Strategy

Following a strategy when trading digital options may significantly increase your chances to be profitable. However, you should stay realistic and be aware than you can never be certain of success.

Are binary options strategies infallible?

There is no perfect strategy in trading, no matter what any so called "Guru" or signal provider will tell you. All strategies have some flaws and weak points, and there is no such thing as a perfect mathematical model to achieve profits on the financial markets. When deciding to use a strategy you must be aware all the time that even the best strategy is no guarantee for success. However, this should not discourage you, because certain strategies can be very profitable most of the times. You only have to keep in mind that luck is a very important factor in trading, just as it is in life in general.

What type of binary options strategies exist?

Generally speaking, there are two main categories of strategies when it comes to binary trading:

Type 1: Strategies based on betting models - Those strategies presume that using specific patterns in terms of investment amounts and the right timing can generate profit no matter if the trader is skilled or not at market prediction. Those strategies presume that in certain situations you can design your option buying strategy to give you a high probability of winning. In this category you will find betting pattern strategies like The Grinding Strategy or strategies based on trading the news.

Type 2: Strategies on how to predict the direction of the market better - In this case the strategies are based on simple technical and statistical evidence that in some circumstances the market has greater chances to move in one direction over another. While technical analysis can be pretty complicated, there are much simpler ways of interpreting the charts, especially when it comes to binary trading.

Binary options simple strategy

The strategy that we are going to present is a very simple "Type 2" strategy. It's purpose is to help you predict the direction of the market movement and have a high percentage of options that finish in the money. This strategy is based on the assumption that markets tend to correct themselves after movements in one direction, and the price usually goes up and down. This means that if the price has raised in the previous timeframe, it is more likely to fall in the next one.

Of course, this is not a rule and there will be many times when it won't happen, especially when the market is on a trend, but when the market is calm and fluctuations are at small levels (a low volatility) you will most likely see ups and downs constantly.

Binary options usually have a small timeframe and are ideal for this type of technique. The trading platforms of the brokers will show you a recent chart of the asset that is well suited for the option's timeframe. If an option expires in 15 minutes, you are likely to see the chart for the last 45 minutes and an empty chart for the next 15 minutes like in Figure 1:

After buying the PUT option you must wait until the expiry time, which is 15 minutes in this case. Let's see how the chart looked like after 15 minutes:

You should also keep in mind when using this strategy that sometime the market is on a trend or some important news may be released that will shake the market to a degree that such simplistic analysis will be useless. This strategy is recommended on calm markets with small trading volumes and no news expected to be released in the following hours.

Binary options signals and automated trading systems

Some very experienced traders have developed their own complex trading strategies that render very good results. Such strategies and algorithms are available to everyone through special services that offer trading signals or even automated trading through their advanced systems.

The binary options auto-trading strategies are also known as binary options robots. We monitor many such binary options robots to see how well they perform, as many of them don't offer the results advertised on their websites. Live-testing is the best way to check if a robot's strategy is actually as good as it pretends to be.

Here is the list of the best binary options auto-trading strategies based on the actual results we had with them on our monitoring accounts:

# Strategy Name Win Rate Profit 1 Automated Binary 68% 22.40% 2 Trader Pro 68% 22.40% 3 Option Robot 67% 20.60% 4 Make Money Robot 64% 15.20% - 60% Winning Rate 60% 8.00% 5 Pip 365 59% 6.20% 6 XL Signals 57% 2.60% - Break Even Rate 55.55% 0.00% - Average Robot 52% -6.40% - 50% Winning Rate 50% -10.00%

Win Rate = The number of winning trades out of the last 100 trades executed (updated weekly)

Profit = The average profit per trade calculated based on a 80% payout for winning trades and 100% loss for losing trades. This is the actual profit per trade after taking into account the difference between the payout offered by brokers which is lower than the amount lost when the trades are out of the money. This means that you need a winning ratio of 55.55% to break even.

Note: The robots that had a winning rate below 55.55% and generated losses are not listed in the table above. The average winning rate we experienced with trading robots is around 52%, so the average robot will generate a loss over the long term. However, using the top robots can be quite profitable.

We also have a dedicated page where you can find more about binary options automatic trading strategies: Best Binary Options Systems.

Binary options strategy tip: copy from the best traders

Another way to apply a good trading strategy without effort is to copy from the best traders. While this may sound impossible to do, it is actually very simple. There is a binary options trading network named The Traders Junction where traders can share their results.

The access to the network is free, but you need a premium membership if you want to be able to automatically copy the best performing traders. The good thing is that you can try the premium membership for free for seven days using the following voucher code: TTJ7

This exclusive voucher code will give you one week of Premium membership for free that will allow you to copy the best traders in real time and rake in good profits. To redeem the voucher code you must follow these steps:

1. Go to The Traders Junction Website

2. Register an account

3. Once you have the demo account, you must click on the "Premium" button.

4. Choose the "7 Day membership" (valued at 9.95 Euros) and insert the Voucher Code as seen in the following image:

5. Enjoy your Premium Membership by connecting your broker and copying the best traders.

Another way to take advantage of the skills of experienced traders is by investing into a forex managed fund through a PAMM system. We have a dedicated page where we explain how PAMM investing works here: All about PAMM Investment

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