Binary Options Trading
 
 

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:

   
Binary Option 60 minutes Chart
If the current price is higher than the opening price (in the current sample the current price of 79.7199 is higher than the opening price of 79.6921) the price is more likely to move down, and you should buy a PUT option. In the opposite situation, when the current price is lower than the opening price you should buy a CALL option as the market is expected to move up.
Figure 1: USD/JPY one hour binary option chart
 

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:

   
Binary Option final chart
The price moved down to 79.7032 and the option finished "in the money" generating a profit of 81% in only 15 minutes. As you can see, the price followed the tendency to normalize after a small increase and finished closer to the opening value. While this outcome is more likely to happen than the opposite, you should expect a decent amount of trades to end up the wrong way.
Figure 2: USD/JPY chart after option expiry
 

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
68%
22.40%
2
68%
22.40%
3
67%
20.60%
4
64%
15.20%
5
63%
13.40%
-
60% Winning Rate
60%
8.00%
6
59%
6.20%
7
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:

Copy Trader

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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More binary options strategies

Here is another interesting strategy that helps in predicting the asset movement that can work great with certain pairs: Cointegration Strategy

 
 
 
 
 
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About us: DWHM Trading is the name behind a group of trading experts who aim to provide quality and reliable information about derivatives trading to help educate new investors.
 
     
 
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Disclaimer: Binary Options are derivative trading instruments that can generate high yields in a short amount of time, but they are also very risky. Trading using binary options can result in the complete loss of your investment. This is why you should never trade with money that you cannot afford to lose.
 
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