5 Binary Options trading Strategies for Newbies
When you make up your mind to being binary options trader you don’t only become a player but mainly you become an investor. You actually invest your real money the same way you could invest it in any other project; only that binary options trading is riskier but also very profitable if done in the right manner. With this in mind, you should get yourself a binary options trading strategy since this is your greatest weapon when it comes to binary options trading.
There are a variety of binary options trading strategies. For you to succeed, you have to actively learn and use those strategies that you think will make you profits. For beginners, they should start by training with those binary options strategies that are simple to use.
The binary options market is made of a vast and complicated mechanism of the financial market, which operates in accordance to certain regulations and laws.
Below are five binary options trading strategies that are ideal for beginners:
When you choose a certain option when trading binary options, the result of that option depends on the general condition the market and the actual current price of the asset that you are trading. By using a good binary options trading strategy, you can be able to reap big from the options.
As a trader, you should understand that every strategy, even that one that looks to be very promising, isn’t ideal at any one time. Just as it with human trading, binary options trading strategies also make some minor losses from time to time; with the only difference being that the strategies make fewer losses than the human traders and thus the trading strategies make more profits.
But even when using binary options trading strategies, you should never put all your money into one option; rather you should look to see that you divide your capital in a way that enables you to make at least ten investments at a go. This is what is referred to as diversification. Most successful binary options traders always keep Diversification Strategy in mind.
Five Minutes Strategy
This is a very simple strategy, and it is best for beginners with no experience in binary options. Although it doesn’t guarantee to100% of success, according to estimates, it has a success margin that is close to 80%.
The strategy doesn’t really an emphasis on the amount of capital that the beginner deposits. But even with the small amount of deposit, the trader can use this strategy repeatedly in a day, thus increasing the small capital.
The Five Minutes Strategy uses the fact that most binary options brokers allow traders to place options on their farthest extent, which is within 5 minutes before expiration. So, the trader needs to look through the assets in the market and find one that is steady and that has been growing for a long time or, on the other hand, one that has been decreasing. Then the trader should trace its maximum or minimum value depending on the prevailing trend. This value is most likely to be the turning point for the trend.
The Martingale Strategy is based on the principle of the Martingale, which is less risky and safe when applying it in trading binary options. The Martingale Principle is based on making doubling the trading amount so as to cater for a previously failed trade. This means that, if a trader loses $150, he or she have to trade again with an amount of $300. If he or she loses $50, he or she puts $100. According to this strategy, a trader should double the trading amount.
However, the success of this strategy purely relies on luck. It is very risky at some point if the subsequent trades turn out to be losses. To reduce the risk of making losses, a trader should look for a currency pair that has a clear upward or downward trend of price movement. Also, traders can use binary options indicators to increase the chances of winning.
15 Minutes Strategy
This strategy simply states that a trader should track assets on the 15 minutes time frame. If there are 3 or more successive candlesticks of the same color, a trader should buy binary option after two minutes hopeful for a rolling back. For example, if a trader sees three successive white candles close, then a new candle opens and it moves in the opposite direction. The trader should wait for 2 minutes and buy Put binary options with an expiration time set at the close of the current candle which is ideally after 13 minutes (meaning 15 minutes of the time frame minus the 2 minutes waiting).
Buying an option is also recommended if the bodies of three similar successful color candles collectively add up to make more than fifteen points.
It’s true that there are different types of triangles. However, no matter the type of triangle, they all used to show when a breakthrough price is imminent. For example, there are rising/ascending triangles that foretell an imminent increase in prices and may be a probable breakup. Then there are falling triangles, which on the contrary foreruns a likely price fall. Depending on the kind of triangle, traders can successfully trade to make profits.
During an uptrend, price movements form an ascending triangle. However, to visually see the triangle, a trader has to draw two lines joining the resistance and support level. Resistance line is usually horizontal while the support line is normally located at an angle in an ascending triangle when the trend is rising. For the descending triangle during a downtrend, the support line is usually horizontal while the resistance line is normally inclined at an acute angle.
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References and Further Reading:
- Empirical Characteristics of Dynamic Trading Strategies: The Case of Hedge Funds (William Fung David A. Hsieh)
- Tests of technical trading strategies in the emerging equity markets of Latin America and Asia (Mitchell Ratnera, , , Ricardo P.C. Leal)
- S&P 500 Trading Strategies and Stock Betas (Anand M. Vijh)
- Risk Adjustment and Trading Strategies (Dong-Hyun Ahn, Jennifer Conrad Robert F. Dittmar)
- Estimating the profits from trading strategies (Peter J. Knez Mark J. Ready)