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Just as trades vary, applying the correct binary options strategy is also a dynamic art all traders ought to master. Having a better control of your binary options trades is essential to your understanding about the financial markets behavior.
Strategizing your investments is clinical for your overall binary options trading success. Just as trades vary, applying the correct binary options strategy is also a dynamic art all traders ought to master. In order to obtain minimal financial risk, reach maximum trading flexibility and simplify the entire trading process, below we have gathered some of the top trading strategies today's traders frequently apply.
Having a better control of your binary option trades is essential to your understanding about the financial markets behavior. The more you apply and follow these trading strategies, the more probability there is that your trade will end as a successful one.Hedging/Straddle Binary Options Strategy
Applying the hedging/straddle binary options strategy is comprised of a simultaneous trade on one asset in opposite directions. This trading strategy includes risk management features which prevent you from enduring a full loss of your trades’ invested capital and the substantial chance to profit. The strategy is based on the presumption that "what goes up, must come down", and it works as follows:
Despite the positive direction the trade has taken, traders ought to know that the potential threat of a sudden shift of the asset's general direction continuously lurks their trades. The accepted solution here would be to make an opposing investment.
If in step 1, your general direction leads you to invest in a “Call” option, in step 3 you will invest in a “Put” option. Consequently, you're now trading both “Call” and “Put” options, thereby minimizing the risk of losing on both options, and maximizing the chances of gaining from one of them.
In other words, the hedging binary trading strategy guarantees you'll end up “in the money”- its risk management in its finest form. To make things even better, if by the end of the trade the asset's market price was between the striking price of your first and second investments, you can actually end up benefiting from both trades.
The table below represents the USD/JPY price for a potential “Call” option. Let's assume the price will breach the descending trend line.
The price breaks the trend line and is retesting it before continuing its movement upward. Corresponding to the hedging strategy, at the retesting point, you invest in a “Call” option.
Once the price movement is corresponding to your prediction, i.e., the option is “In the Money”, you wait for an opposing trend line to break again toward a decline. As a result, you lowered your risk and doubled your potential to profit.Hedging/Straddle Strategy Scenario Explanation
Normally, if you invest 0 in the USD/JPY option, as displayed on the chart above, and the asset's return is 85%, you either lose your 0, or alternatively, if you implement the above mentioned strategy, in the event that the trade ends up “In the Money”, you gain 0-even if one of the options expires “Out of the Money”.
Applying the straddle binary strategy will spring different results to your trade. If all of the conditions are correct; the price movement is in your predicted direction and you're “In the Money”, you can take this
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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