Binary Option Alliance

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Category: Advanced stratedy

Binary Options Trading Strategies and Online Trading

Binary Options Trading Strategies and Online Trading

Online trading is fast becoming popular among some investors and has seen growing interest in recent times. Binary options trading is particularly popular among investors who want to invest through online trading. This growth in interest has led to the development of binary options trading strategies designed to help investors improve their chances of trading binary options successfully. But what exactly are binary options?
Binary options are special types of options in which the trader either receives a fixed, predetermined amount of compensation or he receives nothing at all. The term “binary” implies and signifies that there are only two possible outcomes that can result from the trade. If the option expires at a strike price that is below the market price of the underlying option for a call option (in the money) or at a strike price that is above the market price of the underlying asset for a put option (in the money), the trader will receive the agreed compensation for the binary option. Otherwise, he will receive nothing. Those investors who invest in binary options usually do so through online trading platforms that are unregulated for the most part. Very few binary options are traded on regulated platforms. For this reason, binary options do present a certain level of risk. However, investors can mitigate risks and protect themselves by only trading with reputable online traders. Binary options trading strategies are many but there are few popular strategies that traders like to use.

Binary Options Trading Strategies.

Generally speaking, there are two basic types of binary options trading strategies that exist. The first type of strategy is based on the concept of odds and probabilities; very similar to betting. The second type of strategy is based on using market data to analyse the market in order to make more accurate predictions. The first type of binary options trading strategy places great weight on timing as well as on the amounts that are traded. There is always a 50/50 chance that the investor will make the right choice and end up in the money. However, there are several factors that investors should take into consideration that can make it more or less likely for them to hold a particular position about a binary option. One popular binary options trading strategy that investors use is the Martingale or Grinding strategy.

The Martingale or Grinding Strategy for Trading Binary Options

With the Martingale or Grinding binary options trading strategies, the investor will invest a certain amount in a trade and will continue to double the original amount invested in each trade until he records a win. These particular binary options trading strategies are based on the premise that as long as you continue to double up the amount invested; even if you lose, as long as you keep doubling up your losses, eventually you are bound to win since your chances of winning are 50/50. Here is an example of how the Martingale strategy works:
Let’s say you invest $10 to bet that the currency will go UP within the next 15 minutes and the established payout is 70%.
Amount invested – $10
Assume that you lost this bet because the currency went DOWN, instead of UP. This means that you would lose that $10.
You bet again that the currency will go UP but this time you have to double your investment and add something extra to it. So this time you invest $26.
Let’s assume that this time you win because the currency went UP as you predicted.
So you would make back your $26 plus, the 70% payout which would give you a total of $26×1.70 = $44.20.
The total amounted invested = $10 + $26 = $36
Your profit = $44.20 – $36 = $8.20

One advantage of the Martingale or Grinding strategy is that it is simple and appropriate for beginners since it does not require much knowledge about trading. In addition, it is likely that the investor will eventually win.
On the other hand, the Martingale strategy of trading binary options usually requires a large investment to cover any potential losses. If there are a great number of consecutive losses, the investor may end up investing huge sums of money and running out of cash before a win is made. When using the Martingale or Grinding Strategy, it is best to keep your initial investment on the lower end to avoid having to make huge investments in case you lose and have to double up.

Momentum and High Probability Trading Strategies are another popular type of binary options trading strategy.

Momentum and High Probability Binary Options Trading Strategies
The Momentum and High Probability Binary Trading Options Strategies require the investor to have knowledge of how to analyse market movements using techniques such as candlestick charting, moving averages, Fibonacci retracing and so on. The investor should have the skill to spot high probability situations by analysing what is happening within that particular market. The key to being successful with this type of binary options trading strategy is being able to accurately read and interpret the signals in order to increase the chances of making a win.
Trading binary options is an exciting way to invest. However investors should be aware that while they can make substantial profits, there is also the possibility of making losses. Those who are keen on binary options trading should take the time to understand how the financial markets work so that they can improve their chances of success at binary options trading. Also, it is advisable to seek out a reputable online trading platform. If you are new at trading binary options, you could benefit by using a binary options demo which will show you the basic idea behind binary options trading.

Trend Trading Binary Options

Going with the Trend

Trend trading– As far as “tricks” in trading go, trading by following trends has to be the oldest one in the book. Following the trend is THE go-to advice experienced traders will give to anyone wanting to start trading.
Although it is good sense to do so, some traders still get confused about the way it should actually be applied. In this article we’ll go over what trading with the trend is, and how to spot trends easily.

What does Trading with the Trend mean?

Trading with the trend means exactly what you think it means: it’s spotting a trend (a long term direction in the market) and following it.
Basically you want to spot whether the market is going up or down, and place your entries according to that direction.
The general idea is that usually long term trends tend to last… well, a long time. Therefore if you were to jump into long trends at the start, you could potentially ride them until the end and make a boatload of money.
It also means you can add to your position gradually every step of the way. This obviously depends on the type of strategy you’re using, but it should be your goal to always place your trades in favor of the dominant trend in order to put the probability of winning the trade in your favour.

How to Spot the Trend?

how to spot a trend in binary options

Obviously the first issue for new traders is to actually spot the current trend. Markets can go 3 different ways: up, down or sideways. Even though there are only 3 solutions, things can get confusing so let’s define how we look for trends once and for all.
First step is to open your charts, and zoom out. You don’t want to be seeing big candles or bars. Zoom out until you can see quite a bit of data on your charts.
Now sit back, and look: where is the market heading? Think like a 5 year old. If you were to ask to a 5 year old, “Where is the market going?”, what would he say? If you have a 5 year old, ask them! Its quite easy to spot when you don’t over think it.

How to Trade the Trends in Binary Options

Trading and following the trends is probably the single best way to make money in the markets. It has always been the strategy that big investors use, and this since the very early days of market trading.
Trend trading in the traditional markets (forex, stocks, etc.) is fairly straight forward. All you need to do is spot the current trend, build a strategy that allows you to jump in it at profitable points, and apply your rules the best way you can.
In binary trading though, it can become a bit more difficult. In this article we’ll see why it’s more difficult to trade the trends in binary options.

Trend Trading in Binary Options

binary-options-trend trading

The difficult part of trading the trends with binary options is that you’re locked into a trade for a certain amount of time, with what seems to be no power.
Let’s say you were to place a long term trade in the regular forex market, following the current up trend. It would be easy for you to regularly check up on your trade and adjust your risk. You could for instance move your stop loss up, close some part of your trade to limit your risk, or even just close the trade if you feel like you’ve taken all you could get.
In binary trading, you simply can’t do that, hedging your trade if the trend goes against you is the a good way to minimize risk, You can also manage your trade for a double profit setup, but that is more suited to a non trending market situation. Once your trade has been placed, you have to wait for the expiry to kick in, however, with some platforms you have the ability to sell off your position before your expiry, at a small loss if the trade goes against you or for a profit if the trade is going your way, which is essentially  the same stop loss system regular forex traders use without all the complications.
You definitely can make money following the trend in binary, you just have to adapt to the market conditions and manage your trades accordingly.

Trend trading clock

Finding the current trend is one thing, figuring out which expiry you should take is another. Try to think in absolutes: where is the market likely to reverse or slow down, and how fast is the market moving? (volatility) If the market is moving in quick successions of high numbers of pips, you might be better off placing a short term expiry on your binary trade, If the market is moving very little and is not showing many signs of being volatile then its wiser to extent your expiry times.
There are a plethora of ways to use the trend in order to trade binary options profitably. It is one of the simplest and most reliable chart patterns and can and should be integrated in all strategies while trading. If you have any questions about using the trend to trade binary options or would like to share your story of trend trading please do so in the comments section.

Day Trading Binary Options

Day trading – A Love Hate Relationship

Ha, day trading! Who hasn’t heard about day trading? It’s pretty much one of the first things a new trader reads about after the first boring articles about support, resistance and EMAs.
Day trading is the dream for many traders. It’s the skill of being able to make money in short term trades, sometimes tons of money within a few minutes.
Day trading is also the pitfall of many cowboy traders who think they are fit to risk enormous amounts in high variance trades. Most of the times these traders do it for the show, for the adrenaline pumping through their veins, more than for the money they could potentially earn.
Should you, or should you not, day trade? That’s the question we’re going to ask ourselves now.

Why you shouldn’t be day trading

day trading-why you shouldnt be

Day trading is extremely risky. Like we mentioned earlier, day trading consists of taking high risk positions for a short amount of time hoping to cash in on very quick movements in the market. Most day traders don’t hold their trades for more than an hour. It’s extremely fast.
If you’re new to trading, resist. Do not day trade within the first year of investing in the markets. It’s tempting, but it’s going to cost you. A good alternative would be to day trade with a demo account. See how it feels, have fun, but don’t invest any real money in it.

Why you should be day trading

Day-trading- why you should be

If you have the experience (and have developed a skill for it by, for instance, practicing on a demo account for a few months), day trading can be very profitable. It should be encouraged to have both a day trading and a long term trading strategy in your arsenal.
Once you spot a long term trend, you could place a long term position which will give you profits over time, and at the same time take small day trading stabs at the market for more rewards.

How to day trade in the binary options market

Day trading, the art of opening and closing profitable trades within the scope of one day maximum, is all most binary traders can talk about these days. The fact is that binary trading and day trading are extremely well correlated.
Binary trades can, by definition, be opened and closed within very short amounts of time. Some experienced traders can place numerous trades per day using expiries as low as 30 seconds. This means that each time they open a trade, 30 seconds later it closes at a loss or a profit. It’s an extremely fast form of trading and is becoming very popular.
Coupling day trading and binary trading can be very profitable, but you have to know what you’re doing. In this article we’ll go over a short plan (the basics) that should allow you to be prepared to dive into this exciting world.

A plan to day trade in the binary options world

Binary-Options-Day-Trading
The first thing you need to settle on while day trading binary options is a strategy. Most binary traders use momentum based strategies, which means they enter the market when there’s a strong push on either side of the market, hoping to capitalize on that quick movement.
Once you have found a strategy that works for you, you need to decide which expiry you want to trade on. It’s important not to take the lowest possible expiry just because you feel like you’ll be able to place more trades. More isn’t always  better. Find an expiry that works in your brain (you can handle its pace mentally) and that fits the strategy you’ve built.
Anywhere between 5 minutes to a couple hours are good day trading expiries, especially for momentum based trades.
The last thing you need to do is plan your money management. Give yourself a stop loss for the day, (ie stop after 2 losing trades) and try to trade on risk free capital as soon as you get the chance.

 

Are you Day Trading Binary Options? Whats your experience with day trading? Let us know in the comments section below!  Happy to answer any questions you may have regarding the topic;)

Price Action Trading

The art of price action trading

Price action trading is an art, they say. The mystery that surrounds price action trading is appealing to young traders. There is something about the fact that some people can make money off the markets simply by looking at candles going up and down that attracts the attention.
While price action trading is indeed very profitable for a select few who have learned to trade it perfectly, it’s also a very dangerous path to go down to for complete beginners. Let’s see why that is.

funny binary option humour

What is price action trading?

It’s all in the name. Trading price action is to base trading decisions solely on price movements. A price action trader doesn’t have any indicators on his charts. The only indicator he looks at is price going up or down.
The idea behind it is that price action should actually be the only information you need to make good trading decisions. Everything can be seen in the way the price of an asset moves. Indicators are just pretty representations of things you can actually see in the movements, and often times they are lagging (ie: they give you information about the market when it’s too late, when the information isn’t relevant anymore) or simply cloud your charts and prevent you from seeing anything.

Why is price action trading an art form?

price action trading discipline

Price action trading can be compared to an art form for many reasons. First of all, it takes a long time to master. Remember, you have nothing on your charts. You need to learn to spot things happening in the market just by looking at the price movements.
Second of all, price action trading relies a lot on interpretation and experience. One experienced price action trader might spot a perfect momentum trade opportunity while another experienced price action trader might decide to sit back and wait for a rejection.
All in all, while price action trading is very attractive and intriguing, remember that it will take many hours of practicing and dedication to master.

Is price action trading in binary options possible?

Price action trading is a fairly common practice amongst experienced traders. Some of the most old school forex or stocks traders only trade price action based strategies and have been doing so for many years.
With the recent appearing of binary trading though, these traders have found a new way to profit from their wealth of experience. Is price action trading in binary options possible? The answer is a definite yes!

How to trade a price action based binary options strategy

The first thing you have to keep in mind is that binary options have many, many options available. You can trade as low as 30 second expiries and as far as one month expiries, and there are a plethora of different ways to trade (one touch, high/low, Ladder and so on).
You will have to pick one and stick with it. Build your price action strategy around the way you wish to trade and the one that makes the most sense to you.
The most common way to trade binary options is the high/low option. Basically you’re predicting that the price will go either higher or lower than the price at which you placed the option.
Given that, as we said earlier, you can place short term trades (5min/15min), price action traders will thoroughly enjoy momentum trading on these expiries.

The strategy, in a nutshell

 

This is a solid strategy, but one which requires experience and discipline. The idea is to use price action based levels (support, resistance, trend lines) and trade momentum breaks off them using short term expires on your binary trading account.
Let’s say for instance that AUD/USD is approaching a strong support area. The price finally pushes through and breaks down below the support area. This would be a perfect time to place a short term put option trade (for instance 15min expiry ). This will take advantage of the strong downwards momentum offered by the break of the support area, which should net you money as you manage your trade accordingly!
Whats your experience with price action? Do you trade price action? We would love to know;) Please leave your thoughts and comments below!

Swing Trading

The Perks of Swing Trading

Before we delve into the advantages swing trading can offer to a good trader, we must define exactly what swing trading is. Swing trading, in its purest form, is all about taking long term positions in a market. It’s basically the exact opposite of day trading, which is opening and closing trades within one day (or even within an hour).
Swing trading, or long term trading, offers many advantages to new and experienced traders. More often than not, new traders get bored really quickly and decide to jump into day trading because it’s obviously more exciting to be opening tons of trades every day. However, this often turns out to be a bad decision, as new traders don’t have the experience to handle such volatility and variance in the market.
This is the reason for this article! Let’s see exactly why you should be swing trading first, then maybe day trade here and there on the side.

The Advantages of Swing Trading

swingtrading2
As we said, swing trading is all about taking long term positions in the market. One of the big advantages of swing trading is that it’s actually long term, which means you don’t have to make quick decisions all the time like you would on a day trade.
You can start trading H4 charts and only have to update your trades every 4 hours. That gives you a ton of time to study, work, have family time and so on.
Swing trading also relies on long term trends, which tend to be more reliable than short term time frames. You can get into a long trend and ride it for many months without ever looking back.
Finally, swing trading is extremely easy to back test. You can take pretty much any strategy, plot it on a H4-D1 chart, go a few years back in time and start testing. You can rely on the results you’ll get because the charts are clear and the trends are reliable. It makes it very easy for any trader to decide if a strategy is profitable or not.

Does Swing Trading apply to Binary Options?

Swing trading has been around for many years. Some might even argue that it was the first real form of trading, as back in the days where internet didn’t exist yet (I know, scary right?) the data gathering process took much longer than now, therefore it took a while to find trades and people tended to hold positions longer.
With the age of the internet came faster access to more data, and faster execution of trades. Spreads reduced as well, which drove a ton of traders to try and beat the market for a little bit of money many times per day – hence day trading.

Swing Trading and Binary Trading

swing-trading-strategy
With the recent apparition of binary trading, traders have been placing trades faster than ever. Some binary brokers offer expiries as low as 30 seconds, which literally means you could be placing trades every 30 seconds and make money.
The clash of the titans comes when you start to think about compiling swing trading with binary trading. Could it be possible to make profitable long term trades using binary options?
The answer is a quite resounding yes!
Swing trading is all about trends. Whether it is in the stock market, forex or in binaries, if you’re looking to place long term positions you have to look for the trend and adapt your position to it. Therefore it’s not unconceivable to build a strategy that revolves around finding a long term trend in H4/D1 charts and placing One Day expiries or longer on your binary trading platform.

Risks and Reward

Risk and reward swing trading
The biggest risk you’ll encounter while swing trading in the options market is boredom. Be very sure to build a strategy that you know works (hint: backtesting!) and that you trust, or you’ll quickly go back to those potentially deadly 30 second trades.
The reward however is huge. If you play the trends well, you could pile trades up and make a ton of money following the herd of traders.