Despite the simplicity of the binary option algorithm, for its effective use in the financial market and obtaining good trading results, it is necessary to use trading strategies.
Their simple rules and technical capabilities are aimed at increasing the probability of making a profit on an option contract. Every market participant must understand that simple guessing on binary options does not work and only leads to loss of funds.
Against this background, we present to you the main types of systems and mathematical approaches that demonstrate the highest efficiency on the market and are very popular.
Classification of popular trading methods
So, if we take the bulk of the trading strategies used by traders to earn income in binary trading, they can be classified into the following groups:
In addition, there are mathematical approaches that help reduce losses and are used as separate strategies:
Without a doubt, there are systems that will combine signals and approaches for analyzing different subgroups of trading strategies, but these are all derivatives of the main types of systems.
Starting the review of different types of trading systems, it is worth paying attention to the general rules and conditions for applying trading strategies. We are talking about the need for testing and risk management, without which the effectiveness of any strategy is significantly reduced.
System testing is necessary to study the signals and subtleties of the strategy. Without practical experience with the system, a trader may encounter difficulties, especially at times of market uncertainty or increased volatility.
There are several approaches to testing strategies - testing at minimum rates, where a trader uses his real funds or a demo platform of brokers, where the trading process takes place on virtual funds.
This approach is the most rational, but it requires good technical equipment of the simulator.
Demo account can be a simple solution this broker, which uses not a separate training terminal with cut functionality, but a full-fledged trading terminal.
In addition to a high-quality educational platform, this company also offers the most minimal trading conditions that contribute to the effective management of trading risks - the initial cost of options is from 5 USD, the minimum possible trading deposit is from 100 USD.
Such indicators make binary trading affordable and safe.
This is a type of trading systems in which technical means are used to generate trading signals - indicators. These are automated programs that evaluate market performance and provide a forecast for the further dynamics of the development of the market movement.
This is the most common and popular way to generate binary options predictions. This is due to the large list of indicators available on the market, as well as the simplicity of the strategy.
A classic example of using indicators for effective binary trading looks like this:
Here we use a simple channel indicator Bollinger Waves, which, using mathematically constructed movings, determines the average values of the asset price and the boundaries of the maximum deviation of quotes from the average values.
By the way, here are some more strategies using the Bollinger indicator:
As a result, a price channel of market movement is built on the asset chart, which is effectively used to receive a signal to complete a deal.
The easiest way to trade with Bollinger is a signal in the form of a price rebound from the channel border, as shown in the screenshot.
Indicator strategies in most cases use several technical means at once in their work - this allows you to get more formalized and accurate signals.
Such systems are called multi-indicator:
Here we use the combined signal of the MACD indicator located in a separate window under the chart in the form of the intersection of its moving averages and the trend direction indicators from the moving average indicator (red line on the quotes chart).
It is quite difficult to describe the whole variety of indicator systems in one material. It is worth noting that this type of strategy is the most effective and simple way to get a stable profit on binary options.
This is an approach to generating trading forecasts, which uses a simple pattern - the reaction of the underlying asset market to the release of statistical data of a macroeconomic nature.
This binary trading strategy is great for beginners, as it does not require deep knowledge of financial trading.
The principle of trading is quite simple. We find an announcement of publications on any information portal where financial statistics are published, and select the most important data (they are usually marked with a special indicator - three bull heads, three torches or exclamation marks).
Then we study the preliminary forecast according to the publication data, which is given in the announcement, and draw up contracts immediately after the statistics are released according to the following principle: real data is better than the forecast - the market will begin to grow impulsively, draw up an UP contract, if the data is worse than the forecast, asset quotes will actively decline - we draw up deal DOWN.
Here is an example of the reaction of oil prices to the decline in hydrocarbon reserves in US storage:
Having correctly assessed the statistical data regarding the preliminary forecast and having executed a binary options contract at the time of publication, the trader is guaranteed to make a profit.
It is also recommended to use programs for trading on the news autoclick or FlashNewsTrader, using these software devices, you can open deals in advance in the direction of the market movement, but this method is only suitable for those. who trades in forex.
Binary trading strategies of this kind are based on the cyclical patterns of market movement. These are the features of the movement of quotes that have been noticed by traders for many decades, which are repeated over and over again.
Here are simple examples of such regularities:
Trade with support and resistance trendlines
The signal here is the touch of the trend resistance line and the rebound of quotes from it.
The system is suitable for the effective use of turbo options (short-term contracts with a small expiration).
Trading in price channels
The principle of trading is the same as for trend lines, only trading takes place in two directions.
This is a regularity of building price candles of asset quotes, which can form signals using the very form of a price candle: dragon, pinocchio, shooting star, and with the help of building models relative to each other: bearish engulfing, bullish engulfing:
This is a classic example of a bearish engulfing - a descending candle with its body blocked the previous growing candle. Such a candlestick pattern indicates a change in the direction of the trend down and is a highly effective signal for binary option trading.
This type of approach to binary trading, as we have already said, is often used as an integral part of the main strategy. The fact is that they are primarily aimed at either reducing losses or saving the result on an already open trading position.
For example, martingale strategy is the principle of obtaining an overall profitable trading result, where the result of each trading position is taken into account to a small extent.
The method of application is as follows: upon receipt of a loss-making contract, we draw up the next one with a double amount of value, and we carry out such an increase in the size of a trading contract until a profitable transaction is obtained.
As a result, the overall result on a profitable contract will fully cover all losses and bring a small percentage of profit.
Antimartingale — this is essentially the complete opposite of the classic martingale, in this case, the increase in the volume of the transaction is carried out not after the loss, but vice versa - after the profit.
The anti-martingale technique is good in a psychological sense, since after a profitable trade, a trader usually feels euphoric and can continue to make profitable trades, which will help raise profits, since transactions will be made with an increased lot.
Averaging is a system that allows you to increase the number of trading contracts when the market moves contrary to the forecast:
As you can see, after placing a position (marked with a black line), the market began to build a growth impulse, which is used to place additional contracts on the market.
As a result, when quotes return to the trend movement, we get a series of profitable trades.
This is a fairly complex system for binary trading, which uses the statistical principle of creating an advantage in the direction of a profitable result.
A contract is drawn up with any direction of the forecast, then the direction of quotes fluctuation is used to place additional positions in the direction of the market movement, which creates an overall preponderance of the trading result in the direction of generating income:
This review of trading strategies provides only a small list of practical examples.
But on their basis, you can easily get a general idea of trading on different types of systems and easily choose the right option for yourself for high-performance binary trading.
All strategies for binary options are given here.