Success in Binary Options Trading

Sunday 26-08-2012

Binary option is a modified version of Option trading. As its name is binary option, naturally it has only two options, which is known as “Put” or “Call”. Now a day’s Binary option are getting huge popularity for its simplicity and high rate of return. It also known as digital option or all- or- nothing option. It’s become popular mainly in Europe. It has only two options to decide for the investor, that is whether it will go up or down. You need not to be right on all the route. If you are near to right such as you bought an option that it will rise, if it rise a fractional portion then you are in the winning side and if it decreases a fractional portion than the strike price then you are in the losing side. It has some amazing feature.

1.Easy to trade

2.Easy to understand or less complexity

3.Low and limited risk

4.Higher return

5.Can be trade few times in a day

Binary options trading Strategy: – There is a popular saying for the field of overall trading that is, “Plan your trade and trade you’re Plan”. Binary option trading strategy is a part of that trading plan which will help you to be successful in binary option trading. A successful binary options strategy consists of some real cause for which a trader will take position, exit position with his money management. It will also help the traders to minimize their risk in trading. In a simple word, a trading strategy is a whole package which consist the predefined rules for entry, exit and money management.

As in Binary option, there are methods called all or nothing. On this method, your initial invest is at risk. So it’s better to make a successful binary trading strategy.

What type Binary options trading strategies is suitable for you: - like the Forex market, here is two method used basically, which are Fundamental and Technical analysis. As binary options are available for Gold, EuroUsd and some other selected currencies.

Most of the trader trades based on technical analysis, but fundamental analysis also an important thing to consider during trading Binary option.

Binary options trading Strategy based on Fundamental: – Fundamental trading considers the macroeconomic information to predict the price move. Binary options trading Strategy based on Fundamental also consider the macro economic data to predict the move. For that first necessary thing is an economic calendar which is provided in online by most of broker. Take a note of the important declaration of various economy or your preferred one, and then study the previous data and its impact on that currency. If the released information is better than the previous one or worse then take your decision based on it. For an example, employment issue is an important matter for USA. If the published data shows a rise then you can consider “CALL” option. On the other hand, if the data comes poor than the previous, then you can consider “Put” option. As different broker provide a different type binary option with different expiry time such as 1 minute to 1 hour, you can choose your desired one.

Binary option trading Strategies based on technical analysis: – In this trading strategy, we will only use the technical analysis to decide the move whether it is bullish or bearish with the help of charts which are based on past data.

 There are many binary options trading Strategy based on technical analysis. Some widely known and practices strategies are

1. Binary Option Price action trading strategy

2. Bullish Binary Strategy

3. Bearish Binary Strategy

4. Range volatility strategy

Binary Option Price action trading strategy: This is purely based on the price movement chart. It may be 5 min, 15 min, 30 min or 60 minute chart. This binary option trading strategy actually derived from Forex market. In this, some commonly used setup are used such as Pin bar method with the combination of support and resistance.

Pin bar trading is a widely used setup in Forex which can give you a clear idea about the direction of the movement. Some consider it as tough, but some are easy. In my opinion, it’s easy to trade, if you consider the longer time frame. For example, if you consider 6o min chart to trade the 15 min binary option then you will get a strong direction. If you find a pin bar in the 60 min chart, then take the “Call” option on the 15 min chart, if the previous trend was down. Some traders include support and resistance with the pin bar trading which makes it more accurate and effective.

Bullish Binary Strategy: - if the trader finds out that specific asset will go up by technical analysis, then he can go out for a “Call” option. This means if the price go above the strike price then you will get the return if price is at your strike rate then nothing will happen. It is very simple method.

Bearish Binary Strategy: – After all of your analysis, you find out the asset will go down in the coming hour by technical analysis, then you can go out for a “PUT” option. This means if the price go below the strike price then you will get the return as per your broker payout.

Range volatility strategy: - With the time you will be more experienced in the Binary option trading strategy. If you are an expert to find out the bullish and bearish direction of the asset, then you are also an expert to find out the no movement zone or range bound zone. This strategy is applicable when the assets are in the range. When you find such a situation, then you can buy and go for an “IN” and choose the range option. If opposite then you can buy and go for “OUT” and choose the range option.

These are all about Binary option trading strategy in short. Better not to forget your risk management whatever trade you are taking.