Binary Options Strategy
Want to be a successful trader and earn money with binary options?
Need a structured method that will allow you to invest wisely?
Learn here everything you need to know about binary options strategies.
Creating and investment strategy
Investing in binary options does not require any prior knowledge or formal education. Yet the simplicity of each transaction is very misleading, because it gives the false impression that succeeding with this financial derivative is easy.
In fact, any investment tool offering such high yields necessarily involves high risk, and any high risk offer signifies that the chances of failure are higher than the chances of success.
That is why you need to have an investment strategy that can be implemented consistently during your binary options trading sessions. The top brokers in the industry will provide you with significant assistance in learning trading strategies and risk management. Make sure you only invest through a broker that is properly regulated and makes all the necessary tutorials available to you.
Binary Options Odds
Binary options payouts are based on the premise that an incorrect prediction will cause traders a larger loss percentually, than what a precise prognosis would generate. For example, if a specific trade offers an 80% payout, a negative outcome for the customer in such a trade would result in a loss of more than 80% of the value invested.
This is not a scam. The only way binary options brokers can allow themselves to offer such high yields is by ensuring that their return will be substantially higher. Only thus can they commit to paying you 80% on a single transaction.
The secret of successful binary options trading is learning how to beat the odds and maintain a high percentage of accuracy. For this to happen, you will need to use trading strategies.
Break even point
To break even, in other words, neither lose nor earn money at the end of a trading session, clients must succeed in at least 55% of their predictions. Of course, this number will slightly vary from broker to broker, and will largely depend on the type of binary options chosen. Yet the average, and the formula around which binary trading is built, is 55%.
If you want to understand what are the odds of being right 55% of the time, you might want to look at professional team sports. Be it soccer, baseball or basketball, a team winning 55% of its games will be considered highly successful and probably will be competing for a championship. Although 55% might sound like simply slightly more than half the time, being able to maintain this level of accuracy is improbable, unless a method is implemented that includes several strategies and risk control mechanisms.
Binary Options Strategy Types
Strategies used in binary options trading can be divided into 4 essential types:
Volatility indicators
Gaming Strategies
Protection Strategies (AKA Option Strategies)
Signals Services
These trading strategies are strikingly different from each other, and each is built on a distinct premise. Whichever type of investment methodology you might chose, it is important to understand the numbers and work with a system, thus avoiding the guessing game.
Although we will analyze each options strategy separately, this is the theory behind the four strategy varieties:
Volatility Indicators
The principle . Binary Options are a true financial investment. Analyzing financial data and using formulas based on such data will allow traders to make predictions based on real market information.
The Method . Use mathematical algorithms and formulas to track the volatility curves of assets and use graphs to choose the timeliest trading opportunities.
The Drawback . If the principle upon which it is based is wrong, the whole strategy will fail
Gaming Strategies:
The principle . Binary trading is a financial name given to a betting system. Predicting market fluctuations for binary options is not possible. Gaming strategies adapt best to the structure and odds involving digital options.
The Method . Transport common gaming methods to the binary options industry and use probability axioms and similar tools to trader through a fixed path that disregards financial data.
The Drawback . Gambling is never a safe investment. Binary brokers use real stock market assets and prices to generate trades.
Protection Strategies:
The Premise . Using common sense and some financial analysis allow a trader to accurately predict 50% of all transactions. With some risk management, that number will grow to above 55% and profits will roll in.
The Method . Hedging. One position protects the other. The aim is not to earn 80% payouts, but rather win against the break-even numbers.
The Drawback . Many of the strategies used derive from forex and CFD trading, where such protection systems make much more sense.
Signals Services:
The Premise . Binary options trading can be very profitable. FOr the lack of better knowledge, using automated trading systems or following the lead of professional traders is the best path to success.
The Method . Automated trading softwares or human trading signals. These range from simple services that send and SMS signal all the way to sophisticated software that track world markets in real time.
The Drawback . Leaving the primary decision making to a machine or a stranger. The market is infested with phony signals offers.
Selecting a Binary Options Strategy
Optimally, whenever you are investing in any financial instrument, the corporation you have chosen to invest through will give you proper guidance and guarantees. That is why choosing suitable binary options brokers should also be part of your overall strategy.
In terms of trading methods, one way to decide which system best works for you is analyzing your profile. Are you a numbers person? Volatility indicators might be the best choice. Have gaming experience? Use the best betting strategies to improve your profitabilityfortable with a long-term plan? Try hedging formulas and go for lower profits and stronger consistency. Still new to the online trading scene? Trading signals are a reasonable approach.
There is no black and white, wrong vs. right situation when experimenting with strategies, especially in a speculative financial derivative such as binary options. Yet giving the chosen strategy a fair chance is key. Stick to the plan for a reasonable amounts of trading sessions to ensure that the results are not random.
Popular Binary Options Strategies
The use of strategies tends to vary according by region. While in Europe there is a strong inclination for strategies that rely on financial markets data, in the USA traders are more inclined to use hedging methods stemming from the Forex field. Meanwhile, Japanese traders have introduced several gaming systems to the binary options strategies realm.
The Bollinger and Fibonacci strategies are two technical analysis methods that take their names from the inventors of the formulas. The concepts they created were then adapted to online investments such as Forex and Contracts for Difference, and recently to binary trading. These strategies are used mostly in the Italian and German markets.
The Martingale strategy is the name commonly given to any number of betting odds sequences, relying on the concept of probabilities and seeking to make the largest investment at the peak of the probabilities chart. This high risk strategies can substantially increase a trader’s losses, but when successful, can signify a significant payday.
Long and Short Strangle strategies are very popular in binary options trading, and involve buying call and put options of the same asset and with a similar expiry time, yet with opposite striking prices. The concept of these strategies is that the probability of either succeeding in both instances or at least in one, is quite higher than simply predicting a single options erroneously and incurring in a high percent loss.
Binary Options Signals Strategy
Automated trading systems have slowly been introduced into the binary options market. Signal services such as AutobinaryEA, Binary Pilot and Algobit are extremely popular throughout Europe and especially in Germany. Nonetheless, some of these offers are bogus, and you should be very cautious when selecting such a service.
Among all signals services in binary trading Algobit currently stands out as not only the best signals software, but the only one manufactured specifically for binary options. Algobit is available for free to OptionBit clients, yet others signals are also offered without charge, and can still be very costly.
Strategically, besides the automated signals, brokers and individual software firms also offer signals based on following and imitating the trades posted by expert traders in real time. Apparently, reproducing the same trades chosen by experimented professionals sounds like a solid strategy, but historically, traders have reported poor results when resorting to this type of trading signals.
Binary Options Strategies Summary
Binary options platforms are easy to operate but achieving consistent success is not a simple task
Investing with reliable and regulated brokers should be the first step and should precede any trading strategy selection
Serious brokers will also offer financial guidance and assistance
Binary options odds are initially set against the trader, and therefore a strategy can make all the difference between profit and failure
There are four basic types of binary trading strategies, loosely based on financial data, position protection, probabilities and automated trading signals
Understand your investor’s profile prior to choosing your strategy
Remember that binary options are speculative and involve significant risk
Serious and patient traders have been able to earn large amount of money and benefit from the very high payouts offered by binary options brokers