Before you enter the field, you should know two main parameters of binary options trading strategies – the trade amount and the signal. Let’s take a closer look at these two parameters:
A signal is a movement in the market or an indication of whether prices will go up or down. It is more like an instinct after observing the trend happening around you. Signal helps you determine the next move. It helps you to predict whether prices will go high or low.
There are certain ways in which you can identify the signal. Below are a few ways:
Trading is related to business and the market. So, to trade well, you should be well aware of the stock market, industry news, and information provided to the public by the CEO. All of this can help you predict whether the price of resources will go up or down.
This is a method in which you leave market news aside and look closely at the trading chart. It is a more centralized approach. You read the chart carefully and analyze past events to predict the future.
It is more complicated but more reliable. You don’t have to go all-in; there are many demo trading apps available online where you can practice and improve your forecasting skills. When your brain gets used to the trading pattern, it will be easy for you to understand the trend of rising or falling prices.
№ 2 Investment amount
It is very important to determine the amount of money you will trade. Being impulsive or mismanaging your money will only lead to loss. Develop a strategy for managing your money to reduce risks with binary options. Here are two of the most used and reliable money management strategies – the percentage-based approach and the martingale approach.
In this method, you decide what percentage of your capital you want to trade. For beginners, we recommend starting with 1% or 2%. For example, you have $50,000 in your bank account. So, you decide to trade 1% of it, which equals $500. This is a safe way to manage your money and reduce potential risks.
This approach is a bit complicated and contains risk if you are not experienced. But it is good to know all possible approaches. Here, you double the trade amount after a loss to recoup previous losses and make a profit at the same time.
One wrong prediction can make you lose a significant amount of money. Therefore, it is important to establish certain binary strategies to manage risks and money. Below are some of the best trading strategies:
1. Follow a trend following strategy
The trend follows the strategy
This is one of the best binary trading strategies for beginners. This strategy can be applied everywhere, regardless of the trading volume or market. First, you have to study the trading chart and line pattern. You’ve probably noticed that they usually go in a zigzag pattern. It may seem like an easy job, but it requires practice.
First, before trading money on the market in real-time, it is better to familiarize yourself with trading charts and their trends in trading demo programs.
Once you learn how to read a pattern, it will be easy for you to predict whether the price of an asset will go high or low. However, this strategy is not very reliable for short trades. To apply this strategy, you have to study the chart and see the movement of the lines.
If the line goes up, prices are rising, and vice versa. If the line is horizontally straight, then find some other option to trade with your money.
It is important to have practical knowledge, practice on demo trading platforms, and get a clear idea.
3. Candlestick strategy
Steve Neeson introduced the binary candlestick formation strategy in one of his books in 1991. A good trader should know how to read asset charts.
Once you understand its patterns and movements, it will be easy for you to predict the next movement of an asset on the charts. For example, there is a pattern formation on asset charts called a candlestick formation. The patterns formed by lines going up and down look like candlesticks.
The top line is the highest price, called the mountain, and the bottom line is the lowest price, called the valley. There is no one specific formation in this strategy, but there are several that you should learn to identify and read to trade better.
To apply this strategy, you should observe the chart and price pattern for some time. You will notice some repetitive pattern formation. Then you can use your knowledge and experience to predict whether the line will go up or down.
3. The turtle strategy
This is a popular strategy among binary options traders. As the name suggests, this strategy uses the price movements of assets over the past twenty days. Then use this data to predict the next call; it could be high or low. This strategy provides you with two signals:
- A buy signal – when the current price movement is above the bars/lines in the last 20 days.
- A sell signal – when the current price movement is below the bars/lines of the last 20 days.
This strategy can be easily used by beginners. However, the result of the turtle strategy has been mixed. Trading strategies help a trader to identify signals; none of them promises to be 100% accurate.