How to develop your own binary options trading system

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Best Binary Options Trading Strategies That Work : Complete Guide

I am sure you have heard or read that you could make a ton of money trading in binary options. That’s true. Unfortunately, it is not as easy as some reviewers or affiliates of binary options brokers would want to put it. Some even make you believe that you can just stumble upon binary options and start making profits right away. Nothing can be further from the truth. Those who get involved naively, most likely end up losing their hard-earned money. Many of these binary options broker adverts just want to get you on their platform and get you to deposit your money.

So, what does it really take to make profits from binary options trading? First, we believe that binary options trading is a legit form of trade and you can make money from it. In order to make money, you have to know your trade. The same goes for binary options trading. We always advocate for trading with a strategy. Trading with a strategy means you are in control of your investment, and significantly reduces the risk of losing it. On the other hand, trading without a strategy is more like gambling. In as much as there is an aspect of luck in binary options trading, winning is more of a strategy than luck. You will certainly lose your money if you treat it like gambling.

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Many people are always wondering about how to master binary options trading. It is estimated that less than 5% of the people who get involved in binary options trading make a profit. A majority, if not all, of those who lose, probably get into binary options trading with no clear strategy. You’ve probably read somewhere that anyone can trade in binary options. While that is true, it does not mean anyone can profit. I have no prior experience with financial and stock markets, you should probably take time to learn a thing or two before staking your money. Those who put in the work, and adopt a robust strategy most likely than not end up in profits. 5% of millions of people around the world is still a large number of people. So, yes there are a lot of people making money from binary options trading.

So, what are the strategies that you can employ to ensure you end up on the profits ends? There are several tries and tested binary stock options strategies that are commonly used by binary options traders. These are actually binary options strategy that works. You need to understand how these strategies work, for you to be to employ them effectively. We seek to educate and put you in a better position to trade in binary options successfully. We are going to look at various strategies that you can employ in binary options trading. It is important to mention that whatever we publish here should not be taken as a blueprint to making money on any platform. We seek to help you understand the concept behind the strategies. The actual actions to be taken depend on the financial market charts. We are going to divide the strategies into three categories.

  • Money Management Strategies
  • Trading Strategies
  • Analysis and improvement strategies

The strategies are employed in the above order if you are starting as a newbie. You need to have a money management strategy to ensure you don’t run out of trading funds. Trading strategies are the actual strategies of engagement with the financial markets. Analysis and improvement strategies ensure the trading strategy you have adopted is sustainable and it keeps winning trades for you.

Tag along and let’s show you how to how to build a trading strategy on the binary options.

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1) Money Management Strategies

Money management is a necessary strategy for anyone trading in binary options. It is the top binary options strategy. It is a basic but very essential strategy. It is employed together with one, or a couple of the other strategies. Money management strategy helps you leverage your money to make the most of a binary options trading winning strategy while keeping the risks to a minimum. The money management strategy is employed in two ways.

(i) Risk Management

As a new trader, you will obviously have no confidence in your strategy and skills. You are basically in an experimentation phase. Unfortunately, experimentation is the only way to test where the trading strategy you have adopted works. You may have to do so with real money on some binary options broker platforms. As such, your main focus in this phase is not only to learn, but also to reduce the rate at which your balance is depleting. You will most likely lose more trade than you are winning.

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Broker Min Deposit ($) Min Stake ($) Max Payout (%)
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The Kelly System is a risk management system that is renowned among trading and gambling circles. The general rule of the system is that you should never stake more than 5% of your remaining balance. The underlying argument is that, in the experimentation phase, you would rather stake small amounts since you are more likely to lose most of the trades

Another way of exercising risk management is placing a call and put options in concurrent trades. Let’s say you are working with a 1-minute binary options trading strategy, and you have placed a call option. At the 30-second mark, you realize it’s not going the way you had predicted. 30 seconds is still a long duration is short term binary options trading. To minimize the risk of losing, you could place a put option for 30-minutes. There are two scenarios here. You could win one trade and loose the other, or win both trades. The probability of losing both trades in such a scenario is almost zero. Let’s say your broker offers 90% profit on both trades and your stake was $10.

  • If you win one trade and lose the other. You will get a payout of $190 on the trade won, and lose $100 on the trade lost. You had staked a total of $200. It means in total you have lost $10. You would have lost $100, had you left the first trade to complete and be wrong.
  • If you happen to win both trades. You get a payout of $190 on both trades. You will end up with $180 in profits.

In the scenario above, you would have risked a small amount to win a big amount. That’s the whole essence of risk management. The goal is to control the depletion of your remaining balance as you seek a working strategy. You do not want to lose all your initial deposit when you probably have no other money to deposit.

(ii) Compounding

Compounding still concerns itself with the remaining deposit in your account but is employed when you have found a winning formula. When you find the binary options winning strategies that you are confident in, you employ the compounding strategy to take maximum advantage of the winning trades of are making. The concept of compounding is quite simple. The amount staked keeps going up as you continue winning. It means the winnings will keep going up too. Compounding is more like the Kelly system but in the reverse direction. Businessmen call it plowing back the profits.

To clearly understand how compounding works, let’s explore a hypothetical situation. Assuming you have $2000 and you are working medium duration trades; say one week. You place five one-week trades and stake 10% of the deposit on each of the trade. Recall the compounding is employed when you have found a winning strategy. You can therefore disregard, the rules of the Kelly System. You will have staked a total of $1000. Assuming you win all the trades at the end of the week and your broker pays 90% profit. You will close the week with a balance of $2900.

One the second week, you keep the same strategy. You will have staked $290 on each trade. The total amount staked will be 1450. If you again win all the trades, you will have a new balance of $4205. The trend will go on as long as you are winning your trades.

The cue to use compounding is when finding a working strategy. Therefore, we need to look at the other strategies you can employ together with the money management strategies to ensure you turn in profits. Money management is a fundamental skill for any binary options trader. As a trader, you have to know how to leverage your money two get more profits. At the same time, you have to know how to protect yourself from losing it all.

2) Trading Strategies

The trading strategies are a structure of how you will be placing your trades. As mentioned above, doing thing haphazardly with no clear plan will have you losing your money thick and fast. Trading strategies help you have a clear picture of what your trades look like. Trading strategies are basically based on two aspects. The instrument or asset you are going to trade with, and the duration of the trade.

(i) Assets/Instruments

These can be stocks, indices, cryptocurrencies, currency pairs, or commodities. You choose to trade in one or a couple of the assets you are comfortable with. If you are a beginner, stocks are always a good place to start. Information about stocks is more readily available as compared to that of the other instruments. If you have one particular instrument whose financial market you understand well, that’s where you want to start.

There isn’t much one the assets, you go with the one you understand best. If you don’t understand any, check all of them and find one that’s easy for you to understand. The back in trading strategies stops with the trade duration.

Trading strategies are classified into three categories as far as the trade duration is concerned. They are;

  • Conservative Long-Term Strategy
  • Semi-Conservative Strategy
  • Aggressive Strategy

Let’s explore them one after another.

Conservative Long-Term Strategy

This strategy, as the name suggests, involves conservative trades. The target for this strategy is 1-2 almost sure trades per day. The concept is to wait for sure signals and employ money management to capitalize. You then keep the trend going and grow your capital. It is the best binary options trading strategy for beginners. The strategy will allow you to grow your capital slowly but sure. The idea is to ensure you do not burn yourself out before you even start trading. As a beginner, you may not have enough experience to interpret the charts correctly. You have to wait for the right moment to strike.

For instance, let’s take the case presented in the chart below. It is a perfect case to use the ZigZag’s two last points. You then draw a Fibonacci in between them guided by the trend.

You draw your Fibo line from point one to point two for a descending trend and vice versa for a rising trend. Therefore, the target is 161.8 projection level.

A fully valid signal should have a retracement of between 50-88.6. The higher the retracement climbs, the stronger the signal gets. In the instance depicted by the photo above, the retracement occurs close to the number 2 on the top left corner.

To give yourself the best chance, you need to be patient until all the 3 factors coincide. Follow the following rules when making your judgments.

  • Wait until the Fibonacci projection reaches level 161.8
  • Wait until the value of the chart is 8 or more
  • The expiry times should be between 5 and 20 minutes

You the employ money management strategies to minimize risks, or scale up your profits. Notice the duration involved here is a bit long (not very long because you can engage in trades running for months). As mentioned in the beginning, you only need 1 or 2 trades in a day. If you win the first, I’d suggest you don’t try another. This strategy will allow you to avoid losing your capital as you experiment and learn.

Semi-Conservative Strategy

You probably already guessed how this one goes. It’s just an upgrade of trade aggressiveness from that exhibited in the conservative strategy above. The durations are shorter and make more trades per day. You kick it up a notch higher when you start getting comfortable with your predictions. Strategies help you get rid of emotions while trading.

A lot of the aspects of the semi-conservative strategy are quite similar to those of the conservative strategy above. There are a few differences though.

  • You can trade at either, 161. 8 or 127.
  • The price needs to be in the red zone
  • Place 4-6 trades in a day. We suggest you don’t go all the way to six when you have won three trades.
  • You should not trade for more than 6 minutes with level 127. Normally, level 127 is a consolidation level where buyers all sellers are drawn to the trend to increase liquidity. The price usually continues in the direction of the trend for the next three candles. A 5 min binary options trading strategy is your best bet here.

Remember to employ money management strategies. If you get it right, your capital should grow a bit faster than in the conservative strategies.

Aggressive Strategy

This is a high risk, high returns strategy. We suggest you have a clear understanding of what you are doing before trying this. It is prudent that you be patient and grow your capital with the semi-conservative strategy, to a point where you are trading with profits.

If you carefully look at the photo below, you will notice it has 9 price cycles.

Now, replace the zigzag indicator parameters with 2,1,1. Notice you can count over 41 short-term cycles. Yes, this is a short-term strategy with the potential to increase your money fast, but it has high risks. Every price cycle is a Fibonacci sequence with a high low retracement projection reverse. Take a look at the image below.

  • The Fibonacci line, drawn in light blue, is drawn from point 1 to point 2. The 1 and 2 points represent high and low respectively. All you need is to wait for the retracement, which can occur either as a wick, or a full candle. Notice the white box marked 3 and the green candle underneath it.
  • Be keen on the trend and get ready for a signal when the retracement candle is accompanied by a red candle in the same direction as the trend.
  • The adjacent red candle closes underneath the open of the green retracement candle, though it does not go to the value chart level 6. It does not go to the regression channels inner band either. Take this as the first breakout candle. It is marked by a blue rectangle. Enter PUT for 10 seconds before this candle closes. Note that the next candle will be bearish, with a probability of 90%. The PUT action is marked with 3 PUT on the chart.
  • The next candle will close under the 100 Fibonacci level, although it does not reach the 127 level. This means it terminated under the low point of the current trend. Enter another PUT 10 seconds before the candle shuts, since it will be accompanied by a bearish candle or even 2-3 bearish candles. These candles have to reach the Fibonacci level 161.8. The action is marked with 1PUT on the chart.
  • The final bearish candle will hit the Fibonacci level 161.8 and value chart level-8. It will also hit the outline of the red zone. You should now place a CALL

Every price cycle within 3 points has an average of 3ITM trade setups during normal volatility trading circumstances. It is important that you trust your gut too. It is best to ignore a signal and wait for the next one if you feel something is off about it. An experienced trader will be able to strike a balance between being confident and fearful. Too much of either is detrimental. This is arguably the best binary options trading strategy if you can get it right. It is a binary option a powerful short-term trading strategy.

You can learn this steps and rules by heart. Unfortunately, they still do not guarantee winning trades by themselves. That’s where analysis and improvement strategies come in. They come in to improve and boost the trading strategies. If you can successfully combine both trading and analysis strategies to comes up with a robust personal strategy, you will certainly make profits trading in binary options. Let’s dive in an take a look at analysis and improvement strategies.

3) Analysis and Improvement Strategies

Having looked at the money management and trading strategies, let’s explore the analysis and improvement strategies. Up to this point, you will notice that there is still a part where luck is left to take the mantle. You still got to sit back and hope all goes well. The analysis and improvement strategies come to reduce that feeling of worry and uncertainty. Note, not eliminate but significantly reduce. There are three categories of analysis strategies. They are;

  • Overall Performance Strategy
  • Technical Analysis strategy
  • Trend-based strategy

(i) Overall Performance Strategy

The Overall performance strategy concerns itself with the well-being of the company or commodity behind the instrument you choose. As mentioned earlier, it is important for you to be informed about the asset you choose to work with. Whether you are working with stocks, currencies or commodities, you need to know how the physical trade and business happens. These factors culminate in the performance assets performance on the money markets.

This is a great strategy for beginners too. You can conveniently combine it with the conservative long-term trading strategy. Let’s assume you are working with Amazon stocks as the asset. You need to keep up with the general performance of the company. Everything that happens to the company as a far as its operations are concerned will be reflected in the assets trend in the financial markets.

For instance, during the festive season, you expect more sales on Amazon than any other time. You could speculate that the stocks of Amazon will be up in that period. Such generalized speculations are best suited for long-term trades that go up to months long. If you can get access to the financial books of the company, you will be in a better position to speculate on the behavior of the asset in the short term. This strategy should be used as a support strategy, especially for long-term trades. It may be looked at as the binary options news trading strategy too. It may not be of much use if you are an aggressive trader.

(ii) Technical Analysis Strategy

The technical analysis strategy involves analyzing the financial market charts for patterns and using indicators to speculate. The strategy needs you to keep a keen eye for price fluctuations and be able to recall these patterns in the future. Technical analysis can be practiced in two ways. They are;

Patterns

The patterns of the asset you are trading with on the financial chart is arguably one of the most versatile strategies. It can be employed with any of the trading strategies discussed above. Pattern traders spend time documenting the patterns of price movements. If they notice a similar pattern in the future, they can refer to their documentation and predict the movement of the asset. Pattern trading needs you to be very keen as it can be misleading. Pattern trading is a great strategy for newbies too. They can use it as part of their trading strategies. This is where you can employ a 30 min binary options trading strategy.

Indicators

Indicator trading is arguably one of the easiest strategies of trading. You act on the prompts of various indicators developed by industry professionals. Indicators such as MACD, ADX, CCI, and stochastics are used to provide trade signals. However, the indicators are do not work for you. They only prompt you of the possibility of a profitable trade. These indicators are developed using the same strategies as discussed above. You can use them as a reference point after deciding on a certain trade based on your strategy or test their prompts with your strategy.

Binary options brokers normally have these indicators on their platforms. Once the indicator is never enough for you to act on. You need three or more indicators showing the same signal to have better chances of winning a trade. Normally, it quite difficult to have the indicators showing similar signals at similar times. As mentioned, these analysis strategies are supposed to be a support system for your trading strategies. Acting on the prompts of the indicators alone is always a bad idea.

(iii) Trend-based strategy

The Trend-based strategy is a highly technical strategy. It is an advanced binary options trading strategy. It is actually the most analytical of the three categories. The strategy involves keeping in tabs with the trends of the financial market charts. The strategy is almost similar to the trading strategies, only that it is a generalized strategy. The trends-based strategy is very versatile. You can use it with any of the trading strategies. The trends-based strategy is employed using particular analysis software. One of the most popular analysis software of the Trend Channels. The software allows you to draw trend lines over the peak prices of the asset you are working with, which then form the basis of your analysis.

The Trends channels allow you to draw lines of best fit over the most peak points both above and below the chart. These trend lines give you a better picture of the area you are working with at that particular time. The strategy is best suited for aggressive traders. The markets no matter how volatile, do not change abruptly. The trends lines can either form parallel, converging or diverging patterns. The most ideal situation is when they are parallel. It makes it easy to trade.

The concept is simple. You expect the chart to touch one line and turn back towards the other line. All you got to do is master the time it takes from one line to the other. Let’s take that the chart is moving towards the upper line. You wait until it touches and starts moving towards the other line. Place a Put option at that point and select a duration that is not more than two thirds twice the duration taken to move from one end to the other. The assumption is the chart will take the same amount of time to go and come back, you can, therefore, estimate where it will be by the time the trade ends. A 60 min reversal binary options strategy with the trading channel is very common.

Timing is an important skill while employing the Trend-based strategy. You need to be able to match the trade duration and the point at which you place your option. Give the chart some time to confirm the trends lines too. Keep on the lookout for a new line of fit for the peak positions on either side. The trends-based strategy is certainly one of the best binary options strategy.

Conclusion

Evidently, there is a lot you need to do if you have any hopes of becoming a binary options trader. Unlike other binary options trading strategy reviews, we do not sell a notion that it easy to profit trading in binary options. We assert that it is possible, and remain adamant that you should have a strategy up your sleeve. Just to recap what we have been through. You need to practice the money management strategy at all times. Choose your trading strategy depending on how experienced and comfortable you are with the binary options strategy. Finally, choose an appropriate support analysis strategy. We have outlined the 3 binary options trading strategies for beginners.

These combinations mean that different traders have different strategies. The discussed strategies are more like frameworks, of coming up with a strategy. In reiteration, the above information is not a blueprint for making profits on any binary options platform. However, if well implemented we do not see you wouldn’t have a reason to smile. You are the master of your own trading strategy. You have to learn the various guidelines by heart so that you can apply them when the circumstances call for it. After some time, you will find yourself with a robust and winning formula. There are many binary options trading strategy forums that you can visit in a bid to sharpen your skills. You will get useful binary options trading tips and strategies.

Binary Options Strategies

Below you can check the most profitable binary options strategies designed by Binary Options Hub just for you. If you are not yet ready, begin with our Binary Starter’s Guide. Trading binaries is rather easy, yet it requires a good binary options strategy. Binary Options Hub explains binary strategies in an easy and understandable manner, so it is not difficult to comprehend even for a beginner in binary options trading. Browse below to find the best binary options trading strategy! Trusted & Verified binary options trading strategy only.

Binary Ladder Trading Strategy

This advanced binary options trading strategy is perfect for traders experienced with pivot points. Many pros use this binary strategy daily.

Long-term Shot Trading Strategy

This strategy is designed for Touch / No Touch binary options. It provides high payouts and should be used for breakout binaries trading.

Capital Drawing Binary Strategy

This binary options trading strategy will help you to improve the binary options money management. Check this binary strategy now!

Binary Knock-on Options Strategy

One of the most advanced binary options strategies that do work. Be sure you are ready to take risks and profits offered by this strategy.

BreakOut Options Strategy

One of the basic binary options trading strategy. It has crucial importance. So be sure that you do read and understand it before trading!

Pivot Points Binary Strategy

Ready to implement some advanced math into Binary Trading? This strategy shows you how to use pivot points in Binary trading!

Diversified Option Strategy

Build a perfect winning grid using multiple types of binary options. See how Touch, boundary and regular options can bring profit.

Matryoshka Trading Strategy

Do not like to trade with a lot of different indicators? This strategy will allow you to do exactly that. Check out Matryoshka right now!

What is a Binary Options Trading Strategy?

As you may understand, binary options trading has evolved from a pure gambling activity to a systemised activity that can actually supply you with decent returns. Even though many traders still consider binaries as the instrument with significant risks and inadequate returns, this attitude is actually changing. When it comes to trading of any asset, the strategy plays an ultimate importance, this is why should dedicate substantial time in the development of your own trading strategy for binary options. In general, the strategy is here to provide you with a set of rules for entering the trade, supply your with the proper trading discipline and finally to assure that you have a higher win / loss ratio.

Should I Use a Pre-made Binary Options Strategy?

The short answer is YES. Binary Options Hub has composed a few common and proven trading strategies for you and by implementing them you can understand the market and the whole concept of binary options trading a little bit better. Also such binary strategies can actually help you in providing the fundamentals for developing your own personal trading strategy for binary options. It is recommended to try our strategies on the Demo account first, before you begin trading them on your Live binary options account. What is vital to understand is that such strategies are only useful for educational purposes. You may of course make money with these best binary options trading strategies, yet the strategy should always adopt the market behaviour and if you do not know how to modify your strategy according to the market changes, the strategy simply may stop working.

How to Develop My Own Best Binary Options Strategy?

There are a few things you need to look at when making your own strategy.

Best Instruments for Binaries

The first step is to identify the set of instruments you are going to trade. In general, there should not be too many instruments, nor there should be too few. Binary Options Hub would not recommend you to trade less than 4 instruments, as you simply may end up having low volatility and hence you are going to trade lacking proper knowledge, if you trade only one or two instruments. We would also advice against trading over 8 instruments, as it is quite hard to keep an eye on the technical and fundamental analyses for a larger count of the instruments.

Best Expiration Time of Options

Once you have determined the instruments you are mostly knowledgable about, it is vital to select your trading time frame. As you know, binaries can be traded online with the expiration time from 30 seconds to more than a year. Selecting your favourite expiration time is the most important part of the binary options strategy development. Usually Binary Options Hub would not recommend you to use anything smaller than 5 minutes and anything larger than a week, however, it should depend mostly on the analysis you are planning to perform and the strategy you are planning to use.

The Actual Binary Trading Strategy

Once you know the instruments and the time frame for your trading, it is now time to actually start developing the whole rationale behind your trades. You should generally focus on a few indicators that have prove working. The best way to do is to try our read-made binary options trading strategies and see which ones have been working for you. Then you do not need to copy the strategy but you rather need to extract the best parts of it. As for the indicators, they can work in your favour with the same chance of working against you, all depends on how you use it. Usually indicators are here to add a bit more clearance to your chart and explain your the past trend line moves, while forecasting the upcoming changes in the price of an asset. Once you have added a few indicators, you may actually see that you start understanding the moves on a chart little bit better. However, it is vital to note that adding too many indicators will remove any sign of a clearance from the chart. You will simply have too many indicators that contradict each other. This is why Binary Options Hub would not recommend you using more than 3 indicators in the same time, especially once you are just starting to develop your trading strategy for binary market.

Precautions Measures for Binary Trading

Overtrading of binary options is the most dangerous thing that can happen to a trader. It is important for successful binary options strategy to have a clear limit in terms of the trades you can achieve on daily and weekly basis. You should never trade just in order to compensate for your losses, you should only trade when you have a clear understanding of the potential results.

How to Trade Binary Options

Updated: September 13, 2020 | References

This article was co-authored by our trained team of editors and researchers who validated it for accuracy and comprehensiveness. Together, they cited information from 26 references.

wikiHow’s Content Management Team carefully monitors the work from our editorial staff to ensure that each article meets our high quality standards. Learn more.

Binary options trading has become increasingly popular over the last decade. Day traders in particular access these markets with ease from their computers. Another draw is that entrance requires relatively little capital. This article will delve into the basic rules of the game, how market exchanges work, and several ways to strategize for the greatest profit potential. Along the way, you’ll also learn the jargon used in binary options trading that you need to understand to be successful.

Best Binary Options Brokers 2020:
  • Binarium
    Binarium

    Best Binary Options Broker!
    Perfect For Beginners!
    Free Trading Education!
    Free Demo Account!
    Sign-up Bonus:

  • Binomo
    Binomo

    Good Choice For Experienced Traders!

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Best Binary Options Trading Guide For Beginners
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Broker Min Deposit ($) Min Stake ($) Max Payout (%)
IQ Option 10 1 95 1st Choice
ExpertOption 50 1 95 2nd Choice
Olymp Trade 10 1 92 3rd Choice