Approach 1: Following the news
If you don’t have a lot of experience, you can follow the news and use
news events as signals. Pay attention to all of the publicly available
information – industry announcements and CEO decisions often
accurately indicate whether an asset’s price will rise or fall.
Approach 2: Technical analysis
Trading stocks and trading options are two very different things, but the
two also have some similarities. You can use technical analysis for
trading both stocks and options.
To put it briefly, technical analysis involves examining all the
information relative to the asset without considering the broader
market’s movements.
Technical analysis is discernibly more complicated than looking at news
events – you will need to look at how an asset’s price has moved in the
past to predict how it will move in the future.
Example for a technical analysis signal:
Buy signal with technical analysis
Conducting technical analysis may seem extremely difficult to new
traders, but you must realize that your brain looks for patterns in things
every day. All you have to do is learn to use charting tools and
understand a few concepts before getting accustomed to forming
signals based on the information you collect.
All told, you must recognize what you’re more comfortable with to
increase your chances of making profits. As a beginner learning technical
analysis, you could benefit a whole lot by practicing strategies using dummy money with a
demo account.
Many brokers offer demo accounts for free. Getting some practice and
gaining some experience before investing real money into the market is
the right way to go. Until then, use news sources to make money with
binary options (more on that below).
The trade amount
You must have an underlying money management strategy to determine
how much you will trade regardless of your approach.
The two most common money management approaches traders use are
the Martingale and the percentage-based approach.
Approach 1: Percentage-based
Using the percentage-based approach to money management is your
best course of action when you’re starting out. The method is a lot less
risky since it determines how much you should invest in a trade based
on how much you have in your account.
In this strategy, you must first reflect and come up with a percentage of
your capital you’re willing to risk. Most traders bet 1% or 2%; however,
more experienced traders may also choose to risk 5% of their capital.
Money management
percent-based
Once you decide how much you want to risk (we recommend 1%), you
can go ahead and trade 1% of your capital on every trade. Let’s say you have
$10,000 in your account. You can make a $100 trade if you’re applying this strategy.
If you lose money, the next time you make a trade, you will have less to
invest since you will have less money in your account.
But this also means that you will have money in your account at all
times, and you could bet more after each successful trade. The
percentage-based approach helps ensure that you make profits
consistently.
Approach 2: Martingale
The Martingale approach will have you double the amount you’re trading
after a loss, so you can recover from the loss and then some.
However, this approach could lead you to lose all of your money if you
don’t have much experience and go on a losing streak.
How to tell if a Binary Options strategy is
good:
A great binary options strategy will generate a signal that makes you
money consistently.
Learning strategies, personalizing them, and testing them out is the only
way to find a good strategy. Any trader worth their salt will tell you that
the strategy you use will pave the way to your eventual success (or
failure).
You must remember that some strategies yield outstanding results in the
short term, and others make you great money in the long term.
Recognizing which strategy is suitable for what circumstance is a part of
being a good trader.
Every time you develop a new strategy or make changes to one you use, test it out.
Never risk real capital to test a strategy you don’t know works. Also,
make sure you have a money management strategy to complement your
signal.
Recommended brokers for using Binary Options
strategies:
If you want to start trading Binary Options successfully, you will need a
reliable broker. In the next section, we show your 10 different strategies.
We recommend using the practice account first before you invest real
money. The following 3 brokers a tested and checked by us:
BROKER: REVIEW: ADVANTAGES: ACCOUNT
+ Best platform Live-account from
1. IQ Option + Best support Open your free acc
(5 / 5) + Highest yield (Risk warning: Your ca
➜ Read the review + Multiple payment options be at risk)
2. Quotex + New broker
+ Crypto payments Live-account from
+ Bonuses Open your free acc
(5 / 5) + Accepts international (Risk warning: Your ca
➜ Read the review clients be at risk)
BROKER: REVIEW: ADVANTAGES: ACCOUNT
3. Pocket Option
+ Accepts any clients
+ Bonus program Live-account from
(4.7 / + Social Trading Open your free acc
5) + Accepts international (Risk warning: Your ca
➜ Read the review clients be at risk)
The 10 best Binary Options strategies
In the following, we show you the 10 best trading strategies for Binary
Options:
1. Strategy – Going along with trends
Regardless of what market you’re in or what asset you’re trading, one of
the best ways to make money is to go along with a trend. It’s arguably
the best strategy a beginner can apply.
Asset prices typically move in accordance with trends. The price will rise or fall
along with associated assets since the market is constantly speculating
and in real-time.
You must remember that a trend rarely has a straight line up or down.
You will typically see an asset’s price move in a zig-zag pattern in a
general direction – up or down. Recognizing the pattern allows you to
estimate whether an option’s price will be higher or lower at expiry.
There are two ways of trading with trends: you can either trade with
overall trends or trade with swings.
See the example of a trend:
Downtrend example
The safer way to go about trading with trends is to focus on the trend’s
overall direction. Most traders make a profit by looking at the general
direction and setting an end-of-day or end-of-week expiry. This strategy
doesn’t work well with short-term trades.
Alternatively, you can trade with every swing in the trend. As mentioned
earlier, trends typically move in a zig-zag fashion. Betting during the up
or downswing can make you more money in a short period, but it is also
significantly riskier.
How to apply
You must examine the chart and look at the trend lines. If the line is flat,
find another option to trade. However, if you see that the line is going up,
the price will likely go higher. The same is true if you see that the line is
going down.
Once you find the right asset and trend, you can use a Binary Options
and make money if your speculations are correct.
2. Strategy – Following news events
While following the news is one of the most basic strategies, it can make
you good profits. It is easier than performing technical analysis, but it
requires you to read the news and stay in the loop all day, every day.
Online news is only the start. You must pick up newspapers, tune into
news stations, and leverage as many other sources of information as you
can. The idea here is to understand the asset as deeply as possible
before evaluating whether its price will rise or fall. We recommend using
the “economic calendar” where are daily news and events published.
Economic Calendar
You also need to reflect upon human behavior. A piece of news you find positive
may not be seen as great news by the rest of the market.
One of the drawbacks of using the news to make trading decisions is
that you cannot tell how far up or down the price will go and how long
the price movement will last because of a particular event.
That being said, there are some things you can do to increase your
chances of making a profit:
Leverage the breakout: A breakout is a short window between the news
release and its impact on the market. It can last for a few seconds or
go on for a few minutes. In this strategy, you want to bet big since
there are significant price movements after a breakout. Using
high/low options is the right way to go.
Employ boundary options: If you’re sure that an asset’s price will move
but don’t know in which direction, estimate how far up or down the
price could go, and use a boundary option. This way, regardless of if
the news is positive or negative, you will make a profit.
How to apply
One of the best ways of using the news to make a profit is to follow tech
companies and find out when they’re making their next announcement.
If you find out they will be unveiling a new product, you can buy options
and wait for your profits to roll in when everyone loves the new product.
3. Strategy – The Straddle Strategy
This strategy must be used in conjunction with the news strategy.
Straddle trades must be made right before an important announcement.
The asset’s value may increase for a short period after an
announcement, but you must buy an option estimating that the price will
come back down again.
When the price starts to drop, you can call another option expecting the
price to rise again.
The strategy leverages the swings of a trend. You will make some money
regardless of if the price goes up or down. The straddle strategy is
known among traders as one of the most consistent ways to make
profits – even in a volatile market.
But bear in mind, pulling it off requires good analytical skills and
experience in the market.
How to apply
Let’s assume there has been a gold mine explosion that will significantly
impact the market. The price of gold will fluctuate frantically since
investors don’t understand whether the price will go up or down.
In this scenario, the affected companies will scramble to find a solution
to continue production.
Using the straddle strategy and leveraging the waxing and waning of the
market in scenarios like these is an excellent way to make profits using
binary options. You will benefit from the market regardless of what
happens in the long run.
4. Strategy – The Pinocchio Strategy
The Pinocchio strategy is similar to the straddle strategy – it calls for
deliberately betting against the current trend.
In a nutshell, if an asset is experiencing an upward trend, you must
place an option expecting the price to fall. By the same token, you must
use an option expecting an asset’s price to rise if the asset is
experiencing a downward trend.
Pinocchio Strategy
While beginners with no knowledge can apply the strategy, a deep
understanding of the asset is essential to making this strategy work.
Only if you understand how the asset works will you make accurate
predictions and make profits.
How to apply
You must first look at the candlestick chart of the asset you’re looking
to trade. When the candle is white or dark, it indicates that the market is
bearing or bullish, respectively.
If the wick of the candle points downwards, place a call option. If the
wick points upwards, place a put option.
5. Strategy – Candlestick Formation Patterns Strategy
If you know how to read asset charts, you can try out this
strategy. Candlesticks show you a lot of information about how the
asset behaves over time. The candlestick’s bottom is the lowest price it
hit, and its top indicates its highest price.
You can also see the asset’s opening and closing price between the top
and the bottom of the candlestick. In this strategy, you must observe the
asset’s price over time.
You will start to see formations that repeat over time, which will reveal
the potential movement of the price in the future. Typically, you will see
long candlesticks on the ends of the asset chart (“mountains”) and a
collection of short candlesticks in between them (“valley”).
Strong
wicks – Candlestick formations
How to apply
If you see that the candlesticks of an asset are taller and the price is
experiencing a peak, you can expect the price to fall soon. On the other
hand, if you see a trough of candlesticks, you can expect the price to
rise.
These mountains and valleys often appear over months. You can set
expiry times by looking at the frequency of a mountain and valley
appearing to make a profit.
› Start trading Binary Options with the highest yield of 100%+
(Risk warning: Your capital can be at risk)
6. Strategy – Fundamental Analysis
Fundamental analysis is less a strategy and more a tool to help you
understand an asset better. The goal of fundamental analysis is to gain
information about the asset so you can profit from it later.
It requires you to perform an in-depth review of every aspect of the asset
or company. Next, you must place a low-risk trade to see what happens,
and you must trade an amount you’re willing to lose.
Once the trade expires, you will know if you can make money from the
asset and trade larger amounts.
How toapply
Let’s say you’re unfamiliar with an asset, but know that the market is
volatile and there is potential for gains.
You must then study the asset and place a small trade (as a call or put)
to test out a strategy you think will work. If it works, you can trade
larger amounts in the short term to make profits, and if it doesn’t, you
don’t lose much and know that you can try again.
7. Strategy – The Hedging Strategy
Some traders consider hedging lazy, and for good reason. It involves
placing both calls and puts on the asset at the same time.
In a way, it is similar to the straddle strategy – you will make money
regardless of where the price goes.
However, you must calculate the cost of losing to make sure you
actually don’t lose money when the trades expire.
8. Strategy – The Momentum Strategy
Using the momentum indicator is an excellent way to determine how
fast the asset’s price is moving upwards or downwards.
Learning to use the indicator can help binary options traders estimate an
asset’s price in the future and make profitable trades. It is also a great
method of picking the right type of Binary Option.
The momentum of an asset can be analyzed in different ways:
Process-oriented analysis: The momentum is analyzed by considering
every period and calculating the distance it has moved on average.
Many indicators calculate this value differently, but the most popular
indicator of process-oriented analysis is the Average True Range.
Relative analysis: A few indicators of momentum compare the price’s
current movement to the asset’s historical average momentum. These
indicators enable you to understand if it’s the right time to use a
binary option and attempt to make profits. If there are strong
movements in the asset’s price, you will be able to make super
profitable trades if you can manage the high risk. You can also choose
to trade assets with smaller movements and low risk to make smaller
profits.
Absolute analysis: These indicators compare the current price to the
asset’s price in the past while ignoring everything in between. The
momentum indicator is the most popular tool for absolute analysis
and compares the last period’s closing price to the asset’s closing
price 14 weeks ago.
Momentum trading with the Average True Range indicator
You will see the result of these indicators’ calculations as a percentage
value with the baseline being 100.
Using boundary options is one of the best ways to leverage the
momentum and win trades. In fact, they are the only option type that will
let you win a trade based only on the momentum.
Since the two target prices in boundary options are equally far away
from the current market price, you don’t have to worry about the
direction in which the price is going.
As long as the price is moving fast enough, you will make money.
9. Strategy – Money Flow Index strategy
Using the MFI indicator is one of the most effective ways to make money
using Binary Options in short periods. It’s one of the best five-minute
strategies out there.
One of the things you need to know about trading Binary Options is that
the market isn’t as random in the short term. Furthermore, since your
capital will be blocked for a short time, you will be able to make many
more trades in a day.
However, all short-term strategies are based on technical analysis,
including this one. This is because no stock’s price rises or falls in the
short-term because the company behind it is doing well or badly.
In short periods, the only thing that influences the price of assets is the
supply and the demand. Technical analysis is the only way to understand
if traders are buying or selling, and one of the best indicators that help
you understand this relationship is the Money Flow Index (MFI) indicator.
The indicator compares the number of assets sold to the number of
assets bought, generating a value between 0 and 100.
Money Flow Index indicator strategy
Here’s how the indicator works:
If the value is 0, all the active traders want to sell the asset.
If the value is 100, all the active traders want to buy the asset.
If the value is 50, the number of active traders wanting to buy and
sell the asset is equal.
If you understand the relationship between the traders that are buying
and selling an asset, you can also estimate what will happen to the price
of the asset since it is determined by supply and demand.
If too many traders have bought an asset, there aren’t many traders left
to push the price upwards. The demand will go down, and the price will
fall.
Similarly, if too many traders have sold an asset, there aren’t many
traders to push the price down. The supply will exhaust, and the market
will rise.
Now that you understand how the market works, here’s how you can use
the MFI indicator to your advantage:
If the MFI is >80, the asset is overbought, and the price will likely
fall soon.
If the MFI is <20, the asset is oversold, and the price will likely
start to rise soon.
If you find that the MFI of an asset is >80, you can invest in a low binary
option to make a profit. In contrast, if the MFI of an asset is <20, you can
invest in a high binary option to make a profit.
The MFI strategy works exceptionally well in five-minute spans.
However, in the long run, and in periods longer than a year, the MFI
remains in the extremes.
The fundamental influences have a strong effect on the asset and will
push the price in the same direction for years. Using this strategy to
make long-term trades won’t work out well for you.
10. Strategy – Rainbow Pattern Strategy
Once you’ve spent some time studying the market and have some
experience, you can consider using the rainbow pattern strategy to increase
the chances of successful trading. The strategy combines simple signals
to make sophisticated predictions about the price.
The rainbow pattern strategy involves using many moving averages with
different periods, and each of them is identified by a different color
(hence the name “rainbow pattern”).
Moving averages that use many periods don’t react to price changes as quickly as moving
averages with fewer periods.
When there’s a strong movement, the moving averages will be stocked
from slowest to fastest in the trend direction.
The fastest-moving average will be closest to the price; the second-
fastest will be the second closest, and so on.
When you see that multiple moving averages are stacked in the right
way, you will know that the price is making a strong movement in one
direction. This is the right time to invest.
While you can use as many moving averages as you like, most traders
use three.
Trading with multiple Moving Averages
If the shortest moving average is above the medium one, which is above
the longest moving average, bet on the prices rising. If the shortest
average is below the medium average, which is below the longest
moving average, you must bet on the prices falling.
While you can set the moving averages to have any number of periods,
consider doubling the number of periods in each moving average.
The ratio guarantees that the averages are just different enough to
create a helpful and accurate signal. Using the most popular values, 5,
10, and 15 is the right way to go if you’re a beginner. You will see the
same opportunities that other traders do, allowing you to tune into the
inside knowledge the rest of the market has.
When your moving averages are stacked in the right order, you can:
Invest immediately: Most signals are created right after the final
moving average aligns itself the right way. While there is a lot of
potential for profit, the risk is just as high.
Wait for one period: Waiting for a period to see if the moving averages
remain in the same order will bring about a lot of security.
Wait for a couple of periods: You can play it very safe and wait for two or
more periods to confirm the signal. But keep in mind that waiting too
long will reduce the accuracy of your signal. By that time, the market
may also begin to turn the other way. If you do decide to wait, make
sure it’s no longer than three periods.
Conclusion on the Binary Options strategy
You must remember that using a strategy just once will not bring you
any gains. Repeated trading is the only way to figure out how well the
strategy works out for you.
Jumping from idea to idea won’t help – sticking to a strategy and
optimizing it to your needs will almost always result in profits.
Now that you’ve learned the ten best binary options strategies test them
out and master them using demo accounts. You’ll be ready to take on
the market in no time!
