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  1. #1
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    Ideas for trading with binary options

    How to create profitable trading method for binary options?

    First of all, we have to know parameters of our strategy – they should correspond to opportunities that binary option can give.

    Profilt/loss ratio

    As you understand – we have to have higher quantity of profitable trades to at least cover our costs. So, we should have strategy that would generate large quantity of winning outcomes – it should not be necessarily big moves, just small deviations in our favor.

    Trading hypothesis:

    To formulate rules for robust trading strategy, we have to formulate trading idea that would benefit from certain market conditions observed on a daily basis. Also, this idea has to be pretty simple to execute.

    If we look at distribution of daily price action on, say, popular currency pair EURUSD, we would notice that rotation of the price occurs when price returns to average sessional price, that can be easily found with EMA indicator. For example, on 5-minute chart of EURUSD, decision making points look like shown below:

    Attachment 11609

    I have to mention that day was pretty volatile – in many cases there would be much more decision making points, especially if price would trade within consolidation area.

    For sixty-second options, it’s possible to build simple scalping strategy that would be impossible to execute in conventional forex trading. If price touches 21-period EMA, we might observe at least slight pullback within next 2-3 minutes (price holds above EMA). Therefore, our trigger for entering long trade (buying «call» option) is a moment when price touches 21-period EMA from above (we can buy «put» option when price touches it from below).

    Attachment 11610

    We are talking about small pullback that does not exceed 5-10 pips, it can be 3-4 pips in most cases. So, it is considered as a «noise» for many intraday traders. In fact, if you target is 5 pips per trade, it would be tough to trade – first you have to cover your spread, then capture 2-3 pips and go away- even 1/1 profit/loss ratio can not be easily achieved in such type of trading. It does not make sense in traditional trading.

    But for binary options, it can bring some profit. You have to have at least 1 pip above strike price to realize profitable scenario – you get guaranteed 70% per bet. As you understand, it can not be achieved in traditional trading.

    But of course, we should not only find profitable pattern, but rather know – what market conditions are risky for our strategy? In other words, we have to know when price moves through moving average without any pullbacks.

    For example, it occurs after important news announcements. Below is a chart of GBPUSD after news announcement:

    Attachment 11611

    Therefore, you have to know periods within a day when you are not trading.

    Also, after elongated consolidation areas market can become extremely volatile – you have to take such periods to consideration as well. The more elongated such period was, the more volatile price action will be – also it means risk for such type of scalping strategy:

    Sometimes, period of reduced volatility pre-defines good trending move, we can use pullbacks to open positions in the direction of the trend.
    This example shows that you can build a trading strategy on short-term options (120 seconds). Also, you can use higher timeframes for your strategies using long term options with other expiration dates.

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    Last edited by Value trader; 09-03-2014 at 03:08 PM.

  2. #11
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    it should not be necessarily big moves, just small deviations in our favor.
    This is really the key to our own success in binary trading. We are not counting pips in binary. We are counting that we are in the right trend when we open a binary option. Although I don't think we can trade long term in binary. Its good if you are aggressive trader in forex trading as you will feel at home in binary. That's why I always say if you want to train your self in binary trading trade scalping.

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  3. #12
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    I'm still not that good in option. I maybe right in my analysis but since binary is more of a volatility type of trade and theirs a time frame that if the time experience and you are in the wrong trend you going to loss money. Some how its good to make profit in option as the money is fast. But same time if we don't know how to deal with volatility we maybe can end up losing.

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  4. #13
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    Quote Originally Posted by budado View Post
    I'm still not that good in option. I maybe right in my analysis but since binary is more of a volatility type of trade and theirs a time frame that if the time experience and you are in the wrong trend you going to loss money. Some how its good to make profit in option as the money is fast. But same time if we don't know how to deal with volatility we maybe can end up losing.
    Have you tried to trade options? What type of options were you trying to trade?

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    Quote Originally Posted by Value trader View Post
    Have you tried to trade options? What type of options were you trying to trade?
    I tried it before in a forex broker site that has ptp forum in which I post and earn bonus funds that I use to trade in binary. I trade eur/usd. Why?

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  6. #15
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    I am very happy that roboforex finally equipped with this options. This trading is relatively easy and more profitable than normal forex trade. But I think here the risk factor is more than forex trading

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  7. #16
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    There are no ideas to trade the options. We need just to pick up the direction of the trade. If you get right direction then you can win. If no, then you loss. This is very simple to trade. But it is very easy to get the losses. So, be carefull with options trading. I do not beleeve any automated methods to trade options. One way that you can win this is to know the trend directions.

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    Quote Originally Posted by AndreyB View Post
    There are no ideas to trade the options. We need just to pick up the direction of the trade. If you get right direction then you can win. If no, then you loss. This is very simple to trade. But it is very easy to get the losses. So, be carefull with options trading. I do not beleeve any automated methods to trade options. One way that you can win this is to know the trend directions.
    It's not just about the direction, it is also about proper timing and trade location. You may be right in your overall analysis, but get loss just because you entered your position too early (and maybe at bad price).

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  9. #18
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    I appreciate the ideas shown above, But it will work for the traders that want to trade on long time trades on the binary option, that is the best too. But all my trading could be based on support and resistance, or pure trend continuation trading on binary option. But no matter what you analyze, try to analyze your time with it as well. Because even if your trading analysis is correct, your time might be the one that will fail you.

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    We've tried out binary possibilities with yet another specialist but didn't still find it considerably interesting since to start with you can not really set the possibilities quickly (not at the least in that broker). Whenever option you can set is usually 10 minutes by right now so that it is a tad difficult in order to make and it fully depended upon good fortune then. Forex currency trading offers additional strengths even as we can hold the deals inside burning in the event we should intended for days to weeks, days or even many weeks. In binary possibilities as an option is usually run out the income or even burning is usually provided to people instantly.

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  11. #20
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    Quote Originally Posted by cozard007 View Post
    I appreciate the ideas shown above, But it will work for the traders that want to trade on long time trades on the binary option, that is the best too. But all my trading could be based on support and resistance, or pure trend continuation trading on binary option. But no matter what you analyze, try to analyze your time with it as well. Because even if your trading analysis is correct, your time might be the one that will fail you.
    I think it is to trade with binary traders should be able to get their analysis with much better because in addition to traders to analyze market traders also demanded to have the capability in terms of doing this trade with precision in making trade contracts so that this will enable them to be able to get advantage that the analysis is not good then it will be easy to make traders will lose

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