There are many strategies for trading binary options. Experienced traders can identify several main types of strategies. [list style=”arrow”]
- Binary strategies based on technical analysis
- Binary strategies based on fundamental analysis
- Binary strategies based on candlestick analysis
- Binary strategies based on wave analysis [/list]
These are, perhaps, the main theories for making a decision to enter a trade. Each method has its pros and cons, and has been a topic of debate among traders for a long time.
How to develop your binary options trading strategy?
One of the basic tenets of financial trading is
History repeats itself
. It will be your reference point for creating a strategy.
The goal of any binary options strategy is to
identify the trend
.
The trader’s goal is to predict where the price of an asset will end up after a certain period of time.
To do this, we need to determine the trend “direction of the asset price”.
To determine the trend, the following are used:
[list style=”arrow”]
- News indicators – the publication of which will affect the current level of the price of the asset
- Trend indicators – comparison of closing / opening prices and deviation from the average price
- Patterns – the behavior of the price of an asset, repeated throughout history. [/list]
You can choose any method and type of analysis.
After determining the trend, statistical data is collected. The purpose of which is to show what percentage of signals to determine the trend was correct.
It is important to understand that all readings must be under the same conditions
. Time frame (time frame), asset, etc.
After this data, we must answer the questions of where and how much the price will move.
An important indicator is the percentage of unsuccessful trades. Now
our task is to reduce negative transactions
. Each strategy has its own indicators of positive and negative transactions.
For this purpose, we use a tool to confirm the decision made after determining the trend, or a filter that shows what we should not do. For example, oscillators are used in technical analysis.
The purpose of oscillators in this case is to signal false signals.
Taken together, these definitions and percentages will give us an indication of the future performance of the binary strategy.
It must be remembered that there are no 100% binary options strategies.
A good binary options strategy gives about 80% positive trades. This means that out of 10 trades, on average, 8 will be in the black.
The next step is to calculate the size of the transaction. This is done so that with a deposit of $ 500 you do not make a deal for the entire amount and not lose everything at once. This is called financial management. The combination of a binary strategy and adapted money management gives the best results. Our losses should not come as a surprise and should be calculated.
Conclusion:
Planning binary options trading involves developing a strategy and managing that strategy.
You can develop your binary system or choose one from our list.
Test and correct strategies with binary brokers with a demo account.
