In this article I would like to share with you what I learned when I first started to trade binary options. I will describe my binary options trading strategy that I used for almost two years. A binary option is simply just another derivative of the common option traded across the global markets.
If the price is above the strike price even by one pip , the trader wins the bet at the expiry date. If the market price is lower than the strike price at the expiry, the trader wins the bet.
In a very long time frame the amount of buyers Call options equals the amount of sellers Put options. Based on the above principle, the broker will never lose money, assuming he will be in the business long enough to overcome possible exceptional markets swings. All the binary option broker needs to do is to maximise the trading volume to increase profits and lower the risk.
This is why the industry offers such a wide selection of expiry dates. As more often as better! I guess, most of the volume is weighted towards intra-day expiry as the industry attracts gamblers looking for a thrill rather than long term professional traders.
The guy above will not make it! A good binary options trading strategy is naturally one that brings profits on a regular basis. There are a few tasks to be performed before deciding on your trading strategy. Break-even Since break-even is achieved when the total amount won equals the total amount lost, it can be calculated using the following formula;.
Expectancy A more general way to analyse any binary options trading strategy is computing its expectancy. This is a single number that combines the winning percentage with the average return.
This number tells immediately if the trading strategy is worth pursuing or not. The strategy should be considered sound. This applies across all markets. Every trader works very hard to keep losers smaller or equal to winners. It is impossible to keep your losers smaller or equal to winners trading intra-day binary options.
You need to think harder to stay ahead in this market. Trader must go against the odds and design a binary options trading strategy than generates more winners then losers to compensate for the unfavourable pay-outs. If the trader is able to generate more wins than losses with the average loser being less or equal to the average winner, it is definitely a recipe for a financial independence.
It is a statistically sound approach and it is sustainable in the long run. Apart from the points above, the trader should consider other variables like trading times, asset class, brokers etc. It is important to get all variables tested before deciding to use them.
Profitable binary options trading strategies combine only the most efficient choices. This is the technique I developed trading binary options. This is the technique I want to share with you today. Back in I started to experiment with strategy and different expiry options.
I tried every time frame offered by the broker. On the top of that I had to account for human mistakes, missed trades, losing streaks and loss of confidence and more.
You can close End of Day binary option before it expires getting back some premium on losing positions. In this scenario, my losers are getting closer to my winners and I shift the odds in my favour. I manged to keep my losers as big as my winners and my accuracy was outstanding. You can close your positions up to 15min before the exchange closes. The closing time varies between the brokers. Please check opening hours before you start trading. I managed to retain a long term average accuracy of the system with 11 winning positions against only 5 losses.
The average loss also met expectations and stayed well below the pay-out amount. My trading account grew astonishing The average loser amount remained within expectations and stayed below the average winning payout.
Trading was performed in the live environment applying strict money management techniques. Recorded 17 winnings and one loss. From 08th July to 30th July I recorded 14 consecutive winning positions. It is needless to say, this is outstanding result and all time achievement. All signals allowed a decent amount of time to fill the positions and provided an easy opportunity to trade. Had 9 trading days with no signals and 3 of the trades did not fill due to fast moving prices.
I placed a total of 19 trades. Recorded 14 winning positions and incurred 5 losing trades. This is slightly above the long term average. This was due to higher than normal volatility during the US session. So now you know how to shift the odds to your advantage. I developed a few things about the strategy to trade these specific options.
I used to place only one trade per day between 3 — 5pm gmt and I let it expire if it was in money or I closed it if I knew it was going to expire out of money. I was right on balance and got better with my judgment over time.
The binary options are priced based on time and volatility. More volatility in the price action causes the premium to disappear. It is important to avoid high volatility day when using this strategy. As less is going on the market, as more profitable the strategy gets.
I believe you are a professional trader and you could try any of your own methods. There are many trading techniques to apply, for example:. I will email you my full binary options strategy description and instructions with indicators and templates for MT4. You will not succeed in the long run. But if trading binaries suits your personality, you can still enjoy it, but please lower your risk and. The one I use is — stockpair. Well I do… but now I use it rather to hedge my cash positions in FX.
This is now part of a bigger trading approach I take. I can generate less profits from trading FX but I take less risk. I like to trade less and keep my winning positions for longer. I suppose my risk appetite is changing with my age. If you liked this article I would really appreciate if you could share it with fellows traders. I hope this will help them to beat the game in the long run.
This E-Book improve your trading dramatically. This E-Book contains step-by-step instructions, examples to teach you how to trade profitably. I truly believe the journey to profitability and freedom is a function of hard work, commitment, persistence and boring routines There is no magic to trading. I believe in making calm rational decisions what, when and how to trade based on a decade of intense learning. You must be logged in to post a comment. July 11, Posted by: I will also share with you something very extraordinary.
Stick around because this is very interesting indeed. The same stands for short positions. Broker — The only winner in the binary options market. The guy who invented this industry is a genius indeed! The very basic premise the industry works off is: The simple genius of the binary option industry is: For every loser there must be a winner so: To get some perspective — your ordinary FX broker charges you a paltry 3 pips!
What a loser he is! This is a fat margin indeed! This is Genius, genius, genius! Twitter is littered with display ads full of hot chicks and luxury yachts. People seem to go for it like there was no tomorrow. Remember one simple thing: Odds, accuracy and the Risk Reward Ratio in the binary option market. It is not always possible. I have tested each strategy and tried to match them with the expiries.More...