How to Trade Binary Options Using Pin Bars

Best Binary Options Brokers 2020:
  • Binarium
    Binarium

    Top Binary Options Broker 2020!
    Perfect For Beginners and Middle-Leveled Traders!
    Free Education How To Trade!
    Free Demo Account!
    Big Sign-up Bonus!

  • Binomo
    Binomo

    Good Choice For Experienced Traders!

How to trade Binary options

Let’s go straight to the point. How to define Binary options using your own words? It is a financial instrument that will have its own price (quote) in the certain time; the new price may be higher or lower that the current one.

For example, now we have price of EUR/USD on the level 1.1179 and in 10 minutes the price will be higher or lower than the stated price (pic 1). In case it goes to 1.1180 means the quote increased.

So this changing to the positive or negative side is the double (or binary) opportunity to earn money (up to 90%) or, unfortunately, to lose it. Meaning the trader has two possible scenarios and he has to make the correct prediction. In case 70% of forecasts are made correctly that means you can trade binary options quite profitably.

The main goal of the trader is to make the correct forecast about the further movement direction and open the appropriate trade by clicking the button and choosing the amount of the trade. If your prediction is correct you have the profit 80-90% in your pocket.

The example of trading platform for the binary options.

Main advantages of options trading

Why Binary options may be interesting both or the beginners and professionals?

In contrast to Forex, options trading is much more fast and dynamic, the trading strategies are quite simple there and you don’t have to make a detailed analysis before setting your trade.

How to choose the Options broker

In case you have decided to try options trading, you need to choose the partner of your trading. There are a lot of companies on the market that offer trading services and the beginner in this field may be lost.

The main features that should be counted:

Best Binary Options Brokers 2020:
  • Binarium
    Binarium

    Top Binary Options Broker 2020!
    Perfect For Beginners and Middle-Leveled Traders!
    Free Education How To Trade!
    Free Demo Account!
    Big Sign-up Bonus!

  • Binomo
    Binomo

    Good Choice For Experienced Traders!

  • The minimum deposit. You can find different options starting from 10 USD or 250 USD. So it’s better to make a correct decision based on your potential.
  • The minimum option size. Here you should understand that you can trade with 1 USD or 25 USD. Your choice should be based on your financial stability.
  • The maximum profit. This criteria is more or less the same in most companies. We recommend to use those that offer 80-90% from one instrument.

To make your choice easier we offer two kind of companies:

Olymp Trade is a new dawn on the market of binary options. This broker have created a company that meets the highest requirements of clients. In Olymp Trade all the stages of trading are as simple as possible, and the entry threshold is lowered to a record sum — 10 dollars.

The broker of binary options 24option established itself as a leading choice in the binary options market. The broker possesses all modern tools and favorable options for a successful trade. 24option is the regulable broker and meets all standards and requirements of CySec. The broker provides training seminars for beginners and qualified technical support.

As well you can check the rating of Binary options companies and be aware of the whole list of the companies.
There is the useful video below that will show you how to trade binary options and stress the aspects for better understanding of the process.

Other useful information for traders:

A Guide to Trading Binary Options in the U.S.

Binary options are financial options that come with one of two payoff options: a fixed amount or nothing at all. That’s why they’re called binary options—because there is no other settlement possible. The premise behind a binary option is a simple yes or no proposition: Will an underlying asset be above a certain price at a certain time?

Traders place trades based on whether they believe the answer is yes or no, making it one of the simplest financial assets to trade. This simplicity has resulted in broad appeal among traders and newcomers to the financial markets. As simple as it may seem, traders should fully understand how binary options work, what markets and time frames they can trade with binary options, advantages, and disadvantages of these products, and which companies are legally authorized to provide binary options to U.S. residents.

Binary options traded outside the U.S. are typically structured differently than binaries available on U.S. exchanges. When considering speculating or hedging, binary options are an alternative—but only if the trader fully understands the two potential outcomes of these exotic options.

Now that you know some of the basics, read on to find out more about binary options, how they operate, and how you can trade them in the United States.

U.S. Binary Options Explained

Binary options provide a way to trade markets with capped risk and capped profit potential, based on a yes or no proposition.

Let’s take the following question as an example: Will the price of gold be above $1,250 at 1:30 p.m. today?

If you believe it will be, you buy the binary option. If you think gold will be below $1,250 at 1:30 p.m., then you sell this binary option. The price of a binary option is always between $0 and $100, and just like other financial markets, there is a bid and ask price.

The above binary may be trading at $42.50 (bid) and $44.50 (offer) at 1 p.m. If you buy the binary option right then, you will pay $44.50. If you decide to sell right then, you’ll sell at $42.50.

Let’s assume you decide to buy at $44.50. If at 1:30 p.m. the price of gold is above $1,250, your option expires and it becomes worth $100. You make a profit of $100—$44.50 = $55.50 (minus fees). This is called being in the money. But if the price of gold is below $1,250 at 1:30 p.m., the option expires at $0. Therefore you lose the $44.50 invested. This called out of the money.

The bid and offer fluctuate until the option expires. You can close your position at any time before expiry to lock in a profit or a reduce a loss, compared to letting it expire out of the money.

A Zero-Sum Game

Eventually, every option settles at $100 or $0—$100 if the binary option proposition is true and $0 if it turns out to be false. Thus, each binary option has a total value potential of $100, and it is a zero-sum game—what you make, someone else loses, and what you lose, someone else makes.

Each trader must put up the capital for their side of the trade. In the examples above, you purchased an option at $44.50, and someone sold you that option. Your maximum risk is $44.50 if the option settles at $0, and so the trade costs you $44.50. The person who sold to you has a maximum risk of $55.50 if the option settles at $100—$100 – $44.50 = $55.50.

A trader may purchase multiple contracts if desired. Here’s another example:

  • NASDAQ US Tech 100 index > $3,784 (11 a.m.).

The current bid and offer are $74.00 and $80.00, respectively. If you think the index will be above $3,784 at 11 a.m., you buy the binary option at $80, or place a bid at a lower price and hope someone sells to you at that price. If you think the index will be below $3,784 at that time, you sell at $74.00, or place an offer above that price and hope someone buys it from you.

You decide to sell at $74.00, believing the index is going to fall below $3,784 (called the strike price) by 11 a.m. And if you really like the trade, you can sell (or buy) multiple contracts.

Figure 1 shows a trade to sell five contracts (size) at $74.00. The Nadex platform automatically calculates your maximum loss and gain when you create an order, called a ticket.

Nadex Trade Ticket with Max Profit and Max Loss (Figure 1)

Binary Options Trading Strategy for Beginners: The Pin Bar Method

The pin bar method is a very popular binary options trading strategy among traders. One of the main reasons behind the popularity of this binary options trading strategy is the simplicity, which is very easy to understand even by the most novice traders.

What is a Pin Bar?

A pin bar is a price action (PA) bar that at first, goes in one direction, then suddenly go into the opposite direction, creating a long tail looking candlestick or bar pattern in the process. Regardless of the pin shape of the bar, the name “pin bar” actually derived from the fictional character Pinocchio. The pin bar resembles how Pinocchio’s nose use to grow when he was under stress from lying. Pin bars, in reality, do lie about their initial direction, then go the other way.

There are basically two types of pin bars. With a bullish pin bar, the price goes down, then comes up and with a bearish pin bar, the price goes up first, then closes near its opening price.

How to Apply the Pin Bar Method to Trade Binary Options?

Pin bars work best with a trend. Hence, it is strongly advised that binary options traders try to find an established trend and only then look for pin bars to trade. With this strategy, you would be using the pin bar as an entry trigger, which will in turn increase the probability of catching a good trade with minimum downside risk.

While many aggressive binary options traders choose to enter when the pin bar forms or when the daily bar closes, other experts highly recommend that you should wait for the price to break higher (for bullish) or lower (for bearish) of the pin bar.

While trading the pin bar against the trend may offer more rewards in traditional trading, trading with the trend will provide you with a higher win rate in binary options. This is because, with binary options trading, you are not only predicting the direction of the price, but the price needs to close “in-the-money” As well. Hence, in the beginning stage of trading binary options, you should focus on trading pin bars with the trend, as will increase your odds of winning.

Once you have identified a prevailing trend in the market, in order to properly apply the pin bar method, you need to wait for the price to break above the high of a bullish pin bar and low of a bearish pin bar. For example, in the USD/CAD daily chart above, we can easily identify five bullish pin bars in an uptrend. Here, the red lines above the pin bars should be your entry price.

Best Binary Options Brokers 2020:
  • Binarium
    Binarium

    Top Binary Options Broker 2020!
    Perfect For Beginners and Middle-Leveled Traders!
    Free Education How To Trade!
    Free Demo Account!
    Big Sign-up Bonus!

  • Binomo
    Binomo

    Good Choice For Experienced Traders!

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