When is the Best Time to Trade Binary Options

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The Best Time to Trade

Is the best time to trade exists?

The stock and currency exchanges, along with the financial markets run 5 days a week, they are closed on holidays and weekends. The 24 hour period is divided due to differences in time zones. There are 4 so-called trading sessions, and the market for each of them has their own nuances. The current time has a real impact on the volatility level, leading many traders to ask what the best day of the week to trade is, as well as what the best time of day is.

In this article, we aim to clarify the aspect of time in trading as thoroughly as possible. We will not only include the schedule and particularities of the trading sessions but go into the release of key events as well. We will go through the nuances of effectively trading the economic calendar, along with other important things of note in regards to the topic.

The Trading Session Schedule

The different time zones across the world make it so that, at any given time, it is the peak of the work day in some countries and night in others. The significant trading platforms are open 5 days a week, but only during working hours. This has led to the 4 trading periods. The world economic zones are divided into 4. At any given time during a 24 hour period, there is at least one session open, meaning that on Forex trading doesn’t cease. During certain times two sessions overlap, increasing the level of volatility. Let’s consider each one of them in further detail.

The Pacific Session

It opens approximately at 23:00-01:00 Moscow time and closes at 10:00. Wellington, New Zealand and Sydney, Australia are the economic centers of the Pacific economic zone. Prior to when the Asian session opens (at 3 AM Moscow time), it is the calmest period on the market.

That being said, during specific times, the general volatility of the market can reach high levels, especially if it involves the release of key news reports from the Australian or New Zealand central banks. Over these periods, currencies pairs including the AUD or the NZD can demonstrate price jumps. Additionally, news releases from these governments have a lesser impact on the global financial market than those from Europe, Asia, and America.

The Asian Session

It opens at approximately 03:00 and closes at 12:00 MSK. The key economic centers are Tokyo, Singapore, and Hong Kong. The two latter cities’ platforms open an hour later than the Japanese. Asian countries play a key role in the world economy because they are modern industrial centers, manufacturing goods that are widely traded internationally.

In the morning, all currency pairs that include the Japanese Yen are actively traded. When the Pacific session overlaps, the trading activity increases between the countries. However, this all happens in the early hours, for the majority of the day they remain calm due to the fact that the American and European countries’ economies are the favorites these days. Therefore, if the Asian session is highly volatile, then it is usually just ripples from the previous American-European trading period.

The European Session

It opens at 9:00-11:00 and closes at 18:00-20:00 Moscow time. As Europe has the largest number of international economic centers, this time is an active period on the market. The largest number of trades placed during this period. When the main center opens in London, all the currency pairs linked to the British Pound, Swiss Franc and Euro increase in activity. The GBP/USD, EUR/USD, CHF/USD assets, among others, are in the top ten most traded tools.

News released during this period more heavily influences the course of all currencies, assets, and goods traded on the market. News in connection with actions on the part of central banks, as well as industry reports, employment figures, interest rates, the state of business, the current housing market and so on have special importance. The anticipation of these events and their aftermath, in particular, provoke very turbulent market reactions that are difficult to forecast through technical analysis alone.

The American Session

It opens at 16:00 and closes at 1:00-2:00 Moscow time. The dollar, in particular, is the global currency. Therefore, when the leading economic centers on exchange platforms open in New York and Chicago, there is obvious growth in market participant activity across the globe. Influential traders enter the market, such as representatives of transnational corporations, banks, and other organizations.

The period from 16:00 to 20:00 is often referred to as the American-European trading sessions, as during that time both periods intersect. Statistically, a higher number of trades are placed in the evening. Moreover, this affects not only the influential market participants who trade funds and currency pairs in London, Chicago, and New York but all the private traders on Forex and other online platforms.
In Russia and CIS countries, the period of the American-European session coincides with the official end of the working day in many spheres of activity. This is useful for traders who start out trading alongside a day job.

The Best Time to Trading

The principle of generating profit through trading is based on price difference. When trading on Forex and CFD, the percentage of profit is directly dependent on the coefficient rate change. The situation is different with fixed contracts, where only the direction plays a role, not to what degree it moves. That being said, there is a general rule. The lower the volatility (the general activity on the market), the less accurate indicators and technical analysis systems are.

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When there are neutral trends, when the price moves within the confines of a horizontal range, there is more “noise” and false signals. This is why the vast majority of traders only trade trends. Statistically, in a 24 hour period, approximately 70% can be characterized as calm. There is high activity only 30% of the time (approximately 7 hours) when key news is released and traders open a larger number of trading positions. Based on that, you can come to the conclusion that the best time to trade is in those 7 hours of a 24 hour period. But what times in particular?

The level of market volatility is based on two factors, the number of active traders and the release of economic news. Therefore, the most volatile periods are when one trading session intersects with another.

There are two such moments in particular:

• The intersection of the Singapore and Asian periods from 03:00 to 10:00;

• The overlay of the American-European trading period from 16:00 to 20:00;

That being said, in the morning the market is relatively quiet. The problem is that the global economic centers are in a relatively passive state. In particular, this is due to that fact that it is daytime in Europe, so the level of volatility is higher later in the day as opposed to in the morning. Also, the majority of key news relating to the Eurozone is released between the hours of 12:00 and 16:00.

Based on this information you could come to the conclusion that the most volatile times for currency pairs is from approximately 12:00 to 20:00. This is the optimal time range for trading because this when many traders enter the market. However, it isn’t all that simple, it is necessary to make several clarifications.
First off, it is important to differentiate between currencies. The activity levels vary between different assets. The schedule of trading platforms on specific exchanges has an impact on it. Secondly, the time when economic reports are released plays a key role, as do other important events from an economic perspective. Thirdly, many factors influence the price, meaning that you can’t solely base everything on the schedule of trading periods. At the same time, on different days the market can behave in a completely different manner.

The best interval for trading with specific currencies:

• 03:00–09:00 – The Australian and New Zealand dollars paired with the Japanese Yen;

• 11:00–12:00– The Japanese Yen paired with the Euro and the Dollar, as well as the British Pound;

• 16:00–20:00 – The Euro and Dollar, as well as the British Pound and the Swiss Franc.

The Importance of the Day of the Week When Trading

The market situation is not only influenced by the time of day but also the day of the week. As it is well known, trading platforms only run during weekdays. The platforms are closed over official international holidays and during the weekends. It is worth clarifying off the bat that this doesn’t apply to cryptocurrencies, which are quickly gaining traction not only among investors but traders as well.

In general, the situation based on the day of the week is stable. However, traders should be cautious at the start and end of the working period. Monday is that time when the market opens after the weekend. Typically, this is also the day when reports of varying degrees of importance and key economic news are released. If the Monday passes without any such events then the volatility usually remains at the standard level.

The other intense day of the week is Friday. The evening hours on the eve of closing are the riskiest. The problem arises due to significant traders closing out their trading positions on the run-up to the weekend. The Friday American-European trading session is typically more volatile than on other days. On the other hand, it is good because traders profit specifically from asset price movements. That being said, the forecast ability and the stability of the market are more important, especially when trading with contracts with fixed profit and loss.

The Best Time to Trade is the Middle of the Week

The second and third days of the week are the most stable periods. Important event rarely takes place on these days and the inertia from previous events has already died down. This means that the indicators produce more accurate signals. This becomes evident with a statistical comparison.

Thursday is a neutral day because it is already beginning to near the end of the trading week. The level of tension is slightly increased. Economic reports that have a profound effect on the state of the market are often released on Thursdays.

The Economic Calendar is a Trader’s Friend

Investing developed this tool on their popular portal for investors and traders. It is unique in that is gathers all the important economic news in one place. As the information is presented in a condensed form, there is nothing unnecessary, only key events, numbers and short descriptions.

The economic calendar at safetradebinaryoptions.com enables traders to easily know the important times and dates of upcoming releases. This allows traders to see in advance when the risky periods where volatility becomes unpredictable are. It is best to refrain from trading during these times. If you don’t do this, then you could easily find yourself in a situation where the price makes a sharp jump despite all the indicators.

Even traders who rely solely on technical analysis use the economic calendar. Other than that, you can use this tool to try your hand at trading with fundamental analysis. A certain percentage of the news available on the calendar has a forecastable result. If the event is positive, then the market usually reacts with growth and vice versa. If it is negative the course falls. The basis for this is trading strategy is the economic calendar.

Conclusion

The best time to trade is when the market is active, but stable. For example, it could be a clear ascending tend. If the price fluctuation is chaotic, experienced traders refrain from trading. These situations typically happen when news is released. This is why it is so important to follow the events on the economic calendar when trading.

“General Risk Warning: Binary options and cryptocurrency trading carry a high level of risk and can result in the loss of all your funds.”

Best Binary Options Trading Strategies That Work : Complete Guide

I am sure you have heard or read that you could make a ton of money trading in binary options. That’s true. Unfortunately, it is not as easy as some reviewers or affiliates of binary options brokers would want to put it. Some even make you believe that you can just stumble upon binary options and start making profits right away. Nothing can be further from the truth. Those who get involved naively, most likely end up losing their hard-earned money. Many of these binary options broker adverts just want to get you on their platform and get you to deposit your money.

So, what does it really take to make profits from binary options trading? First, we believe that binary options trading is a legit form of trade and you can make money from it. In order to make money, you have to know your trade. The same goes for binary options trading. We always advocate for trading with a strategy. Trading with a strategy means you are in control of your investment, and significantly reduces the risk of losing it. On the other hand, trading without a strategy is more like gambling. In as much as there is an aspect of luck in binary options trading, winning is more of a strategy than luck. You will certainly lose your money if you treat it like gambling.

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Many people are always wondering about how to master binary options trading. It is estimated that less than 5% of the people who get involved in binary options trading make a profit. A majority, if not all, of those who lose, probably get into binary options trading with no clear strategy. You’ve probably read somewhere that anyone can trade in binary options. While that is true, it does not mean anyone can profit. I have no prior experience with financial and stock markets, you should probably take time to learn a thing or two before staking your money. Those who put in the work, and adopt a robust strategy most likely than not end up in profits. 5% of millions of people around the world is still a large number of people. So, yes there are a lot of people making money from binary options trading.

So, what are the strategies that you can employ to ensure you end up on the profits ends? There are several tries and tested binary stock options strategies that are commonly used by binary options traders. These are actually binary options strategy that works. You need to understand how these strategies work, for you to be to employ them effectively. We seek to educate and put you in a better position to trade in binary options successfully. We are going to look at various strategies that you can employ in binary options trading. It is important to mention that whatever we publish here should not be taken as a blueprint to making money on any platform. We seek to help you understand the concept behind the strategies. The actual actions to be taken depend on the financial market charts. We are going to divide the strategies into three categories.

  • Money Management Strategies
  • Trading Strategies
  • Analysis and improvement strategies

The strategies are employed in the above order if you are starting as a newbie. You need to have a money management strategy to ensure you don’t run out of trading funds. Trading strategies are the actual strategies of engagement with the financial markets. Analysis and improvement strategies ensure the trading strategy you have adopted is sustainable and it keeps winning trades for you.

Tag along and let’s show you how to how to build a trading strategy on the binary options.

1) Money Management Strategies

Money management is a necessary strategy for anyone trading in binary options. It is the top binary options strategy. It is a basic but very essential strategy. It is employed together with one, or a couple of the other strategies. Money management strategy helps you leverage your money to make the most of a binary options trading winning strategy while keeping the risks to a minimum. The money management strategy is employed in two ways.

(i) Risk Management

As a new trader, you will obviously have no confidence in your strategy and skills. You are basically in an experimentation phase. Unfortunately, experimentation is the only way to test where the trading strategy you have adopted works. You may have to do so with real money on some binary options broker platforms. As such, your main focus in this phase is not only to learn, but also to reduce the rate at which your balance is depleting. You will most likely lose more trade than you are winning.

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The Kelly System is a risk management system that is renowned among trading and gambling circles. The general rule of the system is that you should never stake more than 5% of your remaining balance. The underlying argument is that, in the experimentation phase, you would rather stake small amounts since you are more likely to lose most of the trades

Another way of exercising risk management is placing a call and put options in concurrent trades. Let’s say you are working with a 1-minute binary options trading strategy, and you have placed a call option. At the 30-second mark, you realize it’s not going the way you had predicted. 30 seconds is still a long duration is short term binary options trading. To minimize the risk of losing, you could place a put option for 30-minutes. There are two scenarios here. You could win one trade and loose the other, or win both trades. The probability of losing both trades in such a scenario is almost zero. Let’s say your broker offers 90% profit on both trades and your stake was $10.

  • If you win one trade and lose the other. You will get a payout of $190 on the trade won, and lose $100 on the trade lost. You had staked a total of $200. It means in total you have lost $10. You would have lost $100, had you left the first trade to complete and be wrong.
  • If you happen to win both trades. You get a payout of $190 on both trades. You will end up with $180 in profits.

In the scenario above, you would have risked a small amount to win a big amount. That’s the whole essence of risk management. The goal is to control the depletion of your remaining balance as you seek a working strategy. You do not want to lose all your initial deposit when you probably have no other money to deposit.

(ii) Compounding

Compounding still concerns itself with the remaining deposit in your account but is employed when you have found a winning formula. When you find the binary options winning strategies that you are confident in, you employ the compounding strategy to take maximum advantage of the winning trades of are making. The concept of compounding is quite simple. The amount staked keeps going up as you continue winning. It means the winnings will keep going up too. Compounding is more like the Kelly system but in the reverse direction. Businessmen call it plowing back the profits.

To clearly understand how compounding works, let’s explore a hypothetical situation. Assuming you have $2000 and you are working medium duration trades; say one week. You place five one-week trades and stake 10% of the deposit on each of the trade. Recall the compounding is employed when you have found a winning strategy. You can therefore disregard, the rules of the Kelly System. You will have staked a total of $1000. Assuming you win all the trades at the end of the week and your broker pays 90% profit. You will close the week with a balance of $2900.

One the second week, you keep the same strategy. You will have staked $290 on each trade. The total amount staked will be 1450. If you again win all the trades, you will have a new balance of $4205. The trend will go on as long as you are winning your trades.

The cue to use compounding is when finding a working strategy. Therefore, we need to look at the other strategies you can employ together with the money management strategies to ensure you turn in profits. Money management is a fundamental skill for any binary options trader. As a trader, you have to know how to leverage your money two get more profits. At the same time, you have to know how to protect yourself from losing it all.

2) Trading Strategies

The trading strategies are a structure of how you will be placing your trades. As mentioned above, doing thing haphazardly with no clear plan will have you losing your money thick and fast. Trading strategies help you have a clear picture of what your trades look like. Trading strategies are basically based on two aspects. The instrument or asset you are going to trade with, and the duration of the trade.

(i) Assets/Instruments

These can be stocks, indices, cryptocurrencies, currency pairs, or commodities. You choose to trade in one or a couple of the assets you are comfortable with. If you are a beginner, stocks are always a good place to start. Information about stocks is more readily available as compared to that of the other instruments. If you have one particular instrument whose financial market you understand well, that’s where you want to start.

There isn’t much one the assets, you go with the one you understand best. If you don’t understand any, check all of them and find one that’s easy for you to understand. The back in trading strategies stops with the trade duration.

Trading strategies are classified into three categories as far as the trade duration is concerned. They are;

  • Conservative Long-Term Strategy
  • Semi-Conservative Strategy
  • Aggressive Strategy

Let’s explore them one after another.

Conservative Long-Term Strategy

This strategy, as the name suggests, involves conservative trades. The target for this strategy is 1-2 almost sure trades per day. The concept is to wait for sure signals and employ money management to capitalize. You then keep the trend going and grow your capital. It is the best binary options trading strategy for beginners. The strategy will allow you to grow your capital slowly but sure. The idea is to ensure you do not burn yourself out before you even start trading. As a beginner, you may not have enough experience to interpret the charts correctly. You have to wait for the right moment to strike.

For instance, let’s take the case presented in the chart below. It is a perfect case to use the ZigZag’s two last points. You then draw a Fibonacci in between them guided by the trend.

You draw your Fibo line from point one to point two for a descending trend and vice versa for a rising trend. Therefore, the target is 161.8 projection level.

A fully valid signal should have a retracement of between 50-88.6. The higher the retracement climbs, the stronger the signal gets. In the instance depicted by the photo above, the retracement occurs close to the number 2 on the top left corner.

To give yourself the best chance, you need to be patient until all the 3 factors coincide. Follow the following rules when making your judgments.

  • Wait until the Fibonacci projection reaches level 161.8
  • Wait until the value of the chart is 8 or more
  • The expiry times should be between 5 and 20 minutes

You the employ money management strategies to minimize risks, or scale up your profits. Notice the duration involved here is a bit long (not very long because you can engage in trades running for months). As mentioned in the beginning, you only need 1 or 2 trades in a day. If you win the first, I’d suggest you don’t try another. This strategy will allow you to avoid losing your capital as you experiment and learn.

Semi-Conservative Strategy

You probably already guessed how this one goes. It’s just an upgrade of trade aggressiveness from that exhibited in the conservative strategy above. The durations are shorter and make more trades per day. You kick it up a notch higher when you start getting comfortable with your predictions. Strategies help you get rid of emotions while trading.

A lot of the aspects of the semi-conservative strategy are quite similar to those of the conservative strategy above. There are a few differences though.

  • You can trade at either, 161. 8 or 127.
  • The price needs to be in the red zone
  • Place 4-6 trades in a day. We suggest you don’t go all the way to six when you have won three trades.
  • You should not trade for more than 6 minutes with level 127. Normally, level 127 is a consolidation level where buyers all sellers are drawn to the trend to increase liquidity. The price usually continues in the direction of the trend for the next three candles. A 5 min binary options trading strategy is your best bet here.

Remember to employ money management strategies. If you get it right, your capital should grow a bit faster than in the conservative strategies.

Aggressive Strategy

This is a high risk, high returns strategy. We suggest you have a clear understanding of what you are doing before trying this. It is prudent that you be patient and grow your capital with the semi-conservative strategy, to a point where you are trading with profits.

If you carefully look at the photo below, you will notice it has 9 price cycles.

Now, replace the zigzag indicator parameters with 2,1,1. Notice you can count over 41 short-term cycles. Yes, this is a short-term strategy with the potential to increase your money fast, but it has high risks. Every price cycle is a Fibonacci sequence with a high low retracement projection reverse. Take a look at the image below.

  • The Fibonacci line, drawn in light blue, is drawn from point 1 to point 2. The 1 and 2 points represent high and low respectively. All you need is to wait for the retracement, which can occur either as a wick, or a full candle. Notice the white box marked 3 and the green candle underneath it.
  • Be keen on the trend and get ready for a signal when the retracement candle is accompanied by a red candle in the same direction as the trend.
  • The adjacent red candle closes underneath the open of the green retracement candle, though it does not go to the value chart level 6. It does not go to the regression channels inner band either. Take this as the first breakout candle. It is marked by a blue rectangle. Enter PUT for 10 seconds before this candle closes. Note that the next candle will be bearish, with a probability of 90%. The PUT action is marked with 3 PUT on the chart.
  • The next candle will close under the 100 Fibonacci level, although it does not reach the 127 level. This means it terminated under the low point of the current trend. Enter another PUT 10 seconds before the candle shuts, since it will be accompanied by a bearish candle or even 2-3 bearish candles. These candles have to reach the Fibonacci level 161.8. The action is marked with 1PUT on the chart.
  • The final bearish candle will hit the Fibonacci level 161.8 and value chart level-8. It will also hit the outline of the red zone. You should now place a CALL

Every price cycle within 3 points has an average of 3ITM trade setups during normal volatility trading circumstances. It is important that you trust your gut too. It is best to ignore a signal and wait for the next one if you feel something is off about it. An experienced trader will be able to strike a balance between being confident and fearful. Too much of either is detrimental. This is arguably the best binary options trading strategy if you can get it right. It is a binary option a powerful short-term trading strategy.

You can learn this steps and rules by heart. Unfortunately, they still do not guarantee winning trades by themselves. That’s where analysis and improvement strategies come in. They come in to improve and boost the trading strategies. If you can successfully combine both trading and analysis strategies to comes up with a robust personal strategy, you will certainly make profits trading in binary options. Let’s dive in an take a look at analysis and improvement strategies.

3) Analysis and Improvement Strategies

Having looked at the money management and trading strategies, let’s explore the analysis and improvement strategies. Up to this point, you will notice that there is still a part where luck is left to take the mantle. You still got to sit back and hope all goes well. The analysis and improvement strategies come to reduce that feeling of worry and uncertainty. Note, not eliminate but significantly reduce. There are three categories of analysis strategies. They are;

  • Overall Performance Strategy
  • Technical Analysis strategy
  • Trend-based strategy

(i) Overall Performance Strategy

The Overall performance strategy concerns itself with the well-being of the company or commodity behind the instrument you choose. As mentioned earlier, it is important for you to be informed about the asset you choose to work with. Whether you are working with stocks, currencies or commodities, you need to know how the physical trade and business happens. These factors culminate in the performance assets performance on the money markets.

This is a great strategy for beginners too. You can conveniently combine it with the conservative long-term trading strategy. Let’s assume you are working with Amazon stocks as the asset. You need to keep up with the general performance of the company. Everything that happens to the company as a far as its operations are concerned will be reflected in the assets trend in the financial markets.

For instance, during the festive season, you expect more sales on Amazon than any other time. You could speculate that the stocks of Amazon will be up in that period. Such generalized speculations are best suited for long-term trades that go up to months long. If you can get access to the financial books of the company, you will be in a better position to speculate on the behavior of the asset in the short term. This strategy should be used as a support strategy, especially for long-term trades. It may be looked at as the binary options news trading strategy too. It may not be of much use if you are an aggressive trader.

(ii) Technical Analysis Strategy

The technical analysis strategy involves analyzing the financial market charts for patterns and using indicators to speculate. The strategy needs you to keep a keen eye for price fluctuations and be able to recall these patterns in the future. Technical analysis can be practiced in two ways. They are;

Patterns

The patterns of the asset you are trading with on the financial chart is arguably one of the most versatile strategies. It can be employed with any of the trading strategies discussed above. Pattern traders spend time documenting the patterns of price movements. If they notice a similar pattern in the future, they can refer to their documentation and predict the movement of the asset. Pattern trading needs you to be very keen as it can be misleading. Pattern trading is a great strategy for newbies too. They can use it as part of their trading strategies. This is where you can employ a 30 min binary options trading strategy.

Indicators

Indicator trading is arguably one of the easiest strategies of trading. You act on the prompts of various indicators developed by industry professionals. Indicators such as MACD, ADX, CCI, and stochastics are used to provide trade signals. However, the indicators are do not work for you. They only prompt you of the possibility of a profitable trade. These indicators are developed using the same strategies as discussed above. You can use them as a reference point after deciding on a certain trade based on your strategy or test their prompts with your strategy.

Binary options brokers normally have these indicators on their platforms. Once the indicator is never enough for you to act on. You need three or more indicators showing the same signal to have better chances of winning a trade. Normally, it quite difficult to have the indicators showing similar signals at similar times. As mentioned, these analysis strategies are supposed to be a support system for your trading strategies. Acting on the prompts of the indicators alone is always a bad idea.

(iii) Trend-based strategy

The Trend-based strategy is a highly technical strategy. It is an advanced binary options trading strategy. It is actually the most analytical of the three categories. The strategy involves keeping in tabs with the trends of the financial market charts. The strategy is almost similar to the trading strategies, only that it is a generalized strategy. The trends-based strategy is very versatile. You can use it with any of the trading strategies. The trends-based strategy is employed using particular analysis software. One of the most popular analysis software of the Trend Channels. The software allows you to draw trend lines over the peak prices of the asset you are working with, which then form the basis of your analysis.

The Trends channels allow you to draw lines of best fit over the most peak points both above and below the chart. These trend lines give you a better picture of the area you are working with at that particular time. The strategy is best suited for aggressive traders. The markets no matter how volatile, do not change abruptly. The trends lines can either form parallel, converging or diverging patterns. The most ideal situation is when they are parallel. It makes it easy to trade.

The concept is simple. You expect the chart to touch one line and turn back towards the other line. All you got to do is master the time it takes from one line to the other. Let’s take that the chart is moving towards the upper line. You wait until it touches and starts moving towards the other line. Place a Put option at that point and select a duration that is not more than two thirds twice the duration taken to move from one end to the other. The assumption is the chart will take the same amount of time to go and come back, you can, therefore, estimate where it will be by the time the trade ends. A 60 min reversal binary options strategy with the trading channel is very common.

Timing is an important skill while employing the Trend-based strategy. You need to be able to match the trade duration and the point at which you place your option. Give the chart some time to confirm the trends lines too. Keep on the lookout for a new line of fit for the peak positions on either side. The trends-based strategy is certainly one of the best binary options strategy.

Conclusion

Evidently, there is a lot you need to do if you have any hopes of becoming a binary options trader. Unlike other binary options trading strategy reviews, we do not sell a notion that it easy to profit trading in binary options. We assert that it is possible, and remain adamant that you should have a strategy up your sleeve. Just to recap what we have been through. You need to practice the money management strategy at all times. Choose your trading strategy depending on how experienced and comfortable you are with the binary options strategy. Finally, choose an appropriate support analysis strategy. We have outlined the 3 binary options trading strategies for beginners.

These combinations mean that different traders have different strategies. The discussed strategies are more like frameworks, of coming up with a strategy. In reiteration, the above information is not a blueprint for making profits on any binary options platform. However, if well implemented we do not see you wouldn’t have a reason to smile. You are the master of your own trading strategy. You have to learn the various guidelines by heart so that you can apply them when the circumstances call for it. After some time, you will find yourself with a robust and winning formula. There are many binary options trading strategy forums that you can visit in a bid to sharpen your skills. You will get useful binary options trading tips and strategies.

What You Need To Know About Binary Options Outside the U.S

What Do You Need To Know About Binary Options Outside the U.S?

Binary options let traders profit from price fluctuations in multiple global markets, but it’s important to understand the risks and rewards of these controversial and often-misunderstood financial instruments. Binary options bear little resemblance to traditional options, featuring different payouts, fees, and risks, as well as a unique liquidity structure and investment process.

Binary options traded outside the U.S. are also structured differently than those available on U.S. exchanges. They offer a viable alternative when speculating or hedging but only if the trader fully understands the two potential and opposing outcomes.

The Financial Industry Regulatory Authority (FINRA) summed up regulator skepticism about these exotic instruments, advising investors “to be particularly wary of non-U.S. companies that offer binary options trading platforms. These include trading applications with names that often imply an easy path to riches.” 

Key Takeaways

  • Binary options have a clear expiration date, time, and strike price.
  • Traders profit from price fluctuations in multiple global markets using binary options, though those traded outside the U.S. are structured differently than those available on U.S. exchanges.
  • Non-U.S. binary options typically have a fixed payout and risk, and are offered by individual brokers rather than directly on an exchange.
  • While typical high-low binary options are the most common type of binary option, international brokers typically offer several other types of binaries as well.

Binary options outside the U.S. are an alternative for speculating or hedging but come with advantages and disadvantages. The positives include a known risk and reward, no commissions, innumerable strike prices, and expiry dates. Negatives include non-ownership of the traded asset, little regulatory oversight, and a winning payout that is usually less than the loss on losing trades.

Understanding Binary Options Outside the U.S

What Are Binary Options?

Binary options are deceptively simple to understand, making them a popular choice for low-skilled traders. The most commonly traded instrument is a high-low or fixed-return option that provides access to stocks, indices, commodities, and foreign exchange.

These options have a clearly stated expiration date, time, and strike price. If a trader wagers correctly on the market’s direction and price at the time of expiration, they are paid a fixed return regardless of how much the instrument has moved since the transaction, while an incorrect wager loses the original investment.

The binary options trader buys a call when bullish on a stock, index, commodity, or currency pair, or a put on those instruments when bearish. For a call to make money, the market must trade above the strike price at the expiration time. For a put to make money, the market must trade below the strike price at the expiration time.

The broker discloses the strike price, expiration date, payout, and risk when the trade is first established. For most high-low binary options traded outside the U.S., the strike price is the current price or rate of the underlying financial product. Therefore, the trader is wagering whether the price on the expiration date will be higher or lower than the current price.

Binary Options Outside the US

Foreign Versus U.S. Binary Options

Non-U.S. binary options typically have a fixed payout and risk and are offered by individual brokers rather than directly on an exchange. These brokers profit from the difference between what they pay out on winning trades and what they collect on losing trades. While there are exceptions, these instruments are supposed to be held until expiration in an “all-or-nothing” payout structure.

Foreign brokers are not legally allowed to solicit U.S. residents unless registered with a U.S. regulatory body such as the Securities and Exchange Commission (SEC) or Commodities Futures Trading Commission (CFTC).

The Chicago Board Options Exchange (CBOE) began listing binary options for U.S. residents in 2008.   The SEC regulates the CBOE, which offers investors increased protection compared to over-the-counter markets. Chicago-based Nadex also runs a binary options exchange for U.S. residents, subject to oversight by the CFTC.

These options can be traded at any time, with the rate fluctuating between one and 100, based on the current probability of the position finishing in or out of the money. There is full transparency at all times and the trader can take the profit or loss they see on their screen prior to expiration.

They can also enter as the rate fluctuates, taking advantage of varying risk-to-reward scenarios, or hold until expiration and close the position with the maximum gain or loss documented at the time of entry. Each trade requires a willing buyer and seller because U.S. binary options trade through an exchange, which makes money through a fee that matches counter-parties.

High-Low Binary Option Example

Your analysis indicates the Standard & Poor’s 500 index will rally for the rest of the trading day and you to buy an index call option. It’s currently trading at 1,800 so you’re wagering the index’s price at expiration will be above that number. Since binary options are available for many time frames—from minutes to months away—you choose an expiration time or date that supports your analysis.

You choose an option that expires in 30 minutes, paying out 70% plus your original stake if the S&P 500 is above 1,800 at that time or you lose the entire stake if the S&P 500 is below 1,800. Minimum and maximum investments vary from broker to broker.

Say you invest $100 in the call that expires in 30 minutes. The S&P 500 price at expiration determines whether you make or lose money. The price at expiration may be the last quoted price, or the (bid + ask)/2. Each binary options broker outlines their own expiration price rules.

In this case, assume the last quote on the S&P 500 before expiration was 1,802. Therefore, you make a $70 profit (or 70% of $100) and maintain your original $100 investment. If the price finished below 1,800, you would lose your original $100 investment.

If the price expires exactly on the strike price, it is common for the trader to receive her/his money back with no profit or loss, although brokers may have different rules. The profit and/or original investment is automatically added to the trader’s account when the position is closed.

Other Types of Binary Options

The example above is for a typical high-low binary option—the most common type of binary option—outside the U.S. International brokers will typically offer several other types of binaries as well.

These include “one-touch” options, where the traded instrument needs to touch the strike price just once before expiration to make money. There is a target above and below the current price, so traders can pick which target they believe will be hit before the expiration date/time.

Meanwhile, a “range” binary option allows traders to select a price range the asset will trade within until expiration. A payout is received if price stays within the range, while the investment is lost if it exits the range.

As competition in the binary options space heats up, brokers are offering additional products that boast 50% to 500% payouts. While product structures and requirements may change, the risk and reward is always known at the trade’s outset, allowing the trader to potentially make more on a position than they lose. Of course, an option offering a 500% payout will be structured in such a way that the probability of winning the payout is very low.

Unlike their U.S. counterparts, some foreign brokers allow traders to exit positions before expiration, but most do not. Exiting a trade before expiration typically results in a lower payout (specified by broker) or small loss, but the trader won’t lose their entire investment.

The Upside and Downside

Risk and reward are known in advance, offering a major advantage. There are only two outcomes: win a fixed amount or lose a fixed amount, and there are generally no commissions or fees. They’re simple to use and there’s only one decision to make: Is the underlying asset going up or down?

In addition, there are also no liquidity concerns because the trader doesn’t own the underlying asset and brokers can offer innumerable strike prices and expiration times/dates, which is an attractive feature. The trader can also access multiple asset classes anytime a market is open somewhere in the world.

On the downside, the reward is always less than the risk when playing high-low binary options. As a result, the trader must be right a high percentage of the time to cover inevitable losses.

While payout and risk fluctuate from broker to broker and instrument to instrument, one thing remains constant: losing trades cost the trader more than they can make on winning trades. Other types of binary options may provide payouts where the reward is potentially greater than the risk but the percentage of winning trades will be lower.

Best Binary Options Brokers 2020:
  • Binarium
    Binarium

    Top Binary Options Broker 2020!
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  • Binomo
    Binomo

    Good Choice For Experienced Traders!

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