Simple Binary Options Strategies for Newbies

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Simple Strategies for Newbies

Good Day traders,

In this article I am going to say and explain some useful and simple strategies for newbies.If you do your research out there you will find so many strategies which promise fast and sure profit. Their creators describe them as the “holy grail” and many times it needs to subscribe to take a strategy with its indicators without knowing if this strategy really works.Many of them don’t work or they work for short term periods and they don’t have added value in the long term run.From my experience,you can find all these paid strategies for free and finally there isn’t something special about them.Now, I am going to explain you some solid and simple strategies which are based in logic and in reality.

Support and Resistance for puts and calls

The most popular strategy especially for the new traders is “Support and resistance”. You should identify the right spot and you can take call trades in a support area and put trades in a resistance area. How can you identify these areas? There are several ways.One of them is to notice how the price acts in older areas and trying to predict the price movement when the price comes back to these areas.This is the whole value of technical analysis.Predict the future by studying the price behaviour in the past.

In the chart above you can see trading opportunities, puts in the previous resistance and calls in the previous support when the price comes back to test again this area. The best market for this strategy is a ranging market in which S&R keep the price into a channel.In a trending market we have many S&R breaks and this means that here these levels can’t keep the price down or up.

With simple fibonacci levels you can find trading opportunities.The most important fibonacci levels for me is 161.8 , 127 , 61.8 and 78.6. Many times in these levels we have bounces of the price. Also, many harmonic patterns are created by these levels.

Look at this chart. We have leg 1-2 , a down movement of the market.After that we have leg 2-3 an up movement of the market.Many times like this chart, the price makes bounces in levels 161.8 and 127. These are good physical levels for S&R.You can combine them with an Overbought area for puts and an oversold area for calls (with RSI or a value chart) or with previous S&R in these fibonacci levels and you a high probability setup.

How to draw fibonacci?Drag the fibo drawing tool from spot 1 to spot 2 and wait for the price to hit these levels.(spot 3 in this chart)

7 Binary Options

When you make up your mind to being binary options trader you don’t only become a player but mainly you become an investor. You actually invest your real money the same way you could invest it in any other project; only that binary options trading is riskier but also very profitable if done in the right manner. With this in mind, you should get yourself a binary options trading strategy since this is your greatest weapon when it comes to binary options trading.

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There are a variety of binary options trading strategies. For you to succeed, you have to actively learn and use those strategies that you think will make you profits. For beginners, they should start by training with those binary options strategies that are simple to use.

The binary options market is made of a vast and complicated mechanism of the financial market, which operates in accordance to certain regulations and laws.

Below are five binary options trading strategies that are ideal for beginners:

Diversification Strategy

When you choose a certain option when trading binary options, the result of that option depends on the general condition the market and the actual current price of the asset that you are trading. By using a good binary options trading strategy, you can be able to reap big from the options.

As a trader, you should understand that every strategy, even that one that looks to be very promising, isn’t ideal at any one time. Just as it with human trading, binary options trading strategies also make some minor losses from time to time; with the only difference being that the strategies make fewer losses than the human traders and thus the trading strategies make more profits.

But even when using binary options trading strategies, you should never put all your money into one option; rather you should look to see that you divide your capital in a way that enables you to make at least ten investments at a go. This is what is referred to as diversification. Most successful binary options traders always keep Diversification Strategy in mind.

Five Minutes Strategy

This is a very simple strategy, and it is best for beginners with no experience in binary options. Although it doesn’t guarantee to100% of success, according to estimates, it has a success margin that is close to 80%.

The strategy doesn’t really an emphasis on the amount of capital that the beginner deposits. But even with the small amount of deposit, the trader can use this strategy repeatedly in a day, thus increasing the small capital.

The Five Minutes Strategy uses the fact that most binary options brokers allow traders to place options on their farthest extent, which is within 5 minutes before expiration. So, the trader needs to look through the assets in the market and find one that is steady and that has been growing for a long time or, on the other hand, one that has been decreasing. Then the trader should trace its maximum or minimum value depending on the prevailing trend. This value is most likely to be the turning point for the trend.

Martingale

The Martingale Strategy is based on the principle of the Martingale, which is less risky and safe when applying it in trading binary options. The Martingale Principle is based on making doubling the trading amount so as to cater for a previously failed trade. This means that, if a trader loses $150, he or she have to trade again with an amount of $300. If he or she loses $50, he or she puts $100. According to this strategy, a trader should double the trading amount.

However, the success of this strategy purely relies on luck. It is very risky at some point if the subsequent trades turn out to be losses. To reduce the risk of making losses, a trader should look for a currency pair that has a clear upward or downward trend of price movement. Also, traders can use binary options indicators to increase the chances of winning.

15 Minutes Strategy

This strategy simply states that a trader should track assets on the 15 minutes time frame. If there are 3 or more successive candlesticks of the same color, a trader should buy binary option after two minutes hopeful for a rolling back. For example, if a trader sees three successive white candles close, then a new candle opens and it moves in the opposite direction. The trader should wait for 2 minutes and buy Put binary options with an expiration time set at the close of the current candle which is ideally after 13 minutes (meaning 15 minutes of the time frame minus the 2 minutes waiting).

Buying an option is also recommended if the bodies of three similar successful color candles collectively add up to make more than fifteen points.

Triangle

It’s true that there are different types of triangles. However, no matter the type of triangle, they all used to show when a breakthrough price is imminent. For example, there are rising/ascending triangles that foretell an imminent increase in prices and may be a probable breakup. Then there are falling triangles, which on the contrary foreruns a likely price fall. Depending on the kind of triangle, traders can successfully trade to make profits.

During an uptrend, price movements form an ascending triangle. However, to visually see the triangle, a trader has to draw two lines joining the resistance and support level. Resistance line is usually horizontal while the support line is normally located at an angle in an ascending triangle when the trend is rising. For the descending triangle during a downtrend, the support line is usually horizontal while the resistance line is normally inclined at an acute angle.

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The 5×5 Simple Binary Options Trading Strategy

Full Review of the 5×5 Simple System for Binary Options Trading

This is a simple forex strategy that was posted on forex-strategies-revealed.com by Edward Revy. It’s a simple system that only uses two indicators. I like simple strategies that only use a maximum of two indicators. No messy charts, not too many rules to keep on your mind, just as easy as; 1, 2, 3 Trade! Another good thing with choosing a simple strategy is that you can always add another indicator/rule that you like without overwhelming yourself. This strategy uses only an SMA and RSI, both running on period 5. Hence the name 5×5. I tried tweaking the strategy to fit Binary Options trading and I’ve some suggestions on how you can improve it! First, let’s see how it works.

How Does the 5×5 Simple System Work?

This strategy uses only two indicators; 5 SMA and 5 RSI. Add those to your chart and set only a 50 horizontal line for the RSI. We are supposed to use it to monitor a daily chart on any currency. First, a daily candle must cross above/below the 5 SMA. When this candle is closed we have to wait for a new candle (next day candle if it’s a daily chart) to open and move 10+ pips above the previous high or in the case of a put; 10+ pips below the previous day’s low. For calls, our entry is valid only if the RSI is above the 50 line. For put options, our entry is confirmed if the RSI is below the 50 line. Take a look at the following picture:

Some of the valid entries are marked with green circles. The loss (red circle) in the picture could’ve been avoided.
Find out how, keep reading!

Entry Rules

Call Option: Wait for a daily candle to cross above the 5 SMA and close. The next day, the new candle should move 10+ pips over the previous day’s high and you will only enter if RSI is above 50.

Put Option: Wait for a daily candle to cross below the 5 SMA and close. The next day, the new candle should move 10+ pips below the previous day’s low and you will only enter if RSI is below 50.

To avoid more of the losing trades, it is recommended that you trade in the direction of the trend. It is also wise to use support and resistance lines to see whether an important price level is going to hold or not, or produce an otherwise unforeseen hurdle. Keep in mind that discarding non trend following signals would have kept you out of the one losing trade pictured above!

Why Does the 5×5 Simple System Suck?

Yes, I’m with you on this, the waiting is just painful. I have to watch an entire daily candle to close above the SMA only to go and take a nap and come back next day hoping the next daily candle will close 10+ above the previous one and THEN I can trade! I know patience is good but this takes it a bit too far, at least for binary options. Another issue is obviously the fact that once you’ve waited for such big moves to occur you might end up entering just as a retracement is about to take place.
I could add that the strategy ignores the trends but I think it’s up to you to not trade against any trends so it isn’t really a drawback of the system itself.

Why Doesn’t the 5×5 Simple System Suck?

This is a user-friendly, understandable strategy and you can quickly memorize all the rules that you need to follow. If you trade with the trend, the strategy actually gives you good signals in the direction of the trend since it is using a trend identifying indicator (SMA). The RSI is a great tool too and gives the extra confirmation you need. The 5×5 strategy is a good template if you want to add your favorite indicator for improvement.

Start Simple, Finish Advanced!

You don’t need to have a complex strategy with all of the MT4 indicators installed on your charts to make money. In fact, that would be among the stupidest things you could do. Keeping things simple is often the best approach. The 5 SMA and 5 RSI are good enough but I strongly recommend taking my advice on adding support and resistance lines to your charts! This method will improve the 5×5 Simple System and lead to more winning trades. Another tool I can recommend to those of you still not able to draw S/R-lines is the Stochastic Oscillator. It’ll help you find the support and resistance areas much easier. Try it!

Having to wait a day or two just to get a signal might have already scared away a few you out there. Don’t worry, I’ve checked the lower time frames and it looks like we can pull this off with lower expires as well. There’s only one problem; waiting for a 10+ pip move before we enter could mean disaster if we are trading less than 4 hour expires. I know for myself that most of my trades end somewhere between a few pipettes up to, at best 10 pips away from my target before the trend completely reverses on me. So I wouldn’t want to wait that long before entering. Therefore, the next best thing to do is to wait for a candle to close in the direction you want to trade in. Pay attention that in the picture above, using S/R-lines you can clearly see how previous lows have become resistance for the following high. We are still obeying the rules of the 5×5 strategy, the RSI is below 50 for our three puts and candles are beneath the 5 SMA. As a third rule, I’ve added the S/R-lines you see in the picture above. Plenty of confirmation to enter the trades!

Continue talking about the 5X5 Strategy on our forums!

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