A trading strategy is a certain sequence of actions of a trader, allowing him/her to achieve positive results. When looking for binary strategies, you’ll come across thousands of different approaches. Some of them are unknown, while others have been tested by many successful binary traders in South Africa and have been profitable. Before taking the plunge, many professionals study the market, and try out a few strategies to find the “golden egg.”
Binary Options Strategies
But the question is how to find the most effective binary options strategy?
Let’s find out the answer to this question. In any financial market, many experts follow the principle of predicting the direction of price changes with the minimum amount of risks. Experienced traders don’t use ready-made strategies. They create their own unique trading system, applying one or more simplified approach.
Combining them, and using several trading tools, they get a universal strategy that brings good profit. Well, you may be wondering, it’s simple. But it isn’t!
To determine the direction of the market, professional traders in their systems use a wide range of elements of technical and fundamental analysis.
Binary options traders sometimes have to sort out a dozen strategies to find their own. In this search, they look for several criteria. The strategy should correspond to the trader; it must be convenient, understandable, and give a good income. Here’s an example of an effective binary options strategy.
Many traders recognize five minutes of fortune as a simple, convenient, and effective strategy. The increased interest in it is associated with a high probability of winning, which exceeds 80%. Before applying, the trader must find an asset whose price is steadily moving in one direction, no matter up or down.
Having found an asset, a trader needs to acquire a suitable binary option and wait for the end of trading. The Five Minutes of Fortune trading strategy can be reused multiple times during the day.
This is one example of a binary options strategy. As we’ll move into this article, we’ll give several popular and effective binary options trading strategies. If you are just starting, its best to use a trading strategy that ensures the diversification of capital, as it increases the safety of the funds and the probability of winning. The most active trading strategies follow the principle of taking risks, but in less quantity. Complying it, an experienced trader in each transaction uses no more than 1/10 of his capital.
Best time to trade binary options in South Africa
There is a debate among South African traders, “what is the best time to trade binary options in South Africa?” The answer to this question lies in the concept of trading sessions.
Trading is done 24 hours a day, five days a week. As you know, the Earth is round, and this allows financial institutions on different continents to trade around the clock.
Thus, when traders in Australia go to bed, traders in Europe wake up. This is why many traders say that the market never sleeps. There are four trading sessions:
Many traders get confused that you can only trade forex binary options pairs at a certain time. Who said that during the American session, you would not have a good signal for binary options on EUR / JPY? It’s a hoax surrounding the binary options trading. It is worth mentioning that when considering time, we should also ponder on volatility. Volatility is the change in price per unit time. It has three types:
It is a time when the market is not suitable for trading. There is a conflict between buying and selling, and the market is in a downtrend. Low volatility is observed in the Pacific (11 pm to 8 am South African time) and Asian (1 am to 10 am) sessions. This is because the market does not have large volumes of money. Even though Chinese and Japanese markets are open in the Asian session, normal volatility begins to appear closer to the European session (9 am to 6 pm).
This is a time when the markets are neither going up nor down. They are in a balanced state. Such volatility appears during the trading sessions of Asia and Europe and Europe and America (2 pm to 11 pm) because markets of different continents are open at the same time.
High volatility occurs when important economic events and news about crises, wars, sanctions releases. Trading at such moments is not recommended, because the market behaves unpredictably and impulsively. Besides volatility, South African traders need to understand the concept of days of the week. Mondays and Fridays are not considered the best days for trading, as there is a chance of high volatility. So, Tuesdays, Wednesdays, and Thursdays are good options for South African traders.
If we summarize trading sessions, volatility, and days, there isn’t one particular time for binary options trading in South Africa. But we can advise to avoid low volatility, monitor the charts, and keep up with the news.
Binary trading strategies for beginners
We mentioned the Five Minutes of Fortune trading strategy earlier. It is a good strategy for all levels of traders. But many people are inquisitive about finding binary trading strategies for beginners.
As a beginner, you don’t want to complicate your trading. The simple approaches are the most effective. Here we’ll give you two of the best binary trading strategies that you can apply in your trading as a beginner.
- Three in a Row
The “Three in a row” strategy is based on the three most popular indicators; MA, Stochastic, and RSI. When used correctly, these indicators give a high percentage of correct and free binary trading signals for binary options and be excellent filters for each other.
Parameters of indicators
For MA, Stochastic, and RSI, the parameters should be:
- MA (5),
- MA (10),
- Stochastic (14, 3, 3),
- RSI (14).
The strategy is suitable for all timeframes. Naturally, the older we take the timeframe, the more accurate the result.
Signals for Three in a Row
Conditions for “call” option:
- MA 5 crosses MA 10 from bottom to top,
- RSI is inside channel 30-70,
- RSI above level 50,
- Stochastic lines are in channel 20-80,
- Stochastic lines are directed up
Conditions for “put” option:
- MA 5 crosses MA 10 from top to bottom,
- RSI is inside channel 70-30,
- RSI below level 50,
- Stochastic lines are in channel 80-20,
- Stochastic lines are directed down.
- Spring strategy
Spring is a reversal trading strategy, which means you have to go against the trend to get profits. For reversal binary trading South Africa strategies, it is important to choose the correct parameters of the indicators. Many people recommend the default settings for the indicators, but for Spring reversal, you need to change its settings to filter out the false signals.
The 3 indicators used in this strategy are:
- CCI (commodity channel index) with parameters 200 and -200
- Stochastic Oscillator with parameters 5.3.3.
- Bollinger bands with standard parameters.
Conditions for “call” option:
- CCI returns from zone -200
- The graph is below the lower Bollinger band
- Stochastic crosses in the oversold zone (below 20)
- Apply “call” 2 candles ahead
Condition for “put” option:
- CCI returns from zone 200
- The graph is above the upper Bollinger band
- Stochastic crosses overbought (above 80)
- Apply “put” 2 candles ahead
The timeframe for the binary options strategy for beginners “Spring” is starting from 5 minutes. The higher the time frame you choose, the more accurate signals for binary options you will receive. If you are familiar with trading charts, applying these strategies will be a walk in the park.
Binary options trading strategy
Binary options trading is all about profits. Each trader tries to enter the market to find profitable trades. But often, traders went into this fantasy world of profits. They don’t know how to find the right path for earnings. For profits, you need a solid binary options trading strategy. As we already mentioned in the previous section, strategies for beginners. Here we’ll discuss what the different types of strategies available for binary options are.
1. Trending strategies
Trending strategies are applied when there is a trend in the market (chart rises and falls for a long time). They are the most profitable and least risky. The most common trend strategies are:
- Three in a row
- Trend Control
- Triple Screen
2. Reversal strategies
Reversal strategies are used when the market is overcrowded by sellers or buyers (the price of an asset is very high or low). Reversal strategies often make a profit in situations where the chart is near strong support and resistance levels. Common reversal strategies are:
- Hubba Hubba’s style
3. Long term strategies
Long-term strategies are the most accurate and realistic strategies for binary options, as they are less susceptible to market noise (temporary minor price fluctuations). Long term strategies include:
- Three in a row
4. Short term strategies
Short-term strategies are for turbo options with expiration from 60 seconds to 5 minutes. To use these strategies, you need a lot of experience. Short-term involves a high degree of risk and high-profit due to a large number of transactions. Popular short term strategies are:
- Marathon or 60 seconds
- Hubba Hubba’s style
5. Drain strategies
This is another group of binary trading strategies that involve high-risk. Drain strategies work similarly to a casino. The idea is to generate profits one time for every losing trades. As the name suggests, drain strategies can drain your funds in no time. So, don’t try these strategies if you don’t know about them. A robust binary options strategy should not consist of indicators alone. To start earning stably, you must remember the following factors:
- Risk management
- Fundamental analysis (analysis of news, reports, fundamental factors of the economy)
- Price Action analysis (analysis of candlestick patterns and graphic patterns)
- Volume analysis (analysis of the behaviour of large players)
Combined with any of the strategies mentioned above, these factors can bring large profits in binary options trading.
Best binary options strategies that work
We gave a detailed review of the types of trading strategies in the previous section. Now let’s give you the best strategies that work.
1. Marathon or 60 seconds Strategy
60 seconds is a popular short-term trading strategy. The main idea of this strategy is to double your capital in 60 seconds. “Sounds too good to be true?” Believe it or not, this strategy works perfectly. To implement this strategy, you need two indictors; MA and MACD.
Open your MT4 platform and see the direction of any currency pair or an asset trend.
Marathon Strategy Signal for Put options:
- The chart below line MA 9,
- The intersection of two MACD lines from top to bottom.
Marathon Strategy Signal for call options:
- Chart above line MA 9,
- The intersection of two MACD lines from the bottom up.
To make sure that we have a trend, and not just normal market noise, we move the chart away and see how long this trend continued. Next, we impose MA 9 to track the trend. If the trend is growing, the chart should be above the MA line, i.e., higher than the average price in the last 9 minutes. If the trend falls, the chart should be below the MA line, i.e., lower than the average price in the last 9 minutes.
We will catch a specific point at the intersection of the MACD. You can look at the histogram and wait until it crosses the 0 marks. We prefer to bet on the intersection of the baseline with the signal line. Thus, we find the optimal entry point and comply with all the rules of trend trading. This is a simple yet effective trading strategy.
2. Trinity Strategy
The Trinity system is based on three indicators: RSI, MA, MACD. It is considered a proven binary options trading strategy. If you are a fan of trend trading, the trinity is your best bet. The parameters for indicators are:
- MA with a period of 10
- MACD with standard parameters
- RSI with standard parameters
To filter false signals, we use MA and MACD.
Trinity Strategy Signals for “call” option
- The RSI indicator crosses the line from the bottom with a mark of 50
- MACD lines intersect below 0
- The graph is above the MA line with a period of 10
- We buy a call option until the end of the candle
Trinity Strategy Signals for “put” option
- The RSI indicator crosses the line from top to bottom with a mark of 50
- MACD lines intersect above 0
- The graph is below the MA line with a period of 10
- We buy a put option until the end of the candle.
No doubt, the trinity system is a binary options trading strategy that works best. But we recommend you to try this strategy on the demo account.
When you look at the financial market and you have plans to participate and trade binary options, then it requires from traders to have enough trading knowledge to know how to use specific strategies when trading with a chosen trade option, short term or long term.
Traders can choose among many trading strategies, ranging from those that are mostly used by traders beginners or those that require certain trading skills and are intended for experienced traders.
In the industry of binary options, strategies are considered to be in the topmost important elements of binary options trading.
With well-chosen strategies, it is possible to maximize profit and achieve success, whether we are talking about short terms strategies or other types, offered on various trading platforms. We always advise our readers to evaluate many trading strategies and understand them in order to benefit from them in the trading process.
Binary options strategy South Africa
As binary options have become popular, many South Africans want to ride the train. They are looking for ways to find the perfect strategy. We already mentioned some of the best trading strategies. Now, we’ll describe what South Africans need to do for the profitable binary options strategy.
Gain binary options strategy Knowledge
As we all know, knowledge is power. For any South African searching for a strategy, they have to learn how binary trading works.
You have to know about technical analysis, understand the reasons for price movements, and read charts. Without this, binary options trading becomes a casino.
Choosing a broker affects the outcome of your chosen binary options strategy
The choice of a reliable broker is like getting closer to your perfect strategy. To select the best brokerage firm, look for
- Trading Conditions
- Minimum deposits
- Customer service
Some of the notable brokers in South Africa are:
The importance of Risk Management in Binary options strategies
This is one of the most important factors that every South African need to consider. Money management is how you can avoid losses.
The rule is not to risk more than 5% of the deposit in each transaction.
If you apply risk management in each transaction, 6 out of 10 transactions will be enough to bring a stable profit.
How to implement binary options trading strategies?
To apply strategies, you have to master trading charts. If you don’t have any idea, the easiest way to learn charts is through a demo account. Most brokers provide demo accounts for free. After that, all you need to do is find the necessary indicators and try out a few strategies.
When a signal appears, you need to buy call or put option.
When buying a CALL option (if the price goes up) or PUT (the price goes down), your decision must be based on trading signals. Such signals can provide a trading strategy.
Remember, there is no need to search the Internet for complex systems and pay a lot of money for them, as a rule, the simpler the strategy, the better it works.
If the currency pair (or other assets) is in trend, the strategies, based on a combination of moving averages, are perfect.
During the flat (the price is in horizontal movement), you can use the well-known indicator Bollinger Bands (with standard settings).
As a South African, you need to remember these points if you want to find profitable binary strategies.
Technical Analysis as an important binary options trading strategy tool
Technical analysis is often used in the binary options industry primarily because it is based on financial charts. A key element of successful trading with a focus on technical analysis is having more knowledge regarding binary trading signals. If traders wish to achieve high returns, they should be able to identify the market trend and stay on the right track.
Trading on technical strategy can be awarding for traders in South Africa if it is used properly. A lot of traders depend upon the technical analysis. This is the analysis of the asset prices in order to find out about the future movement of the market. It is not something very easy, but if you are capable to do that, then you will be able to guess better. Your prediction will translate into better earning and more money.
There are a few types of technical analysis available for the help of the traders and you are about to discover about them.
Trend following is the type of technical analysis where the historical trend is followed to find out about the trend of the market. It is thought that if the historical movement if the market can be read properly, understanding the present market will become a lot easier. Your prediction will have more depth and more confidence.
Momentum in technical analysis is also known as the moving average convergence divergence. Under this method, the price of the asset is determined by the parent of its rising and falling within a certain time period. It can be a long time or a short time. Both the ways, you will have an average reading of the market which will help you to guess about the price movement better.
Mean reversion is the type of technical analysis where the mean of assets rather the price of an asset is identified. If you are having problem in understanding then a little explanation will make things simpler. The price of an asset is rising and falling all the time, so there is a need to find out the mean and if the price is going to settle down by that point. This one will help you to find out a strong point based on which you can anticipate better.
Pattern recognition is the type of technical analysis which will help you to recognize a pattern among the current trend. If a pattern can be identified, then it will become easier for the trader to make his prediction better and take more risks.
Combining Fundamental Analysis with Binary Options Trading Strategies
Besides technical analysis, fundamental analysis is also considered to be very significant in binary options trading. It works on the principle that it evaluates all important factors that can influence the price, both internal and external. Those factors include data, ranging from company information to the big global market events. Some events affect asset price more intensely than with some other underlying assets.
For traders, it can be difficult to monitor and follow all the time all relevant market news in real-time. However, it is recommended for traders to choose an asset and focus on one and use specific trading strategies to achieve success while trading binary options.
Environment and Fundamental analysis
A lot of underlying assets, such as corn, wheat, soya, oil etc can be at large extent exposed to market changes, influenced by different natural events, such as floods, earthquakes, hurricanes and other disasters. So in case of a flood, there will occur issue with wheat, let’s say. It will result in supply shortage and therefore, the price of wheat will be higher than before the flood. It is pure supply and demand. Some natural events is easier to predict while others are more difficult which can finally result with big market trends and instability of a particular asset. Environmental disasters can have a large impact on a wide range of assets and change the current trend without having time to prepare yourself for the upcoming events.
Politics and Fundamental analysis
When you participate in the financial market, politics can largely influence the price directions of a particular asset. These political events can include war or a sudden change that happened. Changes in governments of some countries can also influence in price movement of a certain asset; stock, currency, commodity or index. All these elements have to be taken into consideration before placing a trade because the market situation can happen at any moment and traders should be aware of that fact. This is why traders should read market news and try to predict will a particular asset be more or less affected on the financial market.
Economic data-based Fundamental analysis
Besides natural and economic events, the release of different economic data can also influence the price movement of a particular underlying asset. Different data, released from companies and governments have a wide range of importance levels for traders in the binary options industry. In a situation like this, traders in South Africa mostly use the economic calendar to keep on track all relevant economic and financial data, that are being used in the trading process. A good quality economic calendar will provide traders with a complete review of the economic data release. Most significant data include GDP, unemployment and interest rate. GDP stands for Gross Domestic Product and it is known as a key indicator of economic health. GDP measures the total value of goods and services on a national level.
As one of the key indicators of fundamental analysis in binary options trading, unemployment can show exactly how good or bad and economy can be. It only requires to monitor unemployment rates to get the bigger picture of a particular economy. For example, economies who have low unemployment rate are doing very well, but their companies can face a crisis and stop hiring people. This is seen as a poor sign for this one economy. Once again, the economic calendar can be of great help and will provide you with the latest information on important market events. This is especially useful for traders beginners who can use the economic calendar to turn their trading process in profitable binary options trading that can assist traders to maximize profit when trading binary options. Fundamental analysis can be of great assistance during the trading process.