Contents
Introduction..........................................................................................................................................3
Demystifying Binary Options.................................................................................................................3
Strategy 1 – Economic Newsfeed..........................................................................................................4
Strategy 2 – Waves and Straddles.........................................................................................................5
Strategy 3 – Machismo Trading............................................................................................................6
Strategy 4 - Corrective Strategy............................................................................................................7
Strategy 5 - Retraction .........................................................................................................................8
Introduction
Thank you for downloading this report, which we hope will help establish a stable and profitable
trading path for you, both now and in the years to come. We have reviewed many strategies and
have filtered the list down to the ones that best fit binary options trading.
Of course, a tried and tested strategy is not the only requirement for successful trading. Having the
best tools, the most appropriate brokerage relationships and the ability to remain disciplined while
executing the strategy are also critically important. We hope you will find this guide stimulating and
informative, and we wish you every success in your trading career!
This is an abbreviated version of our full report “The Magnificent Seven”.
Get your copy for free by visiting http://binoptional.com/hello.html
DISCLAIMER: it is possible to lose as well as gain trading binary options! This guide is for
information only. The author and publisher accept no responsibility for decisions made by users of
these strategies, nor any consequences of those decisions. You should seek financial advice before
deciding to trade binary options.
Demystifying Binary Options
Binary options provide a way to engage in financial asset trading, and, as their name suggests, they
are binary in nature – ie they only allow for one of two outcomes: win or lose. If you lose, you lose
the entire amount of your investment, while if you win, then you gain a further profit percentage as
a result. The percentage gain is normally very high compared with conventional investments,
typically 70% or more. Herein lies the attraction of binary options: in a short period of time it is
possible to make gains of up to 81% without having to provide a large capital outlay. Trading is
possible 24/7 and there is usually no commission to pay on profits
In the rest of this report we will outline the principles behind the best strategies. Always
remember that the market comprises traders like you, applying their own ideas and strategies.
You need to be aware of how they may be thinking even if you don’t apply the same strategy
yourself.
To help you choose the strategies that might work best for you, we’ve ranked them with two
indicators: Skill Level (1 – 5) and Risk Level (1 – 5) where 1 is low and 5 is high in both cases.
Strategy 1 – Economic Newsfeed
SKILL LEVEL: 3 – 4
RISK LEVEL: 3
No doubt you’ve seen the daily news outlining some announcement of an economic indicator that
has panicked the markets, and all hell breaks loose. This strategy makes use of the fact that the
timing of such news is well known in advance, even if the content of the news is unknown until it’s
released.
The types of events that can trigger market movement include National Interest Rate
announcements, US Trade Balance, US Non-Farm Payroll and so on.
The release dates and times of major announcements are well-known – consult your Forex broker
for an economic calendar that shows when they’re due, or consult Google.
We should stress that you don’t need to understand all the ins and outs of the content of these
economic news releases (although the
more you understand the better you’ll
be able to predict market behavior) –
you’re just going to use the event as an
opportunity to trade.
The greater the volatility in the market,
the higher the chances for good profits.
The trick is to recognize that just ahead
of a major announcement, the market
tends to quieten down and stabilize.
During this period trading is operating
between a ceiling of high resistance and
a floor of support, and usually in a
narrow range. As a breakout happens,
there is then an expectation of a surge of
momentum that continues for a while
during which trading can be lucrative
because the momentum provides a
measure of relative certainty about
which way prices are moving.
The strategy is hence implemented as follows:
1. Select an appropriate newsfeed release using the calendar
2. Select a related currency pair that is trading within an easily- identified range ahead of the
release. Make sure you can see the floor and ceiling of the trading range
3. Once the prices surges 10 pips above the ceiling, or 10 pips below the floor, execute a 60
second CALL or PUT binary option respectively on this binary pair.
4. Be aware that pricing can oscillate wildly during such times so be vigilant in your trading
decisions.
Please be careful that you are timing your trades to coincide with the timing of the news
announcement in its own timezone. Get this wrong and you will likely go badly astray!
Finally, even if you don’t adopt this strategy, it’s wise to remain vigilant regarding the impact
newsfeed announcements can have on price movements. Your careful plans could come unstuck if
there’s a destabilizing announcement just as you make your move.
Strategy 2 – Waves and Straddles
SKILL LEVEL: 2-3
RISK LEVEL: 3
The wave or straddle-based strategy adopts the assumption that price changes follow a wave-like
pattern with a series of crests and troughs, each of which signifies a fundamental change in trend.
They work best when there is comparatively little volatility to interfere with the pattern of repeating
waves.
This is possibly the simplest strategy to understand since the idea is simply to identify a price trend
reversal and then PUT or CALL binary options in line with the new trend. Hence if the price has
rebounded against a price ceiling and heading downwards, execute a PUT option, and vice versa if
the price is trending upwards. Clearly to master this requires the ceiling and floor to be identified
along with a new rebounding price trend.
The steps to executing this approach are as follows:
1. Identify a suitable asset whose price is trading within a well-defined range and which has
been doing so for some time. Make sure you can identify the trading floor and ceiling
against which the price has rebounded several times. You should look at trading charts that
track movements over several weeks.
2. In line with the advice in the Newsfeed strategy, make sure that NO news is expected
around the time you will be anticipating trading. It would be disastrous to accidentally
neglect a news item that sends the market for your chosen asset into turbulence!
3. Wait for the next bounce, and then confirm by checking that the next candlestick closes
above the identified floor, or below the ceiling.
4. If all is good, open a trade, by executing CALL or PUT options if the price is rising or falling
respectively.
Strategy 3 – Machismo Trading
SKILL LEVEL: 5
RISK LEVEL: 5
This approach is for one-touch binary options and adopts a more aggressive style of trading which
may not be suitable for everyone. Nevertheless it can prove very lucrative when executed with
confidence, and works best when there are high levels of volatility. Because the risk is high, this
approach is definitely one for those with more experience and with a temperament to match.
The approach is simple: with a one touch binary option you are forecasting that the option asset will
attain a given value within a given length of time. If the value is attained at any point during the
option period, you are in the money. If not, you will lose your deposit. If the target is higher than the
starting price, then you would instigate a CALL one-touch option, and if the target is lower, then a
PUT option. The return on the option is determined by how close or far away the target is from the
opening price.
Of course, your judgment about the likelihood of a price attaining your target will be informed by
many factors. For example, you may consider, because of world events, that the euro will continue
to weaken against the US dollar. In this case you may consider placing a PUT one-touch binary
option against the EUR/USD. Trading is normally possible during the trading day or even over the
weekend and your broker will provide a range of one-touch options for consideration.
The steps to implementing this strategy are as follows:
1. Identify an asset that is displaying volatility
2. Note the target price, the rebate ratio, the payout ratio and the expiry time
3. Place a deposit and initiate either a CALL or PUT one-touch option depending on whether
you think the asset will rise or fall in value
4. Monitor the trade!
Strategy 4 - Corrective Strategy
SKILL LEVEL: 2-3
RISK LEVEL: 3
The corrective strategy applies when an asset undergoes an unexpected surge or drop in price range
and a gap opens up between the trading range before and after. You can easily see when this has
happened when the candlesticks don’t overlap. The opportunity is not in the surge or fall, but later
on when the price trend reverses and starts to move back to the level before the surge (or fall). This
is termed a correction, hence the name of the strategy.
The steps to execute the strategy are as follows:
1. Identify the a gap that has opened up between consecutive candlesticks on the asset’s price
chart
2. Once the price trends back to be inside the gap that opened up, then execute a trade
(a CALL if the price is rising and a PUT if it is falling)
3. Close the trade when the option expires or, if the gap has been filled, explore whether the
trade can completed prematurely. This is to mitigate risk if the expiry time is still some way
away.
Gaps often open up at the start of the trading week, so it’s worth reviewing whether there are any
fundamental reasons why a gap should have opened up before opening a trade. It seems that once
the price moves back into the gap region of price, there is often no support or resistance for it to
continue back into the former trading range, and hence this strategy can be quite profitable once a
suitable gap has been detected.
Strategy 5 - Retraction
SKILL LEVEL: 2-3
RISK LEVEL: 3
Retractions are generally described as temporary price dips within an established price trend or
channel. They are characterized by being an interruption to the trend, as opposed to being a more
serious and longer term reversal. Obviously it is important to be able to recognize the difference
between the two!
Because a retraction is often the result of a minor trading perturbation caused by a small group of
investors taking profits or capping losses for example, they often occur after a previously
experienced large price movement.
The idea then is to look for a minor bounce within a trading channel, and then execute a CALL or
PUT as the price rebounds back into the channel. The trade should be in line with the direction of
the channel. So if the channel is trending upwards, then as the price bounces off the bottom line of
support of the channel, a CALL option should be executed. Note that if the price bounces off the top
line of resistance of an upward pointing channel, a PUT option would not be wise, according to this
strategy because the trade is not in line with the direction of the channel.
The steps to execute this strategy are:
1. Identify a trending channel, either upward or downward, it doesn’t matter which
2. Create the trendlines of the channel by connecting the recent highs with a line and the
recent lows. The trendlines should be approximately parallel.
3. After a bounce, confirm that the price has trended back into the channel in line with the
direction of the channel (see comment above)
4. Then execute a 60 second option, PUT or CALL depending on whether the price trend is up
or down respectively.
The key to making this strategy successful is being able to identify stable trendlines. If such trends
are not immediately clear with a particular trading asset, it’s better to move on and look at other
assets or strategies.
This is where this Slideshare download finishes- thanks for reading!
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resources, please visit the following link:
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