5 Best Trading Strategies in Binary Options

1. Trend Strategy

Undeniably, price trends always bring invaluable potential. Both at spot forex and binary options, many trends are rated as the most ideal conditions for entry. Although binary options no longer take into account the large price movements to weigh profits, open options when trending prices are strongly preferred. This is because trends can make it easier for you to analyze the direction of price movements. If the trend continues, you can more easily take the "Higher" or "Lower" option more convincingly.

Because of the advantages above, many binary options traders choose trend strategies, both beginners and experienced ones. The indicators that are popularly used in this strategy are MA (Moving Averages) and trend line. Generally, trend follower traders will look for forwarding signals, while those who like to go against the flow, are more looking for a reversal signal.

2. Pin Bar Strategy

This strategy relies on the pin bar, which is a candle with a small body and a long axis that exceeds the body size. A pin bar is one reversal signal that is believed by many traders. Whether as a main indicator or just a confirmation, the appearance of pin bars is always considered important.

A longer pin bar axis can be taken as a guide to predicting where the price will turn. For example, a pin bar whose long axis is located at the bottom of the candle is called a Bullish pin bar. If this pin bar occurs after a bearish candle has occurred, then the pattern can be a signal that the price will turn bullish.

3. Hedging Strategy

In binary options, using a hedging strategy can be more flexible, because binary options brokers generally do not prohibit traders from placing the opposite option on an instrument at the same time. Because of this convenience, you can maximize hedging opportunities better.

The main purpose of hedging is actually to anticipate losses from options that will end out-of-the-money. So if you have the "Higher" option that will end in 5 minutes, but the price is still moving in a strong bearish sentiment, you can open a new "Lower" option to compensate for the potential loss from the first position. But before implementing this strategy, it's good to learn to understand the risk of hedging first. Even though it looks effective on the outside, hedging users who are less than optimal can actually double the risk of loss

4. Risk Reversal Strategy

Similar to a hedging strategy, risk reversal is also the method that is run by opening 2 "Higher" and "Lower" options at the same time. The difference is that the risk reversal goal here is not only to minimize risk, but also to make new profits. Then, how?

If you have learned how to hedge, then you will have no trouble trying a risk reversal strategy. There is not much difference in how the two strategies are implemented. For risk reversals, you only need to place a different amount of capital in the 2 options that you open. Most of the capital you place on the option that you believe will work best. So, even though one option will end out-of-the-money, there will still be profits that you win here

5. Straddle's strategy

Straddle strategy is still related to the placement of "Higher" and "Lower" options simultaneously. Here, there is an emphasis on price conditions and ways of analysis that can help you find potential levels for entry options. Basically, straddle focuses on support and resistance as a price barrier that sets the "Higher" and "Lower" areas. Overbought and oversold levels on the oscillator indicator can also be used as potential entry areas.

In the picture above, it appears that the open points "Higher" and "Lower" have been adjusted to the RSI chart which had reached overbought and oversold. You can take advantage of such opportunities by adjusting expiry time so that both options end at the same time. If you succeed, profit is not only obtained from one option, but the two options will equally generate profit.

It should be noted that determining expiry time is the key to straddle strategy. This is because you will not be able to profit if your new 2 options are closed when the price has broken through one of the support or resistance limits. For that reason, setting a valid price range and market conditions with stable volatility is needed, so you can be more sure that the price will remain within the range when your two options expire.

That's the 5 best strategies for trading, if it's still unclear please visit our channel and find more tricks and strategies in trading.