Have you tried making money in binary Option without good result in the past (even currently)? If yes, I share the same feeling you have. Some of us like you have tried different techniques or strategies but things seem not to be working in our favor. I understand you perfectly. I have been there. I struggled for 5 years in trying to get the best strategy in trading options with no positive result. I did not give up. At one point I started making some money and then I lose it back to the broker.
If the above story I am sharing sound familiar with yours, definitely, this post shall be interesting to you because I am about to share some tips that can save you time and money. First thing first, let’s understand what binary options are.
1. What is Binary Options?
A binary option is a financial exotic option in which the payoff is either some fixed monetary amount or nothing at all. In other words, in binary Option, you know what you are about to lose or about to win in a fix period of time.
Example: If the payout for an asset is 80%, and you use 1 min expiration time then us 10 dollars for the trade. You either win 8 dollar or lose the 10 dollars after the 1 min expiration time.
2. Binary Options Brokers
They are many out there. We have PocketOptions, Quotex, BinaryCent, IQOption etc … but my Favorite is POcketOption because of they have multiple asset, higher payout, multiple means for deposit and withdrawal, fast withdrawal (some even instant). Many traders out there use PocketOptions for the same reason stated above. I highly recommend this broker.
Now back to the main reason we are on this page that is knowing how to trade.
3. How to make money in trading Binary Options
There are multiple factors that can help you win in Binary Options. Let’s have that one in our head. It is not limited to the strategies alone. To win in Binary Options, you need the combination of Good strategies, Risk management and have the right trading psychology.
Let’s take them one after the other and elaborate on each one of them.
4. Having a good strategy
To win in Binary options, you need to have a good strategy otherwise you are just gambling and will soon lose in the long run. We don’t want to gamble rather we want to have a plan, a winning plan.
There are many strategies you can use but let’s ,me simplify things for you. You don’t need all of them to win. Have one or two that work best for you. My two favorite strategies are Trends and Support/resistance.
5. First strategy – The trends (Identification)
This is my favorite, it gives me 60-80% winning rate. What is a trend? In simple terms, it is the overall direction of the market. It is either an up trend or a down trends. Some time, the market is not really going up nor does it go down. At this point, we say it is consolidating. Avoid trading during consolidation just follow the trend.
Following the trend is one of the best strategy as professional traders would say, “trend is your friend”.
How do we identify the trend?
Below are the different trends we can have in the market. The first one being the UPTREND, follow by the Consolidation or Sideways then the down trend.
A. Identifying the UP trend.
A common way of detecting a trend is by visual inspection. Spotting consecutive higher tops and higher bottoms will indicate an uptrend.
B. Identifying the down trend
A common way of detecting a trend is by visual inspection. consecutive lower tops and lower bottoms will indicate a downtrend.
C. Identifying the Sideways or consolidating trend
A sideways trend is the horizontal price movement that occurs when the forces of supply and demand are nearly equal.
My favorite way of identifying the trend is using two indicators which are the Zig-Zag and The Moving average. Both indicators are available with PocketOption.
As you can see from the picture below, we can confidently say, we are in an Uptrend. The Zig-Zag indicator showing us that we just ended a down trend and now we are in an Up trend. As for the Moving Average, you see the current price is above the 200MA and 50MA. That is a confirmation that we are in an uptrend. If reverse was the case, then, we would be in a Down Trend.
Now, let’s talk about how to trade the trend.
6. How to trade the trend in Binary Options
Trading the trend is easy once you have identify it. Trading the trend means just following the direction of the trend. If it is an up trend, go with “Higher/Call”. If it is a down trend, go with “Lower/Put”.
Keep in mind, there are Retracements in a trend. Should you trade them as well? Personally I do trade them. It requires some experience though.
Tip: Trade the direction of the Zig-Zag indicator. It is that simple.
7. The Support and Resistance strategy.
Support occurs when falling prices stop, change direction, and begin to rise. Support is often viewed as a “floor” which is supporting, or holding up, prices. Resistance is a price level where rising prices stop, change direction, and begin to fall.
8. How to trade Support and Resistance in Binary Option.
To best explain it to you, let’s use the graph below in PocketOption. As you can see from the picture below, the price is going up and towards the previous resistance. At this point, you don’t use the trend strategy, rather, you use the support and resistance strategy. In this case, we will be anticipating a reverse.
Keep in mind the price can keep going up and break the resistance level. In this case, how do we know if we should click on “put/lower”.
The answer to this is simple. Observe the movement of the candles when it is approaching the resistance level. Is it getting stronger or weaker? Does it still have a strong momentum? What kind of candles is formed when it reaches the resistance level? The answers to the above questions can guide your decision.
Tips: Personally, I look for weak momentum, and inverted Hammer. Try and see if there is a strong rejection at the resistance level. Does the last candle has weak body and long tail? these can guide you as well.
The principles applied at the resistance level is also applicable at the support level.
9. Risk management in Binary Options.
With some practices with the above strategies in a demo account with PocketOption, you will notice that your winning rate will increase if apply correctly.
Do you know that even professional traders don’t have 100% winning rate? According to Forex Academy, most successful forex traders have a win rate of around 50-60%, which means that they win about half of their trades and lose the other half.
Let’s assume your winning rate get to 50%, does that mean if you have 1000 dollars in your account, you can use $100 or $200 per trade? The answer is NO. Also keep in mind, professional traders do have winning days and losing days.
Do you know in Binary options, you can have 20% winning rate and still be in profit? What it means is that, out 10 trades taken, you only win two but still in profit.
Example: Let’s assume you have a trading account of $100,000. On your first trade, you use $100 that is 0.1% of your capital. Base on the calculation in the table below, even if you lose 4 trades and win 1 which is 20% winning rate, you are still in profit. You are still winning $200 ($2000 – $1000 – $500 – $200 – $100 = $200)
| Trades | Payout | lost/win |
|---|---|---|
| 1st Trade — $100 | 80% | $0 |
| 2nd Trade — $200 | 80% | $0 |
| 3rd Trade — $500 | 80% | $0 |
| 4th Trade —- $1000 | 80% | $0 |
| 5thTrade —–$2500 | 80% | $2000 |
Tips: Use a small portion of your account in trading. How much are you willing in a trading section? Ideally, I recommend using 0.1% of your total capital and go up to 4 trades in a section. If you lose all 4 trades, call it a day. Leave trading for that day. Remember, even professional traders do have losing days.
In the next section, we will discuss the psychology of trading.
10. Trading psychology to be a profitable trader.
Most people will agree with me that they do win in demo account but lose in real account? What is the reason? Two things people fail to understand that make them to be losing money is the lack of understanding trading psychology. Imagine having $10,000 in your pocket, you reach the mall to buy something then you realize that while you were on your way to the mall, you lost $1, would you feel the pain as compared to losing $5000?
Losing $1 out of $10,000 won’t affect most people. What is the lesson here? In trading binary options, if you lose $1 out $10,000 account, your emotion would likely be in check.
The second thing people have to understand is that, if you are using $10,000 in demo, do you have $10,000 to fund your account? Fund your demo with what you know you can realistically fund your real account with and apply risk management properly and you will be winning.
11. Best time to trade
There are moments in the day that you shouldn’t trade. I recommend trading the London and New York section because of high volume. You also need to be careful when there is high volatility in the market.
You also need to be careful when there is high volatility in the market. You will notice the price going up and down at high speed. Please avoid those pairs at those times. The market should be calm. The more calm it is, the more predictable and easy it would be for you to trade.
You need to avoid too low volatility markets. That is the time you notice almost no movement of the price. It is hard to predict anything in those markets at those times.
12. Does news affect Binary Options trading?
talking about when to trade, it is important to note that news do affect the market condition if you are trading forex pairs which I recommend.
I recommend working with the news. Basically, where there is an important update in the news, you will notice some volatility in the market. To get those news, head over to Forexfactory.
I would recommend you avoid trading when it is time for news release. From my experience, the market use to be volatile which isn’t ideal for trading.
In the next section, we will be discussing OTC markets. Should you trade it or not, let’s find out.
13. Should I trade OTC market?
This a frequently asked question by my readers. Trading Forex pairs is great just that you have less options as they aren’t many in most cases but overall you can get up to 20 pairs to trade or you aren’t getting the perfect setting to enter a trade and you may want to take a look at the OTC market.
You can trade OTC market but have this question in mind, who determine the price? The big institutions or the price is determine on one single platform? Is EUR/USD OTC is PocketOption same as EUR/USD OTC in Quotex or Olymp Trade or BinaryCent?
It is true you can win some money but keep in mind, you can also lose it back if the broker want to trade against you because remember the price isn’t determine by the financial market. Just be safe.
14. How to get started with Binary Option
You can open a free demo account with pocket Option and start using my tips. If you have questions or need someone to mentor you, feel free to hit us up on 👉 +2347030138408 👈
Conclusion
Trading shouldn’t be hard on a norm. We need a better understanding of the market, have a proper risk management in place and our psychology should be in check and we will be good to go.
If you need someone to guide you in your Binary Options trading journey, feel free to reach out to me. I am not charging you anything. It’s 100% free. Ask questions, I will be glad to answer them time permitting.
Quick recap: Use the trend or support and resistance as strategies, have a good risk management in place. Keep in mind you can have 20% winning rate and still be profitable. Keep your emotions in check by risking less and knowing when to trade and when to quick trading for the day. I am available if you want to talk to a professional binary option trader. Feel free to hit me up on 👉 +2347030138408 👈
