Price action is a commonly used binary options strategy. It is popular because it involves very little research, and you can make judgment calls based upon chart observations alone. This is a great method for those that are putting together short term trades of five minutes in length or less because it allows you to […]
Following the Trend to Win
One of the simplest and most profitable of all binary options strategies is the trend following strategy. Any experienced will quickly tell you that the most profitable trade opportunities arise when asset prices are trending in either direction for a period of time. Long-lived trends will present a plethora of opportunities, especially for those who use short expiry time periods.
In order to trade with the trend, one must first be able to identify it. This can be done using a basic price chart that shows not only the current asset price movement, but also past price movement. Most binary options brokers do provide such a chart, but these are usually quite basic. Feel free to use more advanced charts after you’ve gained some experience and can correctly identify price movement within them.
Within basic charts, price movement is drawn with a line, moving up and down the chart along with the actual price movement. Whenever this line is primarily moving up or down for a period of time, a trend is taking place. For an upward moving trend, you’d select a Call position for your binary options trade. For a downward moving trend, the correct selection would be Put. The asset time selection is important, as some trends are quite short-lived. If you fear that the trend will cease before the trade wraps up, opt for a short-term expiry such as 60 seconds.
Not all trends are solid, meaning that small pullbacks in the asset price can occur along the way. This is normal and should be nothing to fear so long as you have confirmed that the price has been moving in the same general direction for a period of time. When viewing your price chart, it should be easy to see just how many pullbacks have occurred over a period of time, along with just how far the price retracted. If the asset price is simply too erratic at the time you’d like to trade, consider other options instead.
Keep in mind that opportunities often present themselves when a price trend ends and then reverses. Just as the asset price moved in one direction for a period of time, it can easily move back in the other as it tries to push back towards its comfort zone. When trading binary options, you’re in the unique position to be able to profit from any type of price movement so long as you’ve learned how to gauge upcoming market movements with some degree of accuracy.
Trend trading is something that all traders should be doing. There will never a better time to profit form binary options than when price movement becomes highly predictable. Be sure to keep an eye on market news and reports each day. This information will tell you exactly which assets to take a closer look at. When you spot a solid trend, trade. Most modern brokers provide at least one-hundred different underlying assets to select from, a fact which means that profit opportunities should never be limited.