One binary options trading strategy that everyone that focuses on currency pairs should be aware of is cherry picking different market times. There are three major marketplaces in which currencies are traded: the Japanese trading day, the European one, and the New York City trading session. By knowing at which points in the day these markets are the most predictable, you can gain a big edge in your trading. There’s also the added bonus that by locking in your most profitable trades at these times, you can make more money per day on average, and work a lot less to get there. Because there are a huge number of Forex traders that bring their knowledge over to the binary options market, this is a must-know strategy for anyone that focuses on currencies.
The trading day can be broken into three segments. The first consists of Tokyo’s trading hours. The second is London’s. And the third is the trading day out of New York City. There is some overlap in these, as well. If you live on the eastern coast of the United States, the Japanese trading day begins at 6 pm and goes until 2 am. The London hours range from 3 am to 11 am, and New York goes from 8am until 4 pm.
The most heavily traded currency pair is the EUR/USD. And during the U.S. and European trading sessions, this is the currency pair that sees the most action by far. The GBP is also traded heavily against both of these currencies during the European session. During the Asian session, the Japanese yen takes the place of the pound in popularity. The dollar is traded heavily throughout all of these.
Basing a strategy on this information is easy from there. If you are trading binary options, momentum is your friend, and you will find that prices are better able to move when the “home” currency is being used. So, if you want momentum on the Japanese yen, then your best bet is to focus on trading it during the Tokyo session.
This is a lot of time to work with, but luckily we can narrow down certain hours that have the most volume on a consistent basis. For example, when the European session first opens up, there has been time between London beginning the day, and Tokyo ending theirs. London action is going to heavily reflect what happened at the end of the day in Tokyo. If this is a strategy that you wish to employ, there is a ton of opportunity at this moment. Right at 3 am eastern, London is going to hit a lot of volume, and it’s likely to be very predictable simply because most of what happens will be in reaction to Tokyo’s day. So, if you are ready at this time, with a thorough knowledge of what went on in Tokyo, then you have a huge advantage. This works in both binary options and the Forex market.
This strategy is more of a larger framework for other strategies to work within. You need to have a good handle on how volume and momentum works, and you need to be able to discern when trades are good, and when you should just stay out of the market. The point of this framework is to help you narrow down when you should trade and when you shouldn’t. If you can’t figure out the last part, this method will hurt you more than help. If there are no good trades during these timeframes, it’s best just to stay out of the market, and that takes some discipline.
This method also assumes that you have a more finely tuned trading strategy that you can use within the bigger framework.
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