There are several tested and proven technical binary options strategies that can be used by traders of all skill levels. Each of these share the commonality of being founded upon the basic principles of trading, with each being used extensively within the industry. The testing of strategies is always advised, but with these methods there should be no need for running extensive tests.
Support and Resistance Strategy
This strategy is quite popular with novice traders due to its high level of simplicity. The purpose of this strategy is to help with determining the current and future price placement and then purchase “Call” contracts when the asset price nears support levels and “Put” contracts when the asset price nears resistance levels. There is more than one way to establish these levels. The most popular would be to note what the levels were in the past and then forecast the upcoming price movement based upon a return to these levels.
Fibonacci levels are an excellent technical tool that can be used to identify the best entry points. Within some levels you’ll notice erratic price movement and can avoid entry at that time. Other times, more stable patterns will develop and point out prime entry points. Price bounces should not be ignored, as they often point out support and resistance levels. They can also expose overbuying and overselling within the markets. To execute this strategy, just connect the two primary levels and then watch for the asset price to touch them before entering into a trade.
Trend Trading Strategy
All binary options traders will trade along with a price trend at some point. This strategy presents less risk because there isn’t any need to forecast the trend in advance. You simply wait for the asset price to start trending and then seek out the best entry points using exponential moving averages. Whenever the prevailing trend is solid, just wait around for the asset price to touch the EMA’s and then trade. If the price starts to fall during a general upward moving trend, exponential moving averages can approximate the level where the price will resume its upward movement. The same applies in reverse for a downward trend with temporary upward price movement.
EMA Crossover Strategy
With this strategy you’ll wait for EMA crossovers and start to trade when a new trend establishes itself. Two EMA’s will be used here, 13-period and 26-period. These should be paired with 5 and 15 minute time-frames. Within a MetaTrader chart, you’d use the Heiken Ashi indicator to filter market noise and steer clear of false signals. If a crossover takes place and the Heiken Ashi bar is red in color, purchase a “Put” contract. With a crossover and white bar, a “Call” contract should be purchased. After the first trade, watch for an opportunity to trade is the opposite direction when the next crossover takes place.
Technical strategies can present challenges to those who do not yet know how to use charts. If this happens to be you, spend some time learning how to use these technical tools prior to putting these strategies to use. Charting packages are typically not provided by binary options brokers, but many of the more popular and widely used charting packages can be downloaded for free.