When to enter trades in Binary Options

When I first started trading binary options, one of the hardest things for me was figuring out when to enter a trade.The two most common methods people use are entering on a touch of a support/resistance line or entering after conformation.

As talked about in the last two post, price action can help you set up those support and resistance lines of what values you should be entering trades at. A touch trader would enter the trade right when price touches one of those lines. A conformation trader would wait until the candle stick closes and ente if the next candlestick is moving away from the support/resistance line. An example is below.

EUR/CAD 5min candlestick chart, freestockcharts.com

Lets go through the possible trades on the chart above.

Lets start off with #0 on the chart. At this point you don't know the EUR/CAD is going to start ranging so you might enter the trade off the resistance line 40mins earlier. Touch traders would enter the trade and lose but conformation traders would stay out of the trade as the next candle is green( indicating a increase in price).

#1: This trade is off the trend line of the previous two highs. Touch traders would win and conformation traders depending on where they enter might or might not finish in the money.

#2,3,4: These are trades off the trend line, touch and conformation traders would finish in the money on all three.

#5: Touch traders would enter on the support line and would lose, conformation traders wouldn't enter the trade since the next candle is red.

#6,7,8: These are more trades off the trend line and both types of trading would finish in the money on those trades.

I personally trade when price touches the support/resistance lines. While touch trading is more risky, I find overall it bring in more profit.

Binary Options With More Price Action

Something I didn't talk about in my last post was the type of market the asset is in. The asset will either be ranging or trending. In a ranging market, price stays within certain bounds. Take a look at the example below.

1min EUR/GBP from 10am-1:35pmest, from freestockcharts.com

For the whole three hours, price doesn't really move all that much. Lows are close to the previous lows and highs are close to the previous highs. If you were trading this period, you would trade puts at the top of the range and calls at the bottom of the range. A good general rule is to only trade the top 5-10% and bottom 5-10% of the range. As you can tell, there's ranges within the ranges. Generally only trade the bigger range unless the range has permanently shifted up or down. Remember that the asset won't range forever. The hardest part about trading a range is trying to figure out when the asset will break the range. There is no simple answer, but things like relatively large candles very close toward support/resistance lines, a general movement toward the higher or lower part of the range, and the amount of time the asset has been ranging can be signs that a range is breaking down. Assets usually don't range for more than 2-3hours.

The second type of market is a trending market. A trending market is where the highs and lows get higher or lower(depending on if it's a uptrend or a downtrend). For binary options, trending markets are better to trade than ranging markets. You use the same method of connecting previous lows and highs but instead of horizontal lines, the lines are at a angle. Also similar to ranging markets, there are wider channels of support and resistance and narrower channels of support and resistance. The only major difference in trading binary options is don't trade against the trend on most uptrend. If it's a very weak uptrend, then you can probably get away with trading against the trend but it's a lower probably of winning trade. Take a look at the example below.

1min GBP/JPY candlestick chart, freestockcharts.com

The 5-10% rule can apply to trending markets as well, meaning you would only trade in the 5-10% of the top or the bottom of the trend. That's the basic of trading binary options using price action. Next post on when to enter trades.

First Post and a Overview of Binary Options

Hey Everyone!

When I first got into binary options, there was a lot of miss information. Lots of "instant rich" systems, become a millionaire in a month, get $100 every 5 minutes, etc., and of course this information is false. However, binary options are NOT a scam and with discipline, hard work, and lots of studying, you can make profits. I'm not gonna lie to you and say I'm a millionaire, though with low risk amount trades I have made a lot of money for a college student so far trading. This blog will be dedicated to winning strategies and tools I use to be successful at trading binary options.

You might be asking what binary options are and the simple answer is a option where the payout is a set all or nothing amount if you either rightly or wrongly guessed the direction of the asset. You're trying to guess the direction a asset is moving. Binary options are generally for the short term with most options expiring 30 mins. or less of the time it's bought, but there are some brokers where you can get longer expires. Lets take a look at a short example.

Say you think a asset is going to continue its downtrend. So you place a put option(For reference, "put" means you think the asset will go down and "call" means you think the asset will go up) of $50 at the current price of 1000. The broker will display the payout you will get for being right or being wrong. The payout can vary from about 70% of your bet to up to 90% of your bet. Lets say you're correct and the asset does drop below 1000 at its expiry time. You would then get $50 multiplied by what ever the payout % is. If you were wrong and the asset expired above 1000 at the expiry time, you would get nothing. Pic below.

Next post I'll jump into the basics of trading