Binary strategies - types and the optimal conditions of use
The choice of the best type of trading strategy and the conditions of its use in the binary market directly impacts the trading outcome of the market participant. Beginners find it difficult to understand this concept, as the list of trading system approaches to market analysis is exhaustive. In addition, minimal experience and sometimes only a basic knowledge of binary trading processes does not make it possible to select the optimal conditions for the efficient use of trading systems. We will try to provide a short list of recommendations on the choice of trading strategies and the conditions of their application.
Despite the wide range of binary strategies, they can all be divided into subgroups according to their analysis format:
⦁ Strategies on technical analysis, or Price Action
⦁ Trading on the news
⦁ Strategies built on indicators
Each type of strategy has an optimal usage mode for its effective application, in which you must take into account the time of trading, the type of underlying asset, and the range of contract maturity.
Technical analysis strategies
Price Action trading strategies use market patterns that are formed directly by asset quotes. Here, the following areas are distinguished: candlestick and chart patterns, the approach to forecasting based on market fluctuations relative to trend levels, and market consolidation zones. A classic example of a binary strategy based on technical analysis is an approach that applies patterns of market movement relative to trend levels. This approach uses the most simple signal format and has a high level of efficiency. To apply this technical analysis format, it is necessary to build a downtrend support level or an uptrend resistance level on the chart. To do this, the chart line is connected by the quote highs or lows. The signal to trade in this embodiment is the asset price rebound from the trend level:
Technical analysis strategies work effectively on almost all underlying assets, but they require some experience and knowledge from the market participant. The best trading on technical analysis involves the following:
⦁ The use of foreign currency assets for trading
⦁ Night trading or trading in quiet daytime periods of market fluctuation
⦁ The strictest money management rules
The average efficiency rate for Price Action trading strategies is no less than 80%.
Trading on the news
This is a rather peculiar approach to binary trading that allows the trader to invest in stock market assets. In this case, the trader has at their disposal the most accurate trading signals and can use more liberal rules of capital management in trading. This allows you to increase the profitability of your trading positions, but the poor cyclical nature of the trading signals does not make it possible to achieve high dynamics of capital growth.
Trading on the news is dictated by patterns of the market impact of news of a political and macroeconomic nature. This principle of signal generation can be described as follows: bad news leads to a reduction in the price of an asset, good news to a rise in price. Trading on the news is carried out as follows:
⦁ We choose a news publication with the highest impact on a trading asset
⦁ When it is released, we evaluate it
⦁ We register a contract in the direction of the forecast in relation to the principle of statistical data evaluation
Nike statistics show a decline in yield:
Knowing the release time of the data and quickly assessing its impact on the underlying asset, we register a position DOWN.
The result is a profit.
The best trading for the "Trading on the news" strategy involves the following:
⦁ Stock and commodity underlying assets
⦁ The American trading session
⦁ A higher level of risk
The effectiveness rate of signals in this approach exceeds 90% on average.
Indicator type strategies
The easiest and most effective way to build a trading forecast is the use of automatic indicators. Market analysis programs make it possible to, without complex calculations or deep professional knowledge, get effective signals for registering contracts. Moreover, indicator trading strategies have the highest flexibility in the choice of the underlying asset and show the highest growth dynamics of operating capital. There are different mono- and multi-indicator trading strategies.
As a simple example, we will use a mono-indicator strategy based on the Alligator indicator:
The simplest signal, the intersection of the lines of an automatic analysis tool, allows you to get an accurate, highly cyclical signal for trading.
The best trading for this type of trading strategy involves the following:
⦁ A selection of high-yield currency underlying assets
⦁ Intraday trading in active markets
⦁ The classic rules of money management
The efficiency rate of indicator strategies ranges widely from 70 to 90%.
When applying any of these types of trading strategies, it is necessary to carry out the process on the most professional trading platform with minimal trading parameters. For example, highly effective trading on any trading system can be achieved on the Binomo broker’s platform:
where the widest range of technical and support services are offered, as well as the minimum parameters of trading conditions, which allow the trader to use any format of money management.