Contents:The 60 Second Binary Options Strategy aims to increase the effectiveness of trading decisions, improve the profit-to-loss ratio, as well as grow the overall account balance. This post is aimed to explain key factors to select the right trading system, show the pros and cons of this type of trading approach and show several examples of profitable trading methods.
This way of trading could maximize profits from intraday price action.
It might seem that one minute is a too short period for the price action to make a sustainable analysis and make predictions regarding the direction of the current trend. However, financial institutions, investment banks and hedge funds use this way of trading as more and more prevalent in terms of trading strategies. What’s more, many liquidity providers and binary options brokers start offering even shorter time frames such as 30,15 and even 5-seconds charts. Let’s find out how binary options traders can benefit from such frequent cycles.
What is a 60 Second Binary Options Strategy?
The 60 Second binary option strategy is a trading algorithm or a set of rules allowing binary options traders to make profitable decisions on the very squeezed period of trading. Thee system is based on 1-minute charts, and it applies to any kind of asset class including single shares, stock indices, commodities, fiat currency pairs and even cryptos. The range of technical instruments to analyse the market conditions and indicators to provide trading signals can vary, but the main idea remains the same as per any other type of trading - buy CALL options at support levels and PUT options on resistance.
Analysing the market
To simplify the process of analysing the market, binary options traders can apply the same technical rules as per larger timeframes. For example, the one-hour chart can be used to find strong resistance and support levels, identify overbought and oversold conditions, as well as determine pivot points. Fibonacci Retracement Levels are informative in terms of searching for strong defensive barriers, which could reverse the price action. After those levels are found, a binary options trader can use their power to trade on 60 sec binary options, opening CALL deals on the first test of support and put-positions, counting on the first bounce from the resistance.
Best indicators for 60 sec binary option Strategy
As long as the market conditions change much more frequently on the one-minute chart, the set of technical indicators suitable for such a fast type of trading activity has to de adjusted. It would not be reasonable to choose technical indicators, which have a too lagging mathematical formula. Trend indicators are powerful in terms of determining the long-term trend’s direction, but they might have too many false signals on the one-minute chart.
The 60 Second Binary Option strategy would work better in case if technical indicators were able to reflect fast-changing trends and momentum. For this purpose, quick oscillators could help. For instance, Relative Strength Index, Stochastic and Stochastic RSI, Williams %R are the most sensitive oscillators in terms of immediate reaction on shifts of the markets’ sentiment. Bollinger Bands and fast exponential moving averages can help binary options traders to determine resistance and support levels and ranges.
Settings for technical indicators
As long as traders need much more sensitive technical tools to find out where the price action might reverse, the period of any indicator has to be adopted. Instead of the standard 14-bars period for the vast majority of oscillators, traders should consider lowering it to 13-, 9-, 8- or even 5-bars. As a result, oscillators will react to the change of price sentiment much faster, ignoring previous values which are not actual any more. Nevertheless, any combination of technical indicators with different periods has to be backtested on a demo account before applying it on real money.
How to Use 60 Second Binary Options Strategy?
Besides using the reversal strategy in terms of buying call options at support and put options at resistance, traders can benefit from other applications of the 60 sec binary option Strategy.
Using trading cycles on the 1-minute timeframe
There is also a kind of approach aimed to maximize profits from strong trends. If, for example, a strong trend was noticed on the one-hourly chart due to some fundamental event or unpredicted economic headline, a trader could benefit on the one-way direction of the price rally, and switch the trading activity to the 60-second expiration. The method suggests buying options in the same direction continuously until the trend is getting exhausted.
Trading on 1-minute charts using momentum indicators
Financial assets have different periods of price fluctuations. Sometimes it happens that even though rates are gone too far from average means, charting extreme deviations, the action continues in the same direction for quite a while. In that case, traditional moving averages and envelope indicators have a bigger lag, shifting to the fast-moving price much slower than in quiet choppy trade. Thus, a different type of technical indicators is needed to make trading decisions. Momentum indicators are among the alternative choice for such conditions.
For example, a combination of Parabolic SAR and the Average Directional Index is effective when strong trends occur.
Multidirectional trading in sideways ranges
However, when the market is in rangebound, hovering in the same range without going anywhere, traders can benefit from multidirectional trading. This method suggests the absence of any external factor able to influence a sharp rally and lower trading volume. These periods happen on the border of trading sessions. For example, when the New York trading session is almost over, while the Asian trading session has not started yet. The main condition to buy call and put options simultaneously is to determine bands of the sideways range. High and low prices on the one-hourly chart will show the most relevant resistance and support levels to buy 60 sec binary options.
If you like this strategy, you might also be interested in this Protective Put Options Strategy
Example of using Strategy
Here are several examples of profitable trading with 60 second binary options:
RSI, Stochastic RSI and EMA
Below is a screenshot of the one-minute chart of gold. The combination of technical indicators is as follows. The Exponential Moving Average with 21-minute period shows the average mean of the recent price, The Relative Strength Index with 8-bars period points to the trend direction and overbought/oversold conditions, while the Stochastic RSI oscillator is the most sensitive indicator as it has periods of 3, 3, 8, 8 candlesticks. Call and Put options were bought on appropriate trading signals.
Parabolic SAR and ADX
EUR/USD does not have a clear trend on the one-minute chart below. However, Parabolic SAR and the Average Directional Index with the 8-minute period show trading signals once they confirm each other. So for example, a put option was bought when Parabolic SAR shifted the sentiment to negative as its dots jumped above the price, while ADX mainline changed its colour to the red. And call options were bought when Parabolic SAR was below the price, while ADX mainline turned blue. It's also worth considering the direction of the ADX line as it points to growing or declining momentum.
The 60 Second Binary Options Strategy is a trading method allowing to maximize profits from sustainable trends and increasing the effectiveness of the trading algorithm. Although several settings and combinations of technical indicators have to be adjusted for the frequent type of trading activity, the main rules of technical analysis remain the same. Mixing different timeframes for the analysis and using trading cycles with short-term expires might help binary options traders to determine the trend direction, find crucial support and resistance levels and highlight overbought and oversold conditions. At the same time, some of the fluctuations on the one-minute chart might be related to market noise, and the number of false signals could be increased. This is why additional filtering is required.