How To Make A Binary Options Trading System
Binary Trading Systems Always Start With Analysis
It takes some time and dedication in order to be good at stock market analysis. The good news is
that you use the same technical and fundamental analysis to trade binary options as you do to trade
any other financial instrument. That being said there are numerous sources of information on the
subject. I have several articles in this series that can help a newcomer get started or lead a more
experienced trader to information you need.
Fundamental Analysis - Fundamental analysis is the study of the market, it's participants, what
drives it and its inherent strengths or weaknesses. This could mean the general market as
represented by the SP, the DAX or the FTSE. It could mean an individual stock, commodity or
currency pair like APPL, spot Gold or EUR/USD. Good fundamental analysis is like having your
finger on the pulse of the market being studied. This depth of knowledge takes time to master but
can be applied to trading strategies along the way. Try to stick to only a few markets, read all the
news, learn some history and sign up for the press releases. After nearly ten years of trading I have
narrowed and expanded and then narrowed my focus several times. I currently watch a handful of
world indexes, 2 currency pairs and 2 commodity indexes. I do not trade them all all the time, I
watch them all day to day and make a trade in each one as my signals develop. Fundamental analysis
can help tell you which direction a market is moving and how it is valued by the market. It does not
do a very good job of pointing you to entry and exit points.
Technical Analysis- Technical Analysis is the study of financial markets and price movements.
Technical analysis uses charts of weekly, daily or shorter time frames to determine trends and
market strength. In a sense, technical is a form of applied social science. It assumes that all things
are known, will be known or are being anticipated by the market and that those things will or are
being shown to us through price movement. Technical analysis uses trend lines, oscillators and other
types of indicators and measurements to predict price movement and market strength. Trending,
reversing and range bound markets all give off unique signals that can be tracked and anticipated.
Investors, traders, speculators and gamblers all use technical analysis to help pin point price
movements, entry and exits points.
I have been an avid market watcher, investor and trader since 2005. I am not a licensed or
registered broker, dealer or representative. My fascination with financial markets and trading has
led me on a roller coaster ride of experiences that have led me here. I became interested in binary
options in 2011 and have been researching, reviewing and trading them ever since. I am trying to
help dispel some of the myths associated with them. They are highly speculative but are a great way
to speculate for those who can't or don't want to trouble themselves with futures, options and
margin accounts. Because of their accessibility the industry does attract gamblers. Binary options
are highly speculative and very risky. I highly recommend you learn all you can about them and
consult a professional before making any decisions.
My Approach To Trading Binary Options
I always begin with the economy, globally and locally. How are things going, what are the signs and
what are the expectations. Next I will move down to a specific market, lets say the EU Fake Index
500. At this point I will use a chart of a long term time frame to see how this market is doing in
relation to my economic outlook. After that I move down to charts of daily closing prices and see
how it looks. I check all my indicators, look for convergence and divergence, and make my decisions
A good package of trading signals, usually free with any charting system, should include a support
and resistance indicator, a trend following indicator and at least two oscillators. Other types can be
applied as well. Indicators like Bollinger Bands and Elliot Waves also give good, reliable signals. I
get charts from OptionsXpress, they are live streaming charts and have dozens of indicators, way
more than I will ever use or explore.
Learn To Read Binary Option Signals
Binary options signals are the same technical and fundamental signals as any other tradable
derivative. Candlestick charts, moving averages, oscillators and other more esoteric technical
indicators all apply. The only difference is that the nature of the analysis is simplified. There is no
worry over whether a stock moved far enough or quickly enough in order to profit, only that it did.
This is when technical analysis comes into play. Trend lines, support and resistance, oscillators,
Bollinger Bands, Elliot Waves and many, many more types of indicators can be used. Don't get
discouraged. You do not have to learn to use them all, just 3-5.
I recommend using multiple time frames for your binary options strategy. Common time frames used
by successful traders are weekly closing prices, daily closing prices and then a shorter term like 1
hr, 30 min or 15 min closings. Some types of indicators like stochastic can be applied in any time
frame and some others work better in one. Typically, the shorter the time frame the less important
and less reliable the signal. This is why 60 second options are gambling and why I stick to weekly or
Indicators that I commonly use are Fibonacci Retracements, 30 and 150 day moving averages,
support and resistance lines, MACD, stochastic and the VIX. Fibonacci Retracements are potential
support and resistance indicators based on the work of the famed mathematician Fibonacci. It is
uncanny how often these predictions coincide with market movements. Fibonacci's can also help
confirm your own support and resistance lines. The moving averages are trend following and trend
confirming. They can also become support or resistance. Any area of support or resistance you can
confirm with all three of these is likely to be a very significant area, possible a bottom or a top or
even confirming a breakout.
Pick A Binary Options Strategy
There are quite a few ways to trade binary options and your choices depend on where you live. The
bulk of binary options brokers are based off shore, primarily in Limossol, Cyprus. These are
regulated by CySEC, the MiFIB and other EU governing bodies. NADEX, the North American
Derivatives Exchange, is headquartered in Chicago and provides services for U.S. traders. U.S.
traders can also trade CBOE and AMEX binary options. European and American binary options are
similar and different. The similarities make them both easy to trade and give access to world
markets. The differences between the two are subtle but important to understand in order to trade
CySEC Binary Options Are the best for traders located outside the U.S. They may not be legal in
your area so be sure to check. CySEC regulated binary options brokers can operate in any country
within the European Economic Arena and other countries friendly to the EU such as Canada and
NADEX Binary Options Are the best for traders located within the U.S. NADEX is an exchange that
you can join. It allows you access to the trading floor through their online platform where you trade
binary options at market prices. NADEX binary options are a 0-100 binary option, are liquid and can
be traded at any time up to their expiration.
Binary Options Regulation Is confusing. CySEC binary options brokers are not regulated by the
CFTC or the SEC and can not, or are not supposed to, market to U.S. citizens. NADEX is the only
U.S. regulated binary options exchange.
Your strategy will depend on which type of broker you use. NADEX binary options are bought and
sold, can be a credit position and are traded throughout their life. CySEC binary options are not
liquid, are not traded before expiration and can not be a credit position. However, more and more
products are being offered by CySEC binary options brokers including 60 second options, one touch
options, range options, Option Builder and even a form of 0-100 options offered by AnyOption. Treat
your strategy like your analysis. Learn every in and out, when to use it, when not to. When strategy
and signal coincide you'll have a good chance of success.