The best strategy, in fact the only way you have a chance with binaries, is to do the OPPOSITE of what they tell you to do, the opposite of what nearly everyone does.
Makes sense since binary option traders suck worse as a group than any other traders. They could lose money as an olympic sport. The binary options business is so lucrative that brokers will pay you a 35% commission on deposits for introducing a customer, and still make a lot of profit. In other words, its a scam. Unlike other forms of trading where the broker doesn’t make money if you lose, with binaries your broker makes, instead of a nominal commission, in most cases keeps your whole account.
Now assuming you have a broker that actually pays out if you win (there aren’t many, honestly, > 80% of brokers are just ripping you off and never paying out).
Here’s how to do it.
- Everyone wants to have the 10 bagger win, buy the out of the money option for $15 and have it close at $100. DO THE OPPOSITE. Buy the option which is IN THE MONEY, about to close true. Experiment with the time to close, for 2 hour binary options about 30 mins is good.
- Do a check of the upcoming announcements at Economic Calendar | FXStreet Don’t trade anything with an announcement before your binary closes.
- Try and buy options you think will close true 90% of the time, for $75-$80. No more than $80 — this is your edge.
- If your option becomes OUT OF THE MONEY, trades below the strike price, it becomes a coin flip and exit immediately. (note that binary options brokers don’t let you use stop losses since they want you to lose a lot not a little)
- Keep accurate records and stop trading and start paper trading if your win rate drops below 80% for 5 consecutive trading days.
This is a strategy with a very small edge. If you take 10 trades a day you should make money most days, with big drawdowns. It is not suitable for big accounts, and not suitable for compounding into a big account. The only possible use is small and consistent income.
On the whole I do NOT recommend the binary options business. It is riddled with scammers, and has terrible hurdles to overcome. If you must play, however, this is the way.
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