Binary Options for Beginners

Binary Options Strategy for Beginners in 5 Easy Steps

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All beginner binary options strategies have to start somewhere, and to be successful, you should know basic binary options strategy for beginners. Without a proper binary trading strategy or a game plan, you’re practically going into binary options trading blind. This kind of behavior is a common part of the binary options market psychology, but then again most traders aren’t paying attention and lose while you’re here trying to prevent that by reading strategy.

The world is filled with many failed traders from this too common occurrence. So how do you develop a basic binary option strategy? Follow the list below, and you’ll have established a beginner level foundation to begin with.

  1. Keep it Simple
  2. Watch Markets Closely
  3. When to Trade Binary Options
  4. How to Trade Binary Options
  5. Know Which Trades to Make

1) Binary Options Strategy for Beginners is Best Kept Simple

Sounds easy enough right? You’ll be surprised how many traders fail at this simple premise and can’t KISS (Keep it Simple Stupid!). The first thing you need to figure out is simply what you want to trade. This means identify what you’re interested in. Ask yourself the following:

  • Do I have any special knowledge or familiarity with a certain asset class?
  • Am I interested in currencies, stock indices, individual stocks, or commodities? Which ones?
  • Do I have a macro view or a micro view of the markets that I specialize in?

Specialize

Are you a gold bug? Do you think that paper currencies are worthless and that we should go back to the gold standard? Do you think gold is undervalued and should be higher? If that’s what you think, then part of your binary options strategy for beginners is that you should specialize in gold binary options. Learn everything you can about gold. The who, what, where, when and why. Your basic binary options strategy is that you want to become the world’s foremost expert on the price of gold.

Use Common Sense

I cannot stress this enough. Use your brain. This isn’t rocket science, so don’t overcomplicate things. Block out all the noise in your life and determine if the trade you’re about to submit makes sense to you. Should the market go higher or lower? Quite simply that is what trading is all about. Bet on what is going up and bet on what is going lower.

2) Watch the Markets Closely

Remember that you don’t actually “own” a binary option. You’re merely renting it for the minute, the hour, or the day. In binary options trading we try and keep the timeframe as short as possible to allow us multiple opportunities to make money, sometimes we trade as quickly as a single second.

S&P 500 Future Intraday Chart Example

Take a look at the following chart and see if you notice anything strange about it. Pay attention to the trends, their timing, and the fluctuation in price.

Well now that I've done the above, how do I turn it into money?

As you can see, the market hardly did anything all day and then after 4pm, the market made a dramatic move lower. The reason for this is Apple came out with its earnings and disappointed the market. Apple stock tanked and took S&P 500 futures lower with it. All a smart binary options trader had to do was do nothing all day and wait for the earnings release. Buy a binary put or low option after the earnings miss and collect the money!

3) Know When to Trade Binary Options

Markets move on news. It’s that simple. There has to be something to drive prices. Otherwise, it’s pure randomness and you’re getting beat up by the big players who move mountains with their massive trade sizes, but this is rare. Knowing when to be in front of your screen will put you on the path to becoming a successful binary options trader.

We point out each day the important news items that you need to watch for and their times. Be sure to check our binary options news section where we list each day’s important news items with their times so you know when to be in front of your screen. You should also become a member (free) and chat with others in our binary options forum.

4) Know How to Trade Binary Options

Each report will have the previous data, the expectations for the current release, and then you’ll finally have the actual data once it comes out. Expectations for the data are most important before the report is released. This gives you an idea of what the market is expecting and then once the data is released, you can see if the data was better than expected, worse than expected, or neutral and right in line with expectations. If the data was better than expected, it’s a bullish event and the market should go higher. If the data was worse than expected, it’s a bearish event and the market should go lower. If the data was neutral, the market should continue on its path prior to the release of the data.

5) Know Which Type of Binary Options to Trade

This is very important to profitability. You don’t want to purchase the wrong type of binary option when the other one would have been profitable. The next step in developing your binary options strategy for beginners is to dig into these topics in further detail and read our binary options trading systems and binary options trading signals strategy articles.