One thing for sure that there is no such thing as a simple strategy for binary options. What If strategies were simple? Then you and I would be easy millionaires. Aren’t we? However, only a few strategies actually are as true as they seem. Trading for forex, futures, and binary options is not simple and if you believe in just any strategy then you might be up for a financial suicide. How about you try a strategy with a word “Smart” in it? If you want to earn more profits in binary options you can try Smart Breakout Strategy. The author definitely did a great staying true to its name.
Smart Break Out Binary option Strategy
The Smart Break Out Strategy is a standard forex strategy. But it can be easily adapted to binary options. The strategy is based on daily price movements and seeks to make regular small gains in actively traded currency pairs. The strategy is based on four potential scenarios, one of which will happen each day regardless of other market factors. The author assumes that today’s price will perform in relation to yesterday’s price in one of four ways. First, the price today will break yesterday’s high. Second, the price today will break yesterday’s low. Third, the price today will break both the high and low of yesterday’s action. Fourth, the price today will not break the high or low of yesterday’s action.
How Smart Break Out Binary option Strategy works
The Smart Break Out strategy is typically used for forex trading but it can also be used for binary options trading. It aims to generate small gains regularly in currency pairs that are actively traded. It is also based on every day price movements. Four possible scenarios make up this strategy. The first scenario happens daily despite of market factors. Its author presumes that present price can perform with regards to the previous day’s price in a single out of 4 other ways. The first way is that prices today can break the high of yesterday price. The second way is today’s price shall break the price of yesterday’s low. Thirdly, today’s price shall break yesterday’s high and low. Lastly, today’s price shall not break the low or high or the action yesterday.
The first and second scenarios are probably winners. When the price breaks the low or high the plan is to trade in the breakout’s direction. When price breaks, high buy calls with hourly expirations or daily expirations.
When price breaks low, buy then puts with daily or hourly expiration. However, during days with no break, then trade is not possible. On days were price breaks the low and high then there is a probability of a bad trade. The fact behind this is that you can pick a greater amount of probably winners which is around 80% and then earn profits are a quite unclear set point.
Advantages of Smart Break Out Binary option Strategy
- In the world of trading, breakouts are very well respected.
- The problem when it comes to looking for the best and simplest break out strategy is that there are a lot to choose from.
- However, the one thing break out strategies have in common is that they are not too easy to use.
- Most of them require some deep learning on the theories of trading including its technical analysis.
- The Smart Break Out Strategy is simply good because it is quite simple to follow.
- It starts with a good basis and provides easy entry criteria. There is lesser room for doubts which is where a lot of novice traders often lose a lot of cash.
Disadvantages of Smart Break Out Binary option Strategy
- For one reason, this strategy is not so appealing because it is very simple.
- Some traders won’t actually believe that its simplicity can work.
- It leaves room for doubt. It is also not so good because it is so similar to another strategy called scalping strategy.
- Scalpers use recurring small movements of underlying assets to gain profits. Scalpers need to trade many times in one day so that they can be profitable but opening them up to more risks.
- The Smart Break Out strategy is also not so good because it is also a very basic strategy. Traders have to keep up with the markets in a day to day or even hourly level. Something than no one actually likes to do a lot.
The bottom line
The Smart Breakout Strategy is a simple form of entry picking but leaves a lot to be desired. I’m not sure if this is a good strategy for Forex but it does seem to have relevancy in binary. In forex you have to get a certain number of pips in order to make the trade profitable, in binary you only need one. For beginners, only using this in a demo account until you have a firm grip on trend analysis. For advanced traders, this could be a viable form of entry AFTER you have determined trend and potential support/resistance areas for yourself.