Best Short Term Binary Option Strategies : 10-30 Minutes
Short term time frame strategies are my favorite. This is binary after all; we aren’t looking for long term investments. These target expiries in the range of 10 to 15 and 30 minutes, enough time for signals to develop and the market to move. This time frame takes skill to master, it’s no slow moving beast, but unlike ultra-short is much more reliable and a lot less risky.
- The Trend is your Friend Strategy
- Okane’s 15-30 Minutes Strategy
- Cogstochastic Newbies Strategy
- Simple Balanced System Strategy
- RSI High Low Strategy
- Floor Trader Strategy
- Okane’s Homegrown Strategy
1. The Trend is your Friend Strategy
How many times did you hear the words “The trend is your friend”? A lot of times, I bet. But to be honest most of the so called “gurus” out there just drop those words and don’t take the time to really explain what exactly it means and how to get some money from our best friend, the trend. Well, no more! Today I am going to introduce you to more than one way of cashing in on a trend and of course, how to correctly identify one. Also, you probably heard me say that you should never base your trading decision on a single indicator or tool. Guess what: we are going to cover that as well. But first and foremost, we must identify the trend.
How it works:
An uptrend is characterized by Higher Highs and Higher Lows. Not too complicated, I would say. Picture coming up:
This, my friends is an uptrend; every new high/top/peak or whatever you want to call it is higher than the previous and the new lows/bottoms are higher than the previous. Price is moving up in an uptrend.
A downtrend is defined by Lower Highs and Lower Lows, the opposite of an uptrend:
Once we see Lower Lows and Lower Highs, a downtrend is forming. Now to trade a trend, we must draw trend lines, one of the most underutilized technical analysis tool, but one of the most useful.
The market is designed to shake our confidence, eat away at our discipline and take money out of our pockets. It also doesn’t always behave like we would expect it to and a trend line combined with 10 more tools or indicators is no match for its erratic movement. Sometimes price will go through it like a hot knife through butter and after our option expires, it will reverse just to laugh in our face. Unfortunately, we cannot avoid that and we must do our best to take good entries, in line with the trend, but remember that even the best friends suck sometimes and all trends eventually break down.
All trades taken in the direction of the prevailing trend have a higher chance to be successful. If a confirmed trend is in place, a bounce from the trend line combined with a tool like Japanese candlesticks, Divergence, Fibonacci or any other reliable indicator is for me a trade that cannot be missed. There is no sure trade in Binary Options, Forex, Stocks or any other market and all we can do is make sure we tilt the balance of probability in our favor.
2. Okane’s 15-30 Minute Binary Options Trading Strategy
When I first attempted to create my own strategy my goal was to develop a system that could eliminate doubts and indecision out of the equation. I needed confirmation, a solid strategy with simple rules that could be followed and traded mechanically. Today, with months of training, I have the skills to fully benefit from the great trading opportunities it offers. If you are a newbie, you can follow the rules and trade this strategy mechanically until you acquire the skills necessary to understand the reasons behind the rules. Once you’ve reached that state you will also be able to take complete advantage of my strategy. Hence I can recommend this strategy to both newbies and more experienced traders!
The MT4 Setup
Downloads available at the bottom of the page
1. Add 3 exponential moving averages with the following periods:
200 and 50. 21 is helpful but it’s optional.
2. Add (5, 3, 3) Stochastic Oscillator with the following levels: 80 and 20.
3. Add RSI with value 4 and the following levels: 75 and 25.
4. Add FiboPiv_v2
How does this Strategy Work?
First you need to confirm the direction of the trend. The moving averages are the very useful tools for this task. To identify a trend go to the 15-minute chart and see if the candlesticks are under or above the 200-EMA AND the 50-EMA. To make sure the trend is not in a state of consolidation or about to change direction it’s important to identify previous highs and lows. To locate these highs and lows simply mark the areas where stochastic oscillator showed overbought/oversold levels. Check to see if price is stepping down and is under the 200 and 50-EMA, if that is the case look for lower highs and lower lows. If price is stepping up it should be creating higher highs and higher lows above the 200 and 50-EMA. The goal is to find these “steps” or small retracements inside the trend.
-For Call options: enter at higher lows, candlesticks should be above the 200 and 50-EMA and oversold levels on both Stochastic and RSI
-For Put options:enter at lower highs, candlesticks should be under the 200 and 50-EMA and overbought levels on both Stochastic and RIS
Here is an example of a 15-minute chart of USD/JPY:
The two vertical red lines show the lower highs at overbought areas on the 15-minute chart. Notice that these two highs are also under the 200 and the 50EMA. These are good locations for Put-Options.
You can actually find two more Put opportunities if you look carefully. Notice that the distance between the 50 and 21-EMA is becoming narrower on the right side in the picture and Doji-candles are forming. This is not a good place for Put-options even though Stochastic and RSI are overbought.
This strategy provides with enough confirmations to induce the trader to take a trade. During the time I’ve tested this strategy it has proven to be pretty accurate. The rules are simple to follow. This strategy also teaches you trend identification and lets you practice on your price action skills!
CoGStochastic and FX Trend Binary Options strategy
Although the website where I found this strategy indicated that it is used for Binary Options trading, the author talks about Stop Loss and Take Profit levels which are used in Forex so I believe it is a Forex strategy but it’s easily adaptable to Binary Options, just like almost any other strategy. By the way, the website where I found it is www.forexstrategiesresources.com and the author is JamesUK. To be honest, I still haven’t decided if it’s an easy to use strategy or complicated one, but since it only uses 2 indicators, I guess it can’t be that hard to apply. So let’s learn more about it:
How it works
For this one you will need two indicators, both available at the end of this article and on our Forum. The first indicator is the CoGStochastic (Download at the bottom of page) and although the author doesn’t explain what exactly that is, let me give you a crash course about it: CoG stands for Center of Gravity and it’s a relatively well known custom indicator which measures the distance that price deviates from the mean. Price always returns to the mean due to the “rubber band” effect so when it deviated too much, it must return. The “too much” part is measured by the Center of Gravity so when the Stochastic moves away from the mean (that’s the center dotted line on the chart) and touches the outer bands (whether it’s the top or the bottom one), it will return to the center line. In other words, this is a different way of looking at the overbought or oversold condition of the Stochastic. Here’s how the indicator looks like on a chart:
Notice the white rectangles: those are zones where the Stochastic Oscillator was overbought or oversold (there are other zones which I did not mark on the chart) and was too far away from the mean (middle dotted line). Price’s next move was to reverse the current direction and return to the mean. But if you take a closer look at the picture, you will see that price doesn’t return immediately; that’s where the FX Trend indicator comes into play (Download at the bottom of page): after the Stochastic returns from the outer bands of the CoG, we wait for a matching color change on the FX Trend indicator (Red and Blue line on price) and we enter our trade accordingly.
- Stochastic crosses downwards the upper Red line of the CoG
- FX Trend changes to Red
- Stochastic crosses upwards the lower Blue line of the CoG
- FX Trend changes to Green
I told you I can’t decide whether this strategy is easy or complicated; and look at the rules: they are pretty simple and straightforward, but all the Center of Gravity and mean reversion stuff can get confusing to a newbie. Anyway, considering that a new and inexperienced guy can trade a mean reversion strategy using just two simple rules is what makes this strategy not suck.
As much as I like the principle behind it, I cannot help but notice the fact that it generates a lot of bad signals. I believe the reason for that is the FX Trend indicator so I would definitely replace it if I was to use this strategy. Or at least I would change its settings to make it less choppy because in my opinion, it changes colors too fast and this generates the bad signals I talked about. Another thing is that we don’t have clear rules about expiry times: the author says it should be used on a 30 minute time frame but doesn’t tell us anything about expiries. Most of the signals work eventually but a long expiry time is needed. If you experiment with this strategy, let us know on the Forum which expiry works best.
3. Simple Balanced System
Lately I was looking for a system easy enough for a relative novice to understand, but still have more than one condition to enter the trade. The answer came in the form of the “Simple Balanced System” and I found it here: http://forex-strategies-revealed.com/trading-strategy-basic balanced. It uses two Exponential Moving Averages (one with a period of 5 and one with a period of 10), Relative Strength Index (RSI) with default settings of 14 and the Stochastic indicator with settings of 14, 3, 3. If you never heard about RSI or Stochastic, don’t worry because I am going to tell you a little about them before starting to explain how to use the strategy. It wouldn’t be right to trade a strategy without knowing about the indicators involved. Since the Moving Averages were already covered in a previous article, here we go with the RSI and Stochastic.
How it works
First of all, to plot the indicators on a Meta Trader 4 chart, go to Insert – Indicators – Oscillators and choose Relative Strength Index and then repeat the same procedure for Stochastic. If you are having problems with it, read my detailed article on how to use the Meta Trader 4 platform. For the two moving averages, follow the path: Insert – Indicators – Trend – Moving Average and select the exponential method. Ok, now we know how to display the indicators on a Meta Trader 4 platform so let’s go forth and look at the entry rules:
For a Call, we need the 5 EMA to cross the 10 EMA upwards + the RSI to be above the 50 level (this is not a default level so you will have to add it manually) + the Stochastic to be heading up but not in Overbought territory. The word “and” is written in bold letters because we absolutely need all three conditions to be met at the time of entry. It will probably not happen simultaneously so wait until they are all met.
- EMA 5 crosses EMA 10 upwards
- RSI is above 50
- Stochastic is heading up but it is not in Overbought territory
For a valid put entry we need to reverse all three conditions: EMA 5 must cross EMA 10 downwards + the RSI must be below the 50 level (drawn manually) + Stochastic needs to be heading down, but not in Oversold territory. Again, all three conditions must be met at the time of the entry.
- EMA 5 crosses EMA 10 downwards
- RSI is below 50
- Stochastic is heading down but it is not in Oversold territory
As you can see from my trade examples above, once all the three conditions are met, price quickly starts to move in my predicted direction, but keep in mind that I looked back on the charts to find those examples and in live market conditions, the situation can be quite different. This is not the Holy Grail of trading and sometimes the market can go against us much longer than we can stay solvent. Also low volatility and ranging periods can produce false signals.
Having three conditions that need to be fulfilled before placing a trade, this system keeps us out of many false moves and gives very accurate signals. The 50 level of the RSI is often regarded as a trend confirmation and by only trading when this level is breached we are making sure we are going in the direction of the trend. As the 50 level is not a sure confirmation of a trend, we don’t trade it alone, instead we have two other confirmations (EMA cross and Stochastic going down). I always say that we need more than one indication of price direction before placing a trade and the “Simple Balanced System” has three of them so in my opinion, it definitely doesn’t suck.
4. RSI High-Low Strategy for Binary Options Trading
This is a review of an easy and newbie-friendly strategy. Trust me, you can learn how to use this one in no time! This is a Forex trading strategy I read about on the website Forex-Strategies-Revealed.com. The creator of this strategy, Edward Revy, did his best to keep it simple when he presented his RSI High-Low strategy that only uses RSI (14). Let’s not be fooled by the simplicity of his strategy though, the RSI (14) is a very accurate indicator but it will take some practice!
How it Work:
The title spoils it all; this strategy uses RSI to trigger the signals. The author recommends RSI (14) with levels set to 70 and 30, but he also suggests using yet another indicator for confirmation. The goal is to place a Put if RSI crosses above 70 and then crosses back down and place a Call if the RSI crosses below 30 and then crosses back up again… and that’s all there is to it… or was, till I added another indicator! But let me first show you an example of a trade using only the RSI (14).
Call Entry: Call if RSI (14) crosses below 30 and then crosses back up again.
Put Entry: Put if RSI (14) crosses above 70 and then crosses back down again.
The first Call signal was fake but the second Call (up arrow) was correct.
The Put signal is good too but much depends on your expiry and the precision of your entry.
Notice how the RSI (14) has crossed below oversold and overbought levels, 30 and 70.
This strategy sucks because it does not provide the trader with enough confirmations needed to pull off successful trades repeatedly. You would have to “blindly” trade all the RSI crosses and hope for the best. The signals are very few, especially at the higher time frames. Furthermore, this strategy totally ignores trends and price action. An additional analysis of trend, support and resistance could help to weed out the false signals.
The RSI (14) combined with the Stochastic Oscillator are two accurate and powerful indicators. It does not suck because the rules are relatively easy for beginners to comprehend and utilizes the long standing principal of signal confirmations.
5. The Floor Trader Strategy
The original strategy is used for Forex and can be found here: http://www.trading-naked.com/FloorTraderMethod.htm. The core of the strategy is trend following and that makes it one of my favorites. For trend recognition we will use 2 Exponential Moving Averages with periods of 9 and 18. The angle and positioning of the 2 Moving Averages will determine the trend and then we will use a pattern formed during the retracement to enter the market. Here is the detailed explanation of the strategy and all the rules.
How it works:
First of all, I want to make sure that everybody knows what a retracement is (as used by this strategy). During an uptrend, a retracement is a minor decline in prices and during a downtrend, it consists of a minor rally (move up). Retracements are counter trend moves and once they are over, the trend usually resumes. These are very important for our strategy because the entry pattern occurs during the retracement. Our entry trigger in an uptrend is the first candle that rises above the high of the previous candle, marking the end of the retracement and the continuation of our uptrend. The opposite applies for a downtrend. Here is the picture:
The best entries are found after a retracement that contains 2-5 candles and speaking of entries, here are the rules. Yup, they will seem complicated, but be patient, everything will line up eventually.
There are three types of entry signals: Level 1 (L1), Level 2 (L2) and Level 3 (L3). L1 is the strongest signal, followed closely by L2. The weakest signal is L3 and should be traded very cautiously.
The LEVEL 1 Call (long) signal:
After determining that there is an uptrend and a decline retracement is identified, watch for:
- Price to come lower and enter the zone between the 9 and 18 EMA lines, and
- One or more candles touch the 18-EMA line (or penetrate slightly below it)
- Once the 18-EMA has been touched, look for a candle that breaks above the high of the preceding candle by one or more pips. (Trigger candle)
The LEVEL 2 Call (long) signal: (similar to the L1 signal and may appear before it)
After determining that there is an uptrend and a decline retracement is identified, watch for:
- Price to come lower and to enter the zone between the 9 and 18 EMA lines
- A Call signal Trigger candle occurs before the 18-EMA is touched. The market begins to rally without touching the 18-EMA (which would normally trigger the L1 signal).
The LEVEL 3 (long) signal:
After determining that there is an uptrend and a decline retracement is identified, watch for:
- Price to come lower but it doesn’t enter the zone between the 9 and 18 EMA lines, or price just touches the 9-EMA line.
- A Call signal Trigger candle occurs above the 9-EMA. The market begins to rally above both EMA lines (or just slightly touches the 9-EMA line) after a shallow retracement.
Only take an L3 Call signal if it is the first one in a new uptrend.
Qualified L3 Call signals are not common. The best ones form when the market is trading at new highs in a “runaway” rally, or after a strong consolidation.
Continuation Long Signals:
Closely monitor the first Call signal in a new uptrend, regardless of whether or not it is taken, if this trade stalls, or returns to breakeven, do not act on any additional long signals in the current uptrend. The developer of the strategy also advises us not to take additional long signals if they don’t happen well above the first one. In general, the best trades are the first signals in a new trend. That is, the highest rate of success will be with a signal from the first retracement after an EMA crossover. For a Put signal, all the rules must be reversed.
Well…look at all the rules and imagine how hard it would be for a novice to learn the strategy. I was in that situation, I know the feeling. The thought of abandoning it crossed my mind several times, but I decided to stick to it and sooner than I expected I started to see the signals better and didn’t have to check my rules cheat sheet. The biggest drawback of the strategy comes from the fact that it doesn’t cope well with ranging periods and this is known to be the weak spot of the trending strategies. This could be avoided by using another tool (maybe ADX) for identifying trend better. Also, when the two Moving Averages are flat, avoid any trades.
This strategy is based on one of the strongest principles of trading and that is “The trend is your friend”. And what better place to join the trend than after a retracement? From my experience, it gives accurate signals and they occur with a pretty high frequency so even the guys that want to trade a lot are satisfied. Multiple trades can be taken during a trend and this maximizes the profits, giving the trader big gains if all the signals are taken.
6. Okane’s EUR/USD Binary Options Price Action Strategy
This is far from a mechanical strategy and it’s absolutely no good for beginners, you’re gonna need some experience to make this one work, there aren’t any magical blinking arrows and there’s only one indicator… unless you want to call the clock an indicator. If you are familiar with using support and resistance lines, can recognize trends and understand candlesticks then keep reading and you might be able to use my strategy. Those who enjoy trading short expiries such as 10-20 minutes on EUR/USD can benefit from reading this review whether they choose to use my strategy or not.
What Is Okane’s EUR/USD Price Action Strategy?
This strategy uses Stochastic Oscillator, price action and the clock to predict possible trend retracements. I use stochastic with standard settings, (5, 3, 3) with signal levels marked at 20 and 80 to confirm signals that occur near or on my lines. Start by drawing horizontal trend lines, also known as support and resistance lines on your charts. Higher time frames are preferred, such as H1, H4 and even the daily or above because they are more reliable. You should be confident at drawing lines, tell which lines are significant and why they are stronger than others. In my experience, the strong support and resistance lines are the ones drawn on higher time frames, areas that have the most “candle bounces” or thickest price action. Personally, I prefer to have two charts open simultaneously, one M5 and the other illustrating H1. The chart set on a higher time frame is practical to have because you can clearly see if price is heading towards a major support or resistance line. When price is trending and gets near a S/R level I watch the clock and Stochastic to get my signal.
The super-secret Guru part of the strategy that takes experience to master is timing the signals. This is where the clock comes into play. To help make it clear just look at a EUR/USD 15 minute chart, choose the cross hair (on MT4) and hover over full hours and half-hours. It should become clear that retracements in this pair occur at nearly every hour and half hour of the trading day. What I do is look for a potential retracement each time the clock approaches one of these times. This can presents up to 48 possible trading entries every day but we don’t want to trade all of them because sometimes price ignores this time pattern. The Oscillator’s purpose is to provide additional confirmation by identifying overbought and oversold levels as well as highlight potential support and resistance, ie the actual signals. Sometimes the signal is trend following and sometimes it isn’t. Obviously, we want to trade the retracements where one of our support or resistance lines are touched and confirmed with the Stochastic Oscillator. The best signals are catching the trend following entries after the retracement but the retracements can be traded too.
On the left: Put taken at almost 1.24842 at 17:59 and expired 18:10. Notice how it is moving back up after 18:10. Also, Stochastic indicated overbought on most timeframes. On the right, this was actually a touch option because price was moving up and trying to break the dotted red line repeatedly and I figured it wanted to reach to or near 1.15420 which it did! Stochastic on the M5 would get oversold very quickly each time price dropped.
My strategy sucks if you haven’t spent a lot of time watching and trading EUR/USD. Generally speaking; my strategy sucks for anyone who is not fully confident in drawing trend lines and S/R lines and is not in touch with this market. Furthermore, the time patterns are sometimes totally neglected and our expiry is so short that a small mistake can result in a few pip disadvantage which in turn could mean a losing trade. Getting a good entry and expiry can be crucial and time is not an indicator on its own.
This strategy doesn’t suck because after testing my strategy live during six months it gave me roughly 62% ITM on >200 trades. The two first testing months obviously lowered the win rate because it was new to me as well but once I got the hang of reading the chart according to the time my success improved. It also doesn’t suck because it does not rely much on any indicators, even though I use Stochastic it is merely for extra confirmation. I take patterns and trends into consideration and base my signals accordingly.