How to check the efficiency of your binary options trading scheme

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How to check the efficiency of your binary options trading scheme?

Engaged in active trading of binary options, each investor feels the moment when he can, thanks to his skills and professional experience, create his own strategy for forecasting the market and making a profit. Yes, with an experienced professional, creating and developing a system does not cause complications. For novice investors there is a certain list of problems in this matter: from the choice of analysis tools and identification of effective technical laws of the market to the testing of the strategy. It is the last issue, verification of the effectiveness of the author’s strategy, we will devote our material.

So, how to test the effectiveness of your own trading system? Immediately there is a completely logical option: to try trading under the rules of the system on your own investment account. But here you must understand that if the tools of the system are ineffective and its rules you can get substantial losses. Such risks are not worth a single trading system, as the calculation and definition of each indicator will take place with a decrease in the volume of operating capital.

We offer a simpler and more effective way of testing your own strategy – a demo account. This format of trading operations is offered today on most platforms of binary brokers and allows you to determine the effectiveness of the trading system without losing real trading funds. To get at your disposal an effective service for the test, pay attention to such technical parameters of the simulator:

– algorithm for constructing quotations – the service must offer real market quotes, rather than graphs with artificial indicators;

– the availability of analysis tools that you need to build a system;

– the number of available assets – this is necessary to determine the universality of the trading strategy;

– a list of technical settings for the asset schedule. In systems, traders often use a variety of charting modes, time periods for building quotes and other parameters;

– the presence of market history is the main condition for determining the overall effectiveness of strategy signals.

As a variant of a quality and professional trading simulator for testing trading systems, it is possible to offer a service from a licensed company, where investors are offered a demo account for training on a real trading platform, the technical performance of which fully meets the above requirements.

In addition, the distinctive feature of this service is an unlimited amount of virtual funds (the balance of the academic account can be replenished on a permanent basis) and completely free access to the simulator.

So, how do you test the effectiveness of the system in practice? To do this, let’s take a simple example based on two moving averages.

To determine the effectiveness of strategy signals, use the story of the movement of quotes. To do this, we rewind the schedule and count the number of system signals that provided the forecasts confirmed by the market.

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Thus, you can compile statistics on the effectiveness of strategy signals and determine the conditions under which the strategy tools generate incorrect forecasts for binary options. And, mind you, for this you will not spend a cent of your own funds.

Let’s continue. Using market history, one more important technical indicator of a binary contract – expiration – can be determined. To calculate the optimal time range of the option’s action on the history of market fluctuations, calculate the average number of candles of quotes that are formed between the signals of the strategy.

Having determined the necessary indicators for the work of the strategy on the market, you can proceed to the practical test of the strategy in the conditions of trading on the market. To do this, use the rules of the system: draw up contracts in a virtual account and analyze the statistics of trading operations, which on professional trading platforms has a format that is most convenient for analyzing errors and making more accurate tool settings.

As you can see, when using professional commercial and technical services, the issue of testing the system and determining its effectiveness is not difficult and takes place in the simplest and most comfortable mode.

“General Risk Warning: Binary options trading carry a high level of risk and can result in the loss of all your funds.”

A scalping strategy for options

The format of scalping on options is a fairly common way of making a profit in this area of the market. The speed of trading and its high profitability results are the main factors that attract people to this method of trading. Today we will consider the effectiveness of high-speed trading, as well as a few practical examples of scalping strategies for futures contracts that could become highly effective tools for predicting the market using short-term contracts.

How reliable is the scalping strategy for options?

The question of reliability and effectiveness of this strategy for scalping on the market is primarily related to the effectiveness of the trading signals of the system, as well as the correct risk management. In addition, the reliability of this scalping strategy is tied to the professional level of the trading terminal and the parameters of the trading conditions that are available on the operator’s platform. By picking the right technical and trading parameters for the scalping strategy you can get fairly stable and high results using this trading format. Here are a set of recommendations that contribute to the effectiveness of scalping on options:

• Use platforms for trading from professional companies — in this regard, we recommend the terminal for futures trading from the our brokers rating, where you will find all the necessary technical indicators for scalping, as well as a set of highly effective forecasting tools
• Carefully and accurately calculate the risks when registering trading positions. The correct ratio of the cost of the trade to the volume of capital will help you avoid critical losses and drawdown in your account
• To conduct trading in scalping mode, use a system with an efficiency level of at least 85% and maximum universality for all underlying assets

This list of recommendations will allow you to engage in high-frequency trading in a safe and profitable mode.

Scalping indicators for options

Market professionals recommend using technical indicators that are capable of generating signals on fast impulse changes in the price of an asset as forecast indicators for scalping trades on the futures market. In this case, the main trend indicators work perfectly, and they can be found on the many platforms:

This set of forecasting tools will allow you to build universal strategies for scalping on electronic options.

A scalping strategy for futures trades – practice

For our first practical example of a strategy for scalping on the financial market, we will show a system that uses a combination of settings of two trend indicators. This format of generating technical signals allows you to best assess the current market situation on the asset chart and opens up the possibility of determining the points of price quotes where the chart reverses to build corrections or new trends. So, let’s set the following technical forecasting tools on the asset quotes:

• EMA Indicators with technical parameters 10, 20, 30
• 2 MACD indicators — 50/75/9 and the standard configuration

We will use turbo trades with an expiration period of 120 to 240 seconds, and we will register the positions when we receive the following signals from the indicators:

• EMA Indicators – a beam of movings reverses upwards on the chart after convergence in one point
• Indicator MACD 50/75/9 – the lines intersect upwards
• Standard MACD – the movings intersect level 0 upwards

Signals for trades DOWN will have the reverse building configuration. This scalping strategy format has a technical signal efficiency ratio of 90% and allows you to make the most stable earnings for short-term trading. It should be noted that the risk management parameters for this system are of the classic parameters – the maximum amount of trading funds for one trade should not exceed 3% of the total amount of capital.

Scalping in 1 minute

The next scalping strategy format for electronic options is designed to work with contracts that have the minimum expiration period of 1 minute. Here, trend indicators are also used with subtle settings parameters, allowing for the formation of two types of trading signals for turbo contracts. In this way, we will achieve high cyclicity of our technical signals and increase profit opportunities for scalping since this operating approach makes it possible to register contract packages. So, let’s install the following instruments on the trading chart:

• SMA 5 and 10 indicators — we use blue for the moving with a five-minute period of building, for the second technical tool we use the standard coloring.
• MACD indicator – standard

To register trades UP with expirations of 1 minute, we use the following types of technical indicator signals:

Signal for the 1st type:

• The technical movings of the MACD indicator intersect upwards
• The blue lines of the SMA indicator intersect the second moving upwards

Signal for the 2nd type:

• The MACD oscillator lines intersect level 0 upwards
• The SMA indicator movings diverge upwards on the chart without intersecting

Using these signals, you can register up to 40 trades with short-term options in one hour, of which 90% will close with a profitable result. This factor will make it possible for you to earn up to 300% per week on options scalping.

Let’s sum up — scalping with futures trades using the correct mode of risk management and in combination with an effective trading system is the most rapid way to increase your account balance.

“General Risk Warning: Binary options and cryptocurrency trading carry a high level of risk and can result in the loss of all your funds.”

How to develop your own binary options trading scheme?

Binary options, despite the financial prospects for potential investors, require in the process of profit making the solution of many technical and analytical problems. To effectively use binary contracts, traders use strategies that, thanks to specialized approaches, methods and tools, are able to give certain statistical advantages to the market, and also provide an opportunity to more clearly generate effective trade forecasts for the formation of market positions.

Today the network is full of various systems and strategies that can certainly satisfy certain requirements of investors in the process of trading options. However, if we talk about professional trade and the achievement of financial heights, it should be said that the bulk of well-known investors and financial market professionals have achieved success due to their own high-quality trading systems. Schemes of work on the market, which the trader has developed independently, are the most universal and profitable tool.

Of course for most private non-professional online traders with minimal experience in trading and only basic knowledge in financial trading it is rather difficult to independently develop an effective and working strategy, but it is possible! Against this background, we offer a useful guide to developing a trading strategy for binary trading, which will help you understand the technical subtleties of the process of forming trading schemes.

So, before embarking on the formation of a strategy, it is necessary to clearly understand the principle of the main trading instrument – binary options. What task should we solve for profit? Everything is extremely simple – the main condition for the profitability of the contract is to determine the direction of the market fluctuations or the forecast about the value of the price at a certain point in time. Hence the logical conclusion is that to determine the necessary indicators we need a system that will effectively determine the most profitable market positions for betting an option. In this case, the most attractive moments are the levels of origin of new trend movements or a stable market trend. Simply put, the most optimal conditions for binary trading is the work on the trend of quotations. In this way, you can achieve the most effective statistics.
To determine the trends and points of their origin, as, indeed, for the calculation of other indicators, there are two directions of analysis in trade:

• Fundamental, where as the indicators for forecasting the market are the fundamental statistics, political and economic news, as well as the activities of financial regulators and government bodies. On the basis of such drivers of influence on the market, the trader’s behavior pattern is built when working on the trading platform
• Technical – here traders evaluate current market indicators using a wide range of specialized techniques and tools: from patterns and cyclic regularities to the generation of signals using indicators of automatic analysis

A professional trader must master all areas of analysis in order to create an effective trading system. In addition, in the preparatory stage of strategy development, the investor needs to first understand what type of system suits him the most. Here you need to take into account a lot of indicators – a comfortable rate of trade, the choice of working assets, the preferred mode of forecasting and a list of tools that the trader understands.

Most professionals seek to develop the most efficient and simple systems, which include Price Action strategies or indicator approaches to generating forecasts. These types of trading schemes are characterized by simpler algorithms for estimating market indicators, efficiency, high level of performance and correct evaluation of short-term trading periods. Having determined the type of trading strategy that suits you for all indicators, proceed to the direct development. To do this, you need to take the following steps:

• Outline the list of trading assets

Trading quotes of various financial instruments are subject to a diverse spectrum of patterns and drivers of influence. If you open asset schedules, then you will not find two of the same. Therefore, for effective trade, you need to create a set of the most attractive trading resources. The fact is that some assets work perfectly on strategies of fundamental analysis, for example, “Trading on the news” – this includes commodity assets, gold, stock market instruments (stocks), others show excellent results using graphical or indicator strategies – mostly currency pairs. Therefore, the choice of assets for trading is an important factor in building a trading system.

• Determine the optimal trading time

Effective time management is also the foundation for the formation of a profitable approach to trade. Firstly, here there are several time periods for trading – night, which is characterized by low volatility of the market, minimal dynamics of trading, limited list of assets. Day, which is characterized by the activity of the movement of quotations, strong impulse movements of the trend, the maximum dynamics of trade operations. In addition, there are several additional time periods for trading – weekend trading, which uses specialized assets for trading or artificial trading quotes generated by the algorithm of the brokerage platform, as well as the time of the release of the fundamental data. Having determined the optimal time period of work in the market, the investor can improve the level of performance of his trading. Let’s continue, the next step is the direct development of the system.

• How to build a strategy

So, you have decided on the assets for trading, set the trading time for yourself, now you need to create a system template. For this, it is necessary to analyze the quotation chart well and identify the most accurate and cyclical patterns. To informatively show the principle of system development, we take two simple and most popular types of strategies – indicator and Price Action.

В Indicator systems – to create a template for market analysis using indicators, select from your list of understandable analysis services tools with different modes and algorithms. Ideally, if you use a set of oscillators, trend indicators and auxiliary services, for example, volume determination tools. Expansion of the estimated market indicators will allow you to build a system with high efficiency and versatility. Next, analyze the performance of indicators on the history of quotations. This is necessary to determine the system of signals that can form an instrumental set of strategies. Having identified the necessary indicator signal indicators that can be used in practical trading, fine-tune the analysis services. This is necessary for a correct estimation of quotations of a particular asset. It is through the combination of indicators and experiments with their technical settings that professional indicator-type strategies are born.

Strategies for Price Action – this format of systems is more complicated in development. To form a system of this type, you need to have a relatively large trading experience and attention. The bulk of Price Action systems are strategies based on cyclical patterns and the identification of certain market indicators that can be used as signals for trading. A simple example is working on trend levels. The developers of this system simply noticed the regularity of the market, in which the price, reaching certain indicators, carried out a trend reversal. So the trading strategy was born. Another example is candle models. The chart in the mode of Japanese candles generates a wide variety of shapes, combinations and figures of quotations of quotations that are able to inform the trader about changes in the movements of the market. Having identified this model, you can draw up a lucrative rate. Thus, the development of the Price Action strategy is to monitor the market for the identification of certain cyclical patterns. It should be noted that such indicators are considered by professionals to be the most effective signals for trading.

• Calculation of expiration for trading by strategy

The second most important indicator of binary trading is the option redemption time. It is completely unimportant whether you predicted a market movement if at the time of the expiration of the option the price is not in the place where it was supposed to be according to the trade forecast, as the market can oscillate in different directions in a rather limited time range, and considering that the bulk traders trades contracts with expiration from 1 minute to an hour, then without correct calculation of this indicator, trading can be ineffective.

To correctly determine the optimal repayment range for bets, you first need to study the history of the market. Here you can simply calculate the candles of the chart with a certain period of construction (timeframe) to determine the most effective time range, which will effectively work out the signal of the strategy instruments.

Next, when calculating expiration, you should take into account the current volatility of the financial instrument market. For pulsed motion, it is preferable to use contracts with a minimum repayment range. At low quotes activity it is recommended to work with options with a longer range of repayment. A clear calculation of the time indicator of the action for each contract allows you to maximize the profitability and efficiency of trading.

• Managing

We determined the range of technical indicators that are necessary to create our own trading method for binary trading, it’s time for financial requirements for the work of the strategy. You should clearly understand that there are no systems with 100% efficiency. Each strategy gives a certain indicator of unprofitable contracts! Therefore, you must clearly understand what level of losses your strategy gives to properly manage your capital. Ignoring the calculation of risk management indicators can lead to a loss of capital even on the most efficient system. In this respect, you can use the classic limitations on the cost of options – it is usually recommended to use contracts that do not exceed 5% of the amount of capital. An alternative here is a test strategy on specialized services or demo platforms – in this mode, you must use the trade statistics to determine the number of unprofitable rates and calculate the level of the maximum allowable risks in trading.

• Testing the system

Undoubtedly, already during the development of the strategy you will test certain moments of its work. However, after the final configuration, the formation of the system template and the calculation of all the necessary indicators, it is extremely important to conduct a final test of the strategy’s work. Thus, you can finally make sure the system is working, evaluate its trading effectiveness in different trading conditions, and gain experience in its practical use. Believe me, this will definitely pay off in the form of profits!

Summary

Having passed all the stages of professional strategy development, you can create an individual and highly profitable trading method that will be optimal for your trading style. The optimality of all indicators of one’s own strategy is one of the main factors in achieving success by any trader in the binary market!

“General Risk Warning: Binary options trading carry a high level of risk and can result in the loss of all your funds.”

Best Binary Options Brokers 2020:
  • Binarium
    Binarium

    Best Binary Options Broker!
    Perfect Choice For Beginners and Middle-Level Traders!
    Free Demo Account! Free Education!

  • Binomo
    Binomo

    Honest broker!

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