How to Analyze Binary Options? 

If you follow the stock markets, you have probably heard about binary options more than once and asked about how to make sense of them and what binary options trading strategy to employ. Some say it's just luck, you just have to guess where the rate will go. But to make a consistent profit from trading options you need to know the basics, comprehend the terms, know how to invest and do technical or fundamental analyses, or better still, both.

Binary options information
Binary options information

Types of Binary Options by Expiry Time 

An option expiry time is the duration of the period of time during which the purchased contract is valid.

There are different categories of expiry periods. Accordingly, options are divided into these types:

  • Short term (turbo options) - from 30 seconds to 5 minutes. Traders who participate in short term options and make the maximum number of deals during the trading session are called scalpers, and the trading operation is called scalping.
  • Options up to 24 hours (medium term options). With such expiry time the trader gets help from the platform's tools: indicators, charts, analysis strategies.
  • Long term options last on average from one day to one month. But there are also terms over a month, although they are used very rarely. Participating in such operations requires experience and detailed knowledge of market analysis methodology. You should choose long expiry times when you have a large deposit, because you should wait a long time for the results of forecasting.

By choosing the right tools, strategies and expiry time, a trader makes the most conscious bet and contributes to the formation of his own commerce method. After all, it can become the key to making the most profitable trades in the future.

For turbo options, it is not possible to take a few hours chart as a basis and use minute charts for long term options.

Fundamental analysis 

Fundamental analysis looks at why prices fluctuate, how people who trade options make their decisions and why. Essentially, it is an examination of the underlying factors that cause prices to move. This information is crucial for a proper binary options trading strategy and profits.

Mostly short- and medium-term speculators are interested in important news events, which are posted in the so-called economic calendar.

They are published almost daily and influence the price of currency pairs and even shares of stock markets.

Here are some of the factors, which are taken into consideration by the fundamental analysis and economic calendar in particular:

  • The financial and political situation of the world as well as of individual countries. The stability of other countries, whose national currencies are dependent on the US dollar or euro, depends on their deterioration or improvement.
  • Macroeconomic indicators.
  • Of course, interest rates should not be forgotten.
  • Current environmental conditions and future predictions for the global environment.
  • Natural and man-made disasters.
  • Economic conditions: general, local and global.
  • Economic reports are also considered.
  • What statements are made by important political figures and heads of powerful global corporations.

There is an implicit rule in the fundamental analysis of binary options: the value and future movement vector of the underlying asset changes before or just after the release of important economic events.

Technical Analysis 

Technical (chart) analysis is based on past performance, i.e. statistics of market movements in previous periods, shown in charts. By carefully studying the price history for various time periods, you can find recurring trends, which will help you make informed decisions.

There are many technical aspects that people use in their binary options trading strategy. They include indicators, support and resistance levels, envelope patterns, breakout patterns, trend lines and data charts.

Popular indicators for chart analysis
Popular indicators for chart analysis

Indicators are an important aspect of technical analysis. They show price activity over time. They can be used to show where prices are likely to head in a single day or over the long term. Understanding indicators is an essential ability for traders of all levels. There are dozens of different signals on the platform, choose one to suit your tastes!

A chart is the most informative and human-readable way of presenting information in a time dimension.

There are many of them, but in the binary options market, three are commonly used:

  • Candlestick. The most popular and informative. Each candlestick is an indicator of price change over a selected time period, you can use it to determine the opening and closing price, as well as the maximum and minimum value.
  • Linear. The simplest one, it does not show any additional data like a candlestick chart, but you can instantly see the direction of the asset's movement. A line chart is drawn only at the closing price of each timeframe.
  • Bars. They contain the same information as candlesticks, but the visualization is fundamentally different.

By combining different aspects of technical and fundamental analysis, this is the best way to trade binary options.

Trading strategies 

A strategy is a systematic tactic for making and executing profitable trades that you execute with the expectation of making a profit. Trading strategies can be useful in guiding you towards profitable trading.  Almost any strategy must be backed up by a solid and sound indicator or chart analysis. The binary options systems that we will be discussing have proven to be very successful for various traders.

Popular binary options trading methods
Popular binary options trading methods

News trading 

Trading on the news, despite the fundamental rather than technical approach, is one of the easiest strategies. In the past, dealers had to keep their hand on the pulse of dozens of different indicators, but nowadays, it has become much easier. The special service "economic calendar" allows efficient commerce on the news in options to any trader, even those far from understanding the functioning of the world economy.

When trading the news in binary options, a fast reaction time is crucial. You have to enter the market as soon as the news break out - in the first few seconds.

Trend trading 

A trend trading strategy for binary options is more profitable and safer than most other strategies. The identified price trend increases the mathematical expectation of a positive outcome of the transaction, because the rule about higher probability of continuation of the movement rather than reversal comes into play. That is why the expression "The trend is a trader's friend" appeared. The first and most important task of a trader is to determine the trend. The task comes down to finding the areas that correspond to the description of a trend or price channel given in the literature.

Counter-trend strategies imply opening transactions at the moments of the beginning of the correction in the direction against the current movement. At the same time, opening against the trend involves the risk of making a loss (with a probability of more than 50%). This is due to the desire of players to support the trend.

Trend-following strategies are considered safer and more profitable. Opening trades in line with the general market mood allows you to operate more freely with price ranges and contract durations.

Scalping 

Scalping strategy for binary options implies the highest risks. In a short time frame of 1-5 minutes, you have to open a big number of positions. Under such conditions, it is difficult to correctly predict the direction of the market.

There are times when prices change very quickly. The speculator just has to wait for the price to change in the right way. But if you predict the direction of the market correctly, you could make money in a relatively quick amount of time. Indicators often used for scalping are RSI, Exponential Moving Average (EMA) and Stochastic.

Martingale trading 

Martingale trading is a binary options trading strategy, which aims to recover the capital lost in previous unsuccessful trades by successively doubling the amount invested in subsequent trades.

The idea behind the Martingale strategy is that by increasing the amount invested in subsequent trades, an increased payout can be obtained if the trade is successful, thus eliminating any previous losses that may have been incurred in the account.

For example, a trader makes a trade with a bet of $1. After each win, he keeps the same bet at $1. If he loses, on the contrary, he doubles the bet each time. The theory goes that the end result will be in the player's favour. And since, each time the bet is doubled, the next win will be enough to recover the previous losses plus the original bet.

Choose your binary options strategy
Choose your binary options strategy

These are just a few of the more popular strategies. But the best way to trade binary options, is to try everything. You can do this risk-free on the platform, for example through a virtual account, which does not require you to invest.

Best way to trade binary options in the Philippines

The best way to trade binary options in the Philippines is to start by getting to know the brokerage platform. The platform is the middleman between you and the exchange, who will technically execute the trade and also provide all the analysis tools, news, quotes, video tutorials, a mobile app and other important and useful features for the trader.

Registering on the platform will open up the world of investing for you, it's quick and easy. Join the world of trading today!

Registering on the investing platform
Registering on the investing platform

Demo Account 

If you are less experienced or have any doubts, then opening a Demo account will allow you to test your trading skills without losing your money. This is because you can use virtual money instead of real money.

You can practice all the techniques that exist in practice. This is because you can simulate the movement of the asset you intend to trade.

Select the type of account for work
Select the type of account for work

Real trading account 

Before you start using any of the platforms to profit, you should first open a real account. To do so, select the top-up menu and make the required deposit.

It is important to keep a record of any profits and losses you make on your trades. It will be very easy to do once you have your own account. The profits from the trades will be sent to it, and you will see the history of the transactions. Be sure to analyse your strategy and change it if necessary.

These are some of the factors you should think about when looking for the best way to trade binary options in the Philippines. If you want to learn more about these options trading programs, it is best if you start using the platform immediately, this program is reliable and most widely used by traders around the world.

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Astropay
Metro Bank
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