15m binary options strategy

A Simple 15 Minute Binary Option Candlestick Trading Strategy.

This article discusses why candlestick trading is an ideal way to trade binary options.

Viewing price action in the form of Japanese candlesticks was popularised by Steve Nison. Candlesticks are now the default view in most trading software and glancing at a chart shows why.

The use of colours to distinguish bull and bear bars makes them easy to identify. The charts make a clear contrast between the real body (between the open and close) and wicks (between the high and low)

Automated Trading using Candlestick Charts.

Candlesticks are not only useful for viewing the markets and getting a quick understanding of price action, they also are easy to incorporate into automated trading systems. Automatic trading relies on the designer being able to replicate what is happening on the screen into a series of logical steps.

Candlestick charts are constructed using open, high, low, close price data and many patterns will use only a few bars of data. They are therefore much easier to program compared to systems that rely on data from many bars.

Candlestick Trading for Binary Options.

Options were developed to allow investors to hedge risks in a portfolio. Purchasers of an option have the right to buy or sell the underlying instrument at a certain price before a certain time. For investors, options act as a form of portfolio insurance.

Traders buy and sell options to make a profit from market moves and market volatility. Options allow traders to take advantage of margin to make bigger profits and losses they would do by trading the underlying instrument.

Binary options look similar to traditional bets. Trading a binary option risks a set amount of capital and wins a set amount. With an 80% payout a binary option trade of $100 risks $100 and wins $80.

The most popular type of binary option trade is the Higher-Lower trade. To win the trader must correctly guess whether the market will be higher or lower than the current price at a set time. This type of bet often has a payout around 80% and so the trader must be correct more than 55.5% of the time in order to be profitable.

In normal trading, a winning percentage of more than 55.5% would be easily attainable, however, for binary options the problem is that the trade will expire at a fixed time. Therefore any trading strategy must take account of the time element.

Candlestick trading is one way to address the issue of timing.

A Candlestick Trading Strategy.

I have come up with a trading strategy that is simple to use and deals with the issue of timing by trading one bar ahead. Therefore the strategy will enter at the close of a bar and exit at the close of the following bar.

As you will see when you watch the video below, the trading strategy has been profitable over the past 4 years on the EUR/USD 15 minute timeframe. The trading strategy is a reversal strategy.

Trading Rules.

Long trades require 3 consecutive lower bars. Short trades require 3 consecutive higher bars. All of them with a minimum body size that can be varied. 4th candle must be a Doji with a small body. Doji body to be a minimum size that can be varied.

Video Describing the Trading Strategy and how it can be Backtested.

Using Excel to Backtest the Binary Option Strategy.

Microsoft Excel is a very useful tool for backtesting trading strategies. Binary options are comparatively simple way of trading and are ideal to be backtested using Excel. Excel can handle quite a lot of data, in the video above I am testing 100,000 15 minute periods.

In the video I showed how the rules for this simple candlestick strategy can be programmed into Excel. I did this using an IF statement.

The long trades were opened using the following:

Short trades were opened using the following:

How to Improve the Strategy.

In the video I discuss a number of ways that this trading strategy could be improved. Once we have the basic model in Excel, it is easy to change variables to refine the strategy.

There are 2 variables built into the strategy. The size of the Doji and the size of the preceding candles. Either or both of these could be tweaked. I have set the number of preceding candles at 3. This number could be changed to 4 to identify a longer trend or 2 for a shorter trend. Most dojis have a small body, the colour of this could be used to identify preferred trades. For example a red Doji may be more profitable for short trades and a green Doji may be more profitable for long trades. The trading strategy does not distinguish between types of Dojis. Different shapes of wicks give the pattern a different look. Hanging man or shooting star patterns may be more profitable. The profitability of the pattern may be affected by the preceding momentum. We could test whether the pattern is more effective in a downtrend or an uptrend.

Use Excel to Backtest Trading Strategies.

If you are interested in using Excel to backtest trading strategies my Ebook course: How to Backtest a Trading Strategy using Excel is available in the Amazon Kindle Bookstore.

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Tradinformed.

Tradinformed is committed to helping traders develop their skills and stay ahead of the competition. See how you can learn to backtest your own strategies and get new trading ideas.

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15 Minute Strategies.

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Binary Options Edge.

"Ultra Fast Trader" Simple Binary.

Like This Unlike rommark 06 Jul 2014.

Like This Unlike rommark 06 Jul 2014.

Added screen shot, I've added white ball on the entry candles:

Like This Unlike rommark 06 Jul 2014.

Feedback, ideas, suggestions - welcomed.

Like This Unlike rommark 06 Jul 2014.

Anyone else see the Tradingview bug? If you re-size browser window it will move the MA line but candles stays same place?

Like This Unlike David 16 Jul 2014.

Anyone else see the Tradingview bug? If you re-size browser window it will move the MA line but candles stays same place?

Have not seen that one, what browser are you using?

Like This Unlike ELESTAR 17 Jul 2014.

Interesting strategy. I will try to backtest it and see what I will come up with. I actually have been playing with the 10 EMA.

Like This Unlike Apfelsaft85 07 Sep 2014.

Any preferred trading hours?

This strategy works for ranging markets?

Like This Unlike Apfelsaft85 13 Sep 2014.

Interesting strategy. I will try to backtest it and see what I will come up with. I actually have been playing with the 10 EMA.

How have you been doing?

For me it looks pretty good. I am wondering if the AO is really needed.

Like This Unlike dsalomon 15 Sep 2014.

I don't really understand the AO in this strategy. I see many entry points you did that are not with AO = 0.

I do want to try out the MA and Stochastic strategies you shared, seems quite good!

Like This Unlike hichamo 13 Feb 2015.

holla, thanks for sharing this strategy, 've some quest.

do u apply this strategy in a 5 min chart, and enter a 15 or 10 trading expiery or what?

I suggest replacing AO with RSA! What do u think?

Like This Unlike Mondmann 27 May 2015.

Isn't it an option for short with expiration time 2-3 candles?

Like This Unlike levantinebat 06 Jun 2015.

Someone already tested it? Share your results with us, please ! :-)

Like This Unlike sbgorka 14 Jun 2015.

I was backtesting this on few pairs. Didn't check news time. On 5m (10 min exp) and 1M (2 min exp) its working lts say to good:D i will try to check this on Monday at London session. to Good to be true:D.

Like This Unlike binoptwol 14 Jun 2015.

its working lts say to good:D.

What do you mean.

Backtesting is not a solid way to test a strategies.

Like This Unlike homer13 14 Jun 2015.

What do you mean.

Backtesting is not a solid way to test a strategies.

why do you say that? i see it as moving price to practice on. using dates no too far back..

Like This Unlike sbgorka 15 Jun 2015.

its to good becouse its simple and effective. its seems to work very well on breakouts. There very few OTM on pullbaks during strong trend. I got one today in the morrning. This strat needs some peace of PA But still working fine.

Like This Unlike sbgorka 15 Jun 2015.

There is one thing i dont get it. " Moving average MA (green color line) must pass through the body of the candle and be above the next candle" so that means we wait till next candel close and enter the trade or we enter on next after Ma pass body candel?

Like This Unlike homer13 15 Jun 2015.

Like This Unlike sbgorka 15 Jun 2015.

Ok, thx. And what about stoch, should it be in OB/OS area on the second candel?

Like This Unlike homer13 15 Jun 2015.

I'm just going in if the stoch having been in the ob/os level hasn't passed the 50 line..

Binary Options.

This exclusive report aims to serve as a manual, answering all of the questions on the Chinese multi-asset trading industry that you were always afraid to ask.

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Top Five Successful Strategies For Trading Binary Options.

If you are trading without a strategy or a tactic to help you with binary options, you might as well.

The article was written by Connor Harrison from Binary Brokers (BBZ). BBZ makes an effort to educate their traders so that they can understand recommendations regarding binary options, international legislation, risk management and other issues related to trading.

Trading in binary options is one of the popular trends in the financial markets today. Both experienced and novice traders are rushing to include them in their investment portfolios. Just like any other trading platform or business, you must have a strategy to use in order to consistently be making money.

If without a strategy or a tactic to help you trade in binary options, you might as well consider yourself gambling. Relying on luck is not very safe in trading binary options as it will eventually not work for you and might end up losing all of your investment. You will need a solid technique that you can use every time, which will help you make the right predictions. Moreover, you need to employ a strategy that you understand well and which consistently increases your chances of winning.

Bet or Trade?

Strategies are generally categorized into two groups. These categories are;

Betting model based strategies – In these strategies, it is assumed that the investor will employ betting strategies, whether they are familiar with financial markets or not. These strategies use several tactics that are designed to increase the probability of winning. Strategies based on the news are the best example in this category. Market behavior strategies – In these strategies, the investor relies almost wholly on technical and statistical data that are readily available or that which they have researched and worked on. While these strategies are a bit harder to understand and master, they are the most reliable ones since they are objective. There are techniques developed to help you understand some of the data, such as charts and which will make it easier for a new trader.

The popular strategies to go for are:

I – Fundamental Analysis Strategy.

This strategy is concerned with the analysis of the behavior of the overall performance or attributes of a company. As an investor or trader in binary options, you are interested in knowing about the health of the balance sheet, income statement and the cashflow statement of the company before you consider buying an option. The other factors that you should check out include the employee and the business partners’ satisfaction. In short, this strategy tries to look at the overall picture of the business they want to invest in their stock and at times the overall industry.

II – Technical Analysis Strategy.

This is a quite popular strategy in options trading. It is mainly concerned with the study of the past, using different parameters such as charts in order to predict the future price of an asset. This method is not concerned with getting the intrinsic value of an asset. It’s quite useful in options trading because as a trader, you don’t have to delve into the company’s financial statements. Among the tools used in technical analysis include Bollinger bands and Moving Average among others.

III – Basic Options Strategy.

This strategy is quite popular among options traders. It is designed and employed by a trader to safeguard him/herself from incurring total losses on their investments. You will pick an underlying asset or currency that you are interested in and then if the market movement of the strike price is heading towards a good direction, say upwards, you place a call option. At the same time, you will place a put option on the same asset.

Let’s use an example:

The GBP/USD currency option is going at 1:4000. You place the call option of $100 which will expire in 30 minutes. The payout is 70% and 15% if you lose. In the first 15 minutes the asset is at 1:4015 which is good so far. At this specific time, you buy a put option for the same asset at 1:4015 expiring in 15 minutes at $100. The payouts are the same as those of the call option.

At the end of the 30 minutes there will be two outcomes;

Your 30 minutes call option wins and the 15 minutes put option losses. You will have earned $185 from the 70% call winnings and the 15% consolation refund from the put option (the opposite can happen, put option wins and call option losses). Both the call and the put options end up in the money. You will get $340 ($170+$170). Since it’s almost impossible to lose on both options, the general risk of loss in this strategy is only $15 in order to win $140.

IV – Algorithmic and signals.

There are apps which are sold and which are very good at trading or analyzing the market data. You might find it appropriate to invest in such an app. This app is installed in your computer and gathers data that you want and then analyzes it to come up with the best possible outcomes. Technical and fundamental analysis data are used here.

The computer will then pick a trade for you to trade in. You could even go ahead and design the app to be actually trading for you. You will however need to be regularly updating the raw data that the app picks its analyzing details from.

V – Co-integration Trading Strategy.

There could be two stocks in the market that have a high correlation relationship. This could be because they are in the same industry and are traded in the same market, hence affected by many factors the same way. Given the high correlation between such a pair of stocks, you will find that whenever there is a gap between them it will close soon after. The gap can be caused by the weakening of one stock temporarily. The main task here is to identify the gap.

After identifying the gap, you should buy the call option for the stock that is weak or a put option for the asset if the stock higher in price is bound to come down. Eventually, the two assets will come to the correlation path and that should be the ‘point of exit’.

Final Word.

Strategies, just like investment options, are many and you could end up with one which gives you consistent winnings. If you are a new trader, research well and identify the one strategy that best suits your trading portfolio and pattern. If you are a bit more experienced, you can create your own strategy or combine two existing ones to form a hybrid.

Related News.

FMA Issues Warning against Binary Options Broker.

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17 Comments on "Top Five Successful Strategies For Trading Binary Options"

A small loss is better than loosing %100.

Yes true, if one trade is a loss and the other is a win; you end up lose of $15. BUT, look at it that way that you will only end up losing just $15 rather than just placing one trade and losing it meaning losing the whole $100. SO what is better losing just $15 or losing $100.

Not to mention in case of both winning trades than you get $140 extra profit. Know what I mean 🙂

It makes no sense at all. Imagine that you put your money on call and the price goes down before your put order. You have no chance in saving that with a second bet. To use this strategy the first bet has to be in the green until you place your second bet, which I doubt will be statistically profitable.

How come both options end up in the money if I choose to place both call and put options (that end at the same time) in one currency? Obviously, I will always lose one of the two options. The only chance I have to make it possible for both options to win is if I choose two kinds of instruments (usually with negative correlation) or still using the same currency but adjust the options’ expiry times so they don’t end up at the same time.

Buy Euro/USD 30 min Call strike 1.05660. After 15 min CMP is 1.05698, take a Put 15 min. Euro/USD expires 1.05683. Both the options are ITM.

Has anyone you know actually tired this for real, and what was the outcome ?

and if the 30 mutes call was in a lose after 15 minutes. what will i have to do ?

What do you think about iqoptions?

I think it is a great broker website. I have used it. Their platform is quite easy to use.

does it work in india.

Hi anyone out there who can tell me what brokers not to use. So many bad reports Biggest problem is withdrawing funds. There are always excuses and time delays. Any help please.

Hey Guys, I am Michael Essien. I need some guide on binary trading that really works. I am using IQoptions and trust me, making some money via this platform looks easy but its not. who can help please?

I love the ” III – Basic Options Strategy”, there is a chance to win big and in case you lose, its just $15 loss better than trading just one trade at a time and end up losing it making your loss $100. With no probability of a win.

But using strategy III, there is at least the chance of winning both trades.