Binary Options Trading Strategy

How To Trade Binary Options:

In this article, I want to show you a simple binary options trading strategy.

In the previous article, I’ve shown you how binary options work.

If you haven’t read that article yet, please do this first so that you know the basics before we actually start trading binary options.

Because in this article, I will show you:

  • How to configure your charts
  • How to find the right market to trade
  • How to find the best expiration to trade and…
  • As promised: A Binary Options Trading Strategy

So let’s get started…
 

How To Configure Your Charts For Trading Binary Options

In the previous article, we talked about all the markets that you can trade:

  • Indices like the S&P 500, DOW Jones, Nasdaq, etc.
  • Currencies like EUR/USD, USD/JPY. AUD/USD, etc
  • … and you can trade commodities like Gold, Silver ad Crude Oil as well.

And as you know, Binary Options can expire…

  • in 5 min,
  • in 20 min,
  • hourly,
  • at the end of the day
  • … etc.

For this very simple trading strategy, I want to know which Binary Options expire in the next 20 min, so I’m selecting this here:

binary options

 

Right now, we see that only the indices are expiring in the next 20 min.

Depending on the time of day, you might also see currencies and commodities here.

But let’s get started with the indices:

  1. Simply click on one of the indices, e.g. US 500
  2. And then select any strike price.

This will bring up the chart and an order ticket. For now, we only need the chart.

This is what it looks like:

binary options

 

For this simple Binary Options trading strategy, I want to remove the RSI, and I want to add the Bollinger Bands as well as the Bollinger Bandwidth. 

And I am changing the settings of these 2 indicators to 12 and 2:

binary options

 

Here’s what I’ve found when using Bollinger Bands:

  • If prices are moving higher and the Bollinger Bandwidth gets larger, prices usually stay ABOVE the Moving Average.
  • And if prices are moving lower and the Bollinger Bandwidth gets larger, prices usually stay BELOW the Moving Average.

us500

A Simple Binary Options Trading Strategy

Here’s how I use this for trading Binary Options:

  • When I see prices moving HIGHER and the Bollinger Bandwidth gets larger, I BUY a binary option with a strike price at the Moving Average
  • When I see prices moving LOWER and the Bollinger Bandwidth gets larger, I SELL a binary option with a strike price at the Moving Average

I like to use LIMIT orders and I want to see at least $10 in profits.

$10 might not sound a lot, but if you can do this every 15-20 minutes, it adds up.

And you could always buy more contracts:

If you would buy 10 contracts, you would make $100.

Keep in mind that there’s always the risk of losing money!

But you already know that, right?

us small cap 2000

 

After placing the order, all you need to do it wait until expiration.
In this example:

  • If prices close above 1581.4 in the next 6 min, you would make $10.
  • And if prices close below 1581.4 in the next 6 min, you would lose $90.

If you need a refresher on how exactly Binary Options work, read the previous article.
 

Can Binary Options Make You Rich?

What you have just seen is a very simple strategy for trading Binary Options.

And there are a few restrictions when trading this strategy:

  • You have to be in front of your computer during the day when the markets are open. And not everybody has time to do that.
  • You have to wait for the right setup that I just explained.
  • The strategy has a low risk/reward ratio.

I personally use a more advanced trading strategy for Binary Options that allows you to place the trades at night so that you don’t have to worry about it during the day.

I’ll show you this strategy in the next article.

 


Trading Futures, options on futures and retail off-exchange foreign currency transactions involves substantial risk of loss and is not suitable for all investors. You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge, and financial resources. You may lose all or more of your initial investment. The lower the day trade margin, the higher the leverage and riskier the trade. Leverage can work for you as well as against you; it magnifies gains as well as losses. Past performance is not necessarily indicative of future results.

Editors’ Picks

EUR/USD hits two-week tops near 1.0500 on poor US Retail Sales

EUR/USD hits two-week tops near 1.0500 on poor US Retail Sales

The selling pressure continues to hurt the US Dollar and now encourages EUR/USD to advance to new two-week peaks in levels just shy of the 1.0500 barrier in the wake of disappointing results from US Retail Sales.

EUR/USD News
GBP/USD surpasses 1.2600 on weaker US Dollar

GBP/USD surpasses 1.2600 on weaker US Dollar

GBP/USD extends its march north and reclaims the 1.2600 hurdle for the first time since December on the back of the increasing downward bias in the Greenback, particularly exacerbated following disheartening US results.

GBP/USD News
USD/JPY extends downside to near 152.60 as USD weakens across the board

USD/JPY extends downside to near 152.60 as USD weakens across the board

USD/JPY declines further to near 152.60 as the US Dollar underperforms its peers amid upbeat market mood. US Trump didn’t reveal its detailed reciprocal tariff plan on Thursday.

USD/JPY News

Editors’ Picks

EUR/USD hits two-week tops near 1.0500 on poor US Retail Sales

EUR/USD hits two-week tops near 1.0500 on poor US Retail Sales

The selling pressure continues to hurt the US Dollar and now encourages EUR/USD to advance to new two-week peaks in levels just shy of the 1.0500 barrier in the wake of disappointing results from US Retail Sales.

EUR/USD News
GBP/USD surpasses 1.2600 on weaker US Dollar

GBP/USD surpasses 1.2600 on weaker US Dollar

GBP/USD extends its march north and reclaims the 1.2600 hurdle for the first time since December on the back of the increasing downward bias in the Greenback, particularly exacerbated following disheartening US results.

GBP/USD News
Gold maintains the bid tone near $2,940

Gold maintains the bid tone near $2,940

The continuation of the offered stance in the Greenback coupled with declining US yields across the board underpin the extra rebound in Gold prices, which trade at shouting distance from their record highs.

Gold News
Weekly wrap: XRP, Solana and Dogecoin lead altcoin gains on Friday

Weekly wrap: XRP, Solana and Dogecoin lead altcoin gains on Friday

XRP, Solana (SOL) and Dogecoin (DOGE) gained 5.91%, 2.88% and 3.36% respectively on Friday. While Bitcoin (BTC) hovers around the $97,000 level, the three altcoins pave the way for recovery and rally in altcoins ranking within the top 50 cryptocurrencies by market capitalization on CoinGecko. 

Read more
Tariffs likely to impart a modest stagflationary hit to the economy this year

Tariffs likely to impart a modest stagflationary hit to the economy this year

The economic policies of the Trump administration are starting to take shape. President Trump has already announced the imposition of tariffs on some of America's trading partners, and we assume there will be more levies, which will be matched by foreign retaliation, in the coming quarters.

Read more

RECOMMENDED LESSONS

7 Ways to Avoid Forex Scams

The forex industry is recently seeing more and more scams. Here are 7 ways to avoid losing your money in such scams: Forex scams are becoming frequent. Michael Greenberg reports on luxurious expenses, including a submarine bought from the money taken from forex traders. Here’s another report of a forex fraud. So, how can we avoid falling in such forex scams?

What Are the 10 Fatal Mistakes Traders Make

Trading is exciting. Trading is hard. Trading is extremely hard. Some say that it takes more than 10,000 hours to master. Others believe that trading is the way to quick riches. They might be both wrong. What is important to know that no matter how experienced you are, mistakes will be part of the trading process.

The Best Brokers of the Year

The Best Brokers of the Year

SPONSORED Explore top-quality choices worldwide and locally. Compare key features like spreads, leverage, and platforms. Find the right broker for your needs, whether trading CFDs, Forex pairs like EUR/USD, or commodities like Gold.

Read More

Strategy

Money Management

Psychology

Best Brokers of 2025