Back with a short-term binary trade

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Back with a short-term binary trade

Hello, everyone. It’s been quite a while since I last posted here to my blog. Rest assured, I’m still trading, but I’ve shifted almost all of my focus to swing trading spot forex recently, mainly focusing on the four-hour and daily timeframes. It’s been much less time intensive so it blends well with my college schedule. However, school is out for the summer for me so I’m excited for the opportunity to mix things up and get back into some binary options trading after such a long break from it.

I took my first and only trade of the day at about 3:00AM EST for a 3:15 expiry. Those who have read my blog before will remember that I base almost all of my trading on price levels, using areas of support and resistance in the market. This trade, of course, was no different. Around 2AM I noticed that 1.2941 was holding pretty well and forming some resistance. And over the next half hour, price drifted back into the range it had been trading at earlier in the morning. In my experience, if price retraces back into the range it had been trading at earlier, it suggests that the price level that had just been formed is fairly sturdy and represents a sound trading opportunity should it reach back up there in the future.

Nonetheless, I was still patient with the trade. Although I could have taken the trade on the 2:45 candle (when it got back up to 1.2941) I decided to wait. I was mainly wary of the 2:40 candle, which had shown some upward momentum with an 8-pip rise. But 1.2941 still held and if I had taken the put option there it’s definitely a trade that I would have won. But once it got back up to that level again around 3:00, I took the put option at 1.29408 (see red arrow in image below). The trade went against me for only about the first minute before reversing to my expectation and closing out at 1.29355 for about a five-pip winner.

You can also notice that the same price level presented another trading opportunity on the 3:25 and 3:30 candles. I did not trade either of those as I was away from the computer but had I been there I’m sure I would have traded the 3:30 candle upon the re-touch of the 1.2941 level. It would have turned out to be a very nice trade, eventually winning by 15 pips.

If you have any questions or comments about this trade or questions about trading in general, please leave them in the comments section below and I will definitely be happy to get back to you.

Short Term Binary Options Strategy


Short Term Binary Options Strategy (contracts) come in many flavors; the most popular of them being the 60 second, 2 minutes or 5 minutes and 15 minutes expiry. (read more about Expiry Times) These short term expiry contracts are traded the most due to the fast paced action that they offer. Short term binary options typically payout between 65% – 80% and is mostly available for forex instruments. In this article, you will learn about a few simple strategies that you can use to trade these short-term binary options expiring contracts.

What are short term binary expiries?

The short term binary options expiries are contracts that expire within a short period of time. A trader is paid out a fixed return if the contract expires in-the-money or loses their risked investment if it expires out-of-the-money. On a broader perspective, short term expiries behave the same way as any other long term binary options expiries. The fun and excitement comes from speculating the price moves over a short period of time. Technical analysts in forex often argue that it is a lot easier to predict where price moves in the short term than in the long term. But do not be fooled. It is very easy to get addicted to trading the short term expiries and a trader can quickly lose all of their equity when they take consecutive losses.

Trading News Releases with Short Term Binary Options Strategy

Below, we outline a few simple to use trading strategies that can be applied to the short term expiring binary options contracts.

In forex, it is often said to buy the rumor and sell the fact. This simple logic works very well with short term options. The way to trade short term contracts is to first look for a major news release. This could the NFP that is very volatile and affects most of the majors. It could also be central bank interest rate decisions or even CPI data.

The next step is to look for the sentiment. Usually media starts to report about the estimates on such events 24 – 48 hours ahead of the news. If the general sentiment is bullish, then 5 minutes ahead of the news release, make sure to purchase a CALL option. Choosing the expiry time is of importance here as a small miscalculation can lead to a loss. Typically, choose contracts that expire close to the news release time.

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For example, if a CPI news release is due to be out at 10GMT and the market is expecting a bullish reading, then purchase a CALL option 3 – 4 minutes before the news release. Choose either a 60 second expiry or a 2 minutes expiring contracts. Price usually tends to rally before the news and then drop back after the news is released.

To compare, a forex trader usually employs such a strategy known as scalping to make some high probability profits before, during and after the news release. (see Economic calendar with news here )

Short Term Binary Options – Trading Example

AUDUSD – Unemployment Release: The chart below shows the 1 minute chart of AUDUSD before the Australia Unemployment data was released. Notice how price spiked just around the time the report was released. A CALL option around 0.9324 with a 2 – 5 minute expiry would have resulted in a winning trade. But notice the importance of timing here. If the option was a 60 second expiry, it would have resulted in a loss.

NZDUSD Unemployment Release: The next example below shows the Kiwi unemployment data. Keeping in line with the buy the rumor sell the fact strategy, notice how price spiked ahead of the news release. The unemployment rate had actually increased from 5.8% to 6%, which is not great news. However, despite the actual release, price rallied before the news was released. In this chart, we see that a 2 minute expiry just before the news release would have resulted in a winning trade. Again, in this chart we would like to stress the importance of timing the trade and choosing the right expiry time.

A minute ahead or later would have resulted in a losing trade due to the fast changing price. After making the spike, price moved within a tight range without any direction and it would have caught many traders who were late to the party… or some greedy traders opening new contracts resulting in a losing trade.

Trading Short Term Contracts – Takeaway

From the above examples, we see that while it is simple to trade news releases with short term expiring contracts, traders need to get in on a contract at the right time and price. And don’t forget choose regulated Binary Options Broker (see our Top Binary options brokers) A small miscalculation on the timing of the contract expiry or even if the price moved too much before you could enter the contract could jeopardize the chances of having a winning trade.

For traders who are just starting out with trading the short term expiring contracts, always trade with the minimum investment amount for the contract so as to keep your losses to the minimum.

Binary Options

What are binary options

A binary option is a type of option with a fixed payout in which you predict the outcome from two possible results. If your prediction is correct, you receive the agreed payout. If not, you lose your initial stake, and nothing more. It’s called ‘binary’ because there can be only two outcomes – win or lose.

Advantages of binary options trading

Aside from the simplicity of its ‘yes or no’ proposition, binary options trading is also very flexible. It gives you the ability to trade:

  • All markets

Trade on underlying markets that include Forex, indices, commodities, and more.

  • All market conditions

Predict market movement using up/down, touch/no touch, and in/out trade types.

  • All durations

Take a short-term or long-term view with trade durations from 10 seconds to 365 days.

  • All payouts

Earn payouts up to USD 50,000. Losses are limited to your initial stake and nothing more.

Why you should trade binary options with

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  • Patented technology
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  • Security and privacy
    Trade confidently, knowing that your personal data, transactions, and funds are always secure

All conditions and durations

  • All markets and conditions
    Trade currencies, indices, commodities and more in rising, falling, sideways, quiet, and volatile markets
  • Short to long-term durations
    Choose timeframes from 10 seconds to 365 days

Competitive and transparent pricing

  • Sharp, benchmarked prices
    Receive prices that are benchmarked against interbank rates
  • Transparent risk and potential reward
    Know how much you will win or lose before you purchase the contract
  • Protect your profits
    Sell your long-term contracts before expiry to protect any profits you may have made or to minimise your losses
  • Two-way pricing
    Receive quotes for a trade and countertrade, so you always get unbiased, transparent rates

Ideal for new and experienced traders

  • Low minimum stakes
    Deposit as little as USD 5 to start trading
  • Trade according to your preferred strategy
    Trade based on “gut feel” or rely on technical and fundamental analysis
  • Flexible
    Choose from over one million possible trade variations at any time, and customise your trades according to your preferred strategy
  • Scalable
    Earn the same proportional return on stakes of all values

How to trade binary options

Binary options trading is relatively easy. You can purchase a contract in just three steps:

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