Short-term trading on binary options attracts the attention of not only novice traders.
The prospect of earning up to 100% of the investment amount in a matter of minutes is truly impressive, but few manage to implement these plans in practice. You can find quite a lot of short-term trading strategies online, and they all have one feature in common - each trading system is based on trend indicators or oscillators. Reviews from the use of these strategies are quite contradictory: some manage to make stable profits by following the rules of indicator systems, while others lose their deposit within a few months. The second category includes novice traders due to the lack of trading experience. Important! Profitable high-frequency scalping on small time frames is possible, but it requires significant knowledge and practical experience. Indicator strategies on the 5-minute chart for beginners are a reliable way to lose investments in the first month of trading. Many traders have already seen this. It should be understood that indicators are banal programs whose algorithm is based on simple mathematical calculations. Their use is advisable and quite acceptable when working with periods from H4 and more. On charts M1-M15, market noise predominates, under the influence of which standard indicators without redrawing generate false signals.
According to statistics, 95% of novice traders consistently lose the funds invested in trading. Despite this, beginners continue to use the indicator strategies discussed online and subsequently apply them in practice, which leads to the expected result. Isn't it better to use alternative options trading methods so as not to repeat the sad experience of most of your colleagues?
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If you want to transform binary options trading from a regular expense item into a source of stable profit, then it is strongly recommended that you familiarize yourself with the author’s strategy presented below without indicators.
Advantages and disadvantages of binary options for 1 minute
The main features of short-term trading are already known to everyone. We enter into a trade with an expiration time of 60 seconds. We made the correct forecast and made a profit. If you made a mistake, you lost your investment. It's simple. But this trading method has its advantages and disadvantages. We'll talk about them now. Do you agree?
Advantages
Compared to other types, turbo options have one main advantage. Traders are given the opportunity to make hundreds of trades per day. This says two things.
- You can open a huge number of contracts per day, which will lead to a possible increase in profits.
- You can devote only a couple of hours a day to trading. If you have a day job, school, or other activity that takes up most of your time, short-term trading is perfect.
However, before you start using minute binary options, be aware of the disadvantages.
Cons of minutes
If among the advantages we have highlighted only one important point, then turbo options have more disadvantages.
The first disadvantage is reduced payments. Of course, not all brokers cut payouts when trading short-term options. But there are many of them. Usually this is a few percent. If the maximum profit on the platform when trading standard options is 85%, then for minutes they can bring about 70–80%.
Yes, this minus is quite significant, because 10% from one transaction can be considered a serious loss. However, many traders could put up with this drawback, because the ability to open trades almost every minute would compensate for this drawback. But the next point repels many experienced traders.
The second disadvantage is the difficulty of forecasting. Remember what traders use to predict future price movements. They use technical and fundamental analysis. The last option is usually used for long-term trading, and in binary options you don’t have to think about this method at all for a minute. No news can have an immediate impact on the market.
Technical analysis is also not so simple. Yes, you can use various indicators and other technical analysis tools. But in this case their accuracy decreases. This is primarily due to the fact that on minimum timeframes there is so-called market noise, which causes false signals to arise.
Despite the fact that there are more disadvantages, trading on minute charts on binary options and with minute expiration remains incredibly popular. And all because for many beginners it is the advantage that turns out to be more significant.
Minute time frame indicators: RSI, Scalper Dream and Max Macd Color
The situation on the minute timeframe changes very quickly, so the tools for such a chart should be as simple as possible, not lagging and not take up much space on the chart. There is usually no time to conduct a long analysis, search for divergences/convergences, or identify complex candlestick patterns and waves. The only exception is when the trader already has a lot of experience.
When working on a minute time frame, you should use no more than 2 indicators. If you install 4 or 5 instruments on a chart, you simply may not have time to analyze all their readings.
The minute time frame is usually preferred by scalpers. This is the name given to traders who trade along resistance and support lines when the price rebounds from the boundaries of the constructed channel. Short-term scalping on “minutes” is one of the easiest ways to quickly make money on the M1 chart. Level indicators are suitable for scalping, as well as oscillators that confirm price turning points and indicate the direction of the trend.
We recommend that you familiarize yourself with the rules and strategies of stochastic scalping. The described methods are also suitable for minute TF,
Let's consider three instruments that are suitable for the minute timeframe - RSI, Scalper Dream and Max Macd Color. Of course, there are many more such indicators, but you can start getting acquainted with the M1 TF with these three.
Relative Strength Index (RSI)
The RSI indicator (full name – Relative Strength Index) shows the index of relative strength of price movement. In simple terms, it notes with what strength and in what direction the market is moving. The tool is suitable for all trading assets and any time frames.
RSI is included in the Meta Trader terminal set, and is also present on almost all brokerage web platforms. For the minute chart, standard settings are suitable. The main input parameter is the period value (Period). The frequency and quality of signals depends on its value. The higher the period, the less often the signals will arrive and the better their quality will be. Conversely, with a low period there will be a lot of signals, but their accuracy will deteriorate.
If you want to change the input parameters, we recommend that you first test the effectiveness of the new settings on historical data. To do this, you can use a regular strategy tester for Mt4.
RSI is an oscillator and shows market turning points. The tool is located in a separate panel under the chart and looks like a curved moving line that moves between three levels (30, 50 and 70), periodically crossing them. Like stochastics, RSI shows when an asset is overbought or oversold. Usually after this, a price reversal occurs in the near future.
Basic RSI signals:
- The curved line rose above 70, indicating the overbought level. This portends an imminent price reversal, since the asset is already overbought. As a rule, a trend change occurs at the moment when the line breaks through the 70 mark in the opposite direction (from top to bottom) and begins to move towards the bears. This is a sell signal.
- The signal curve dropped below 30, indicating the oversold level. This is a signal that the market will soon turn towards purchases, since the asset has already been oversold. Typically, a trend change occurs after the indicator breaks the level of 30 in the opposite direction (from bottom to top) and leaves the oversold zone, heading towards the bulls. This will be a buy signal.
Level 50 can be considered intermediate. It does not give clear signals to open a transaction, but indicates the direction of price movement. If the RSI curve breaks it from bottom to top, then the trend is upward. If the moving average breaks it in the opposite direction, then this is a sign of a downward trend.
Important! Do not open new trades if the RSI line moves near the 50 level. This indicates uncertainty in the market. The strengths of bulls and bears are approximately equal and it is not yet known in which direction the price will move.
Scalper Dream for short-term scalping
The Scalper Dream indicator was designed for scalping on different timeframes. The tool is suitable for trading on both minute and higher charts. Scalper Dream looks like a histogram with colored bars. Its panel is located in the basement area of Meta Trader according to the working schedule. A change in bar color usually indicates a price reversal.
The tool is custom and therefore requires a separate installation. To install, copy the Scalper Dream distribution file in .ex4 format to the folder with MT4 indicators and restart the terminal.
We recommend that you read the detailed guide on how to install and configure the Scalper Dream indicator, as well as the basic rules for using this tool.
Let's look at the main Scalper Dream signals:
- If the green bars change color to red, then this is a signal that the upward trend is changing to a downward one.
- If the histogram was initially red and then its bars changed color to green, then this is a sign that the downtrend is being replaced by an uptrend.
In addition to the histogram, the indicator also displays an information panel on the chart, which shows basic data about the current situation on the chart:
- Name of the trading asset.
- Trend strength (indicated as a percentage).
- Trend direction (Up/Down).
- Exact time according to your broker.
- The number of minutes/seconds remaining until the end of drawing the active candle.
The main signal to open a trade comes when the color of the histogram changes. However, you should also pay attention to the testimony of the informant. If the histogram indicates the development of a bullish trend, and the informer shows the predominance of a downtrend, then it is better to wait to enter the market, since the signals contradict each other. When opening a trade, it is important that the strength of the trend according to the informer is 65% or higher, and the direction of the trend corresponds to the signal.
Trend Oscillator Max Color Macd
Max Color Macd is a modified version of the classic Macd indicator. The tool is a trend oscillator, that is, it can determine the direction and strength of a trend, as well as identify turning points on the chart.
The algorithm has the form of a histogram along which two lines run. The curves periodically intersect each other in different directions, which indicates the possibility of opening a new transaction. In addition to the intersection of curves, the indicator also gives a signal by changing the color of the histogram bars.
The color of the Color Max Macd bars indicates the price direction and type of trend, namely:
- Red color indicates that the price of the asset is trending downwards and a bearish trend is developing.
- Green color indicates an increase in the price of the asset and also indicates the development of a bullish trend.
- The blue color is a sign that the price is going flat. When such bars appear, you should refrain from concluding new transactions and take profits on already open orders.
After a long flat in the market, the price often jumps and the chart begins to move along an upward or downward trend. In this case, the price can be compared to a spring. The longer and stronger it is clamped within the framework, the more powerful the subsequent jerk will be. Therefore, after a series of blue bars, we should expect a price breakthrough and the beginning of a new trend movement.
Minute chart or minute expiration?
The fact is that traders mean minute trading on binary options in different ways. Some classify as such trading only those transactions that are opened with an expiration date of 60 seconds. And others use strategies for binary options on the minute chart.
The latter option is safer and more affordable. Now let's explain why. Look, in order to carry out analysis to conclude a trade for 60 seconds, we usually have to set up a candlestick chart with a TF of about 15 seconds. In this case, using indicators is extremely dangerous.
We also note that candles with such a time frame cannot be used everywhere. But the M1 TF is available on the platforms of almost all brokers, as well as on third-party terminals and charts.
We recommend trading using the M1 TF. However, you can try your luck in contracts with an expiration period of 60 seconds. Next we will talk about several strategies for binary options on the minute chart. But you can try to implement them in turbo options.
Non-indicator trading
So far, all the strategies discussed have used indicators to search for entry points, but you can work without indicators. They haven’t come up with anything revolutionary in indicator-free trading; it is recommended to work using reversal candlestick patterns.
To improve the quality of trading:
- Only those reversal patterns that formed after a confident movement are taken. Essentially, when trading, a pullback is caught, usually it takes more than 2 candles, so the chances of profit are high;
- only patterns close to ideal are taken into account;
- Always set expiration to 1 candle. Pullbacks after impulses are rarely long-lasting;
- Additionally, you can filter signals by support and resistance levels.
Binary options strategies on minute charts
Next, we will look at several trading options that are suitable for short-term trading. At the same time, they differ in complexity, so almost every trader can find a suitable option here.
One of the simplest trading options using Bollinger Bands
This tool is one of the most popular among both beginners and professional traders. But the strategy for binary options on a minute chart, which will be discussed now, will be of interest only to the most novice speculators, since it is very simple, but does not guarantee a stable profit.
So, the working conditions are simple. Open a candlestick chart with a one-minute time frame. After that, apply the Bollinger Wave indicator with standard parameters. This completes the chart setup. Let's move on to trading.
We conclude a deal after the candle breaks the middle line of the indicator. When crossing from bottom to top, we open a bullish trade. You need to buy a Put option when it crosses from top to bottom. The expiration period is 5 candles, that is, 5 minutes. We open a contract immediately after the signal candle closes. The screenshot below shows several intersections. Look how many of them closed in profit.
Optimization of the “Third Candle” system
One of the options for optimizing the strategy for the 5-minute BO can be considered to be confirmation of the coincidence of the trend on a higher timeframe. This is what many professionals do - they do not trade with the trend on small time frames until they receive confirmation on higher ones. But, in general, it's up to you to choose.
On the subject: Three main ways to determine a trend and its reversal
According to our tests, the strategy gives mostly accurate signals, and their frequency increases in the direction of strengthening the trend. In such cases, it would be a good idea to apply the Martingale method, but within reasonable limits, with low risks.
In any case, we should not forget that this approach is very dangerous if carried away for too long. Therefore, you can use Martingale, but only a few times a day to adjust your profits, and nothing more. But in general, the “Third Candle” strategy is very good in combination with binary options because of its simplicity and clarity.
