- 1 The classic interpretation of moving averages
- 2 Binary options strategy for 1-minute binary options using SMA(8) and SMA(21)
- 3 Which strategy is best for binary options?
- 4 GENERAL RISK WARNING
In this article, you will learn about the binary options strategy, which is based on the most popular technical analysis indicator. We have already written many times on our blog about moving averages. This is probably the most popular indicator when it comes to technical analysis. Many strategies are based on it. Today, we are going to describe a method that works well with one-minute binary options.
|→The 1-minute binary options strategy uses SMA(8) and SMA(21) for trend identification and trading signals.|
|→This strategy works best in conjunction with a visible trend, even without indicators.|
|→Practice and observation are essential to increase the effectiveness of this binary options strategy.|
The classic interpretation of moving averages
You probably already know that there are several types of moving averages. Among them, you will find the most popular ones, like the simple moving average (SMA), weighted moving average (WMA), exponential moving average (EMA). Their classical interpretations are the same.
The closing price crosses the moving average
A situation where the closing price is above the moving average is read as a buy signal. Conversely, if the candle crosses the moving average downwards, it is a sell signal. This strategy in its simplest form gives many false signals. Just look at the chart below and you will see what I am talking about.
Using 2 moving averages to generate trading signals
Another common technique is to use 2 moving averages with different periods. Popular pairs of averages are 9 and 13, 8 and 21, 10 and 30. In the chart below you will find SMA(8) and SMA(21). The SMA(8) follows the price faster than the SMA(21). The signal to buy is when the fast average crosses the slow average upwards. The signal to sell is when the fast average crosses the slow average down.
Both of these techniques work. However, it is better to use them in combination with a set stop loss and take profit. Binary options, however, are an instrument that does not offer such possibilities. Here we are only assessing whether the market will go up or down. Our assessment is verified by the actual direction of the market.
Binary options strategy for 1-minute binary options using SMA(8) and SMA(21)
As I mentioned, binary options require a slightly different approach to trading. We will use the same averages, SMA(8) and SMA(21). First of all, they will be used to determine the existing trend. If the average is more than slow, then we are dealing with an uptrend. If the fast average is below the slow average we say that the market is in a downtrend.
The trend is one thing and the moment the position is opened is another. Our binary options strategy is about being clever. If the trend is downward, we will try to open the option for price falls.
The place where we will trade is to be clearly expensive in the market. If we have an uptrend, we want to open an option for the price increase, but in a place where it is extremely cheap. In this way, we have a chance to reach 60-70% efficiency of our trades. But what does this mean in practical terms?
Pros and Cons of the 1-Minute Binary Options Strategy 💡
- Quick, short-term trading opportunities.
- Can be effective with proper practice and observation.
- Works well in visible trends.
- Requires constant monitoring of multiple charts and currency pairs.
- Can generate false signals if not used correctly.
- Not suitable for all traders, especially those without sufficient experience.
|Useful Tips for 1-Minute Binary Options Strategy||Potential Pitfalls|
|Practice on a demo account before live trading.||False signals due to misinterpretation of moving averages.|
|Monitor multiple currency pairs and charts simultaneously.||Difficulty managing multiple trades at once.|
|Trade in line with the existing trend to increase success.||Inadequate experience leading to potential losses.|
Opening positions for price decreases
Practical examples best show the idea of this binary options strategy. If there is a downward trend we wait for the price to exceed the fast average (SMA8) upwards. If this happens, we wait for the price to clearly break through the SMA8.
Some traders will read it as a buy signal, but in such situations, the price usually returns. This is our signal to open a 1-minute option for a price drop. In the chart below I present one of the transactions. The red rectangle indicates where it is relatively expensive, which is good for opening positions for price drops.
Opening positions for price increases
If we have an uptrend we wait until the price breaks downwards successively SMA8 and then SMA21. Afterwards, we quickly open the option for the price increase. Look at the chart below.
Which strategy is best for binary options?
Remember that this binary options strategy, like any other, does not work every time. In addition, it requires some practice. It is good to practice it on your demo account.
Using this method, prepare several charts for different currency pairs and try to monitor the situation in several markets simultaneously. Remember to set an appropriate expiry time of one minute. Remember also that the method works best when the trend is also visible without the use of indicators.
This method may turn out to be very effective after a few weeks of training and observations. The key to success is a transaction in line with the trend catching the ends of the corrective move in the existing trend. It can be the best binary options strategy for beginners.
We hope that you will enjoy today's strategy. Please share your thoughts in the comments section below.
We wish you all the best!
- Q: How do you identify the trend with the 1-minute binary options strategy?
- A: You use the SMA(8) and SMA(21) moving averages to determine the trend. If the fast average is above the slow average, it indicates an uptrend; if it is below, a downtrend.
- Q: What is the ideal expiry time for this strategy?
- A: The ideal expiry time for this strategy is one minute.
- Q: Is this strategy suitable for beginners?
- A: The 1-minute binary options strategy can be suitable for beginners, but it requires practice and observation to increase its effectiveness.
- Q: How can you increase the efficiency of this strategy?
- A: Trade in line with the trend, catch the ends of corrective moves, and practice on a demo account to increase efficiency.
- Q: How do you open positions for price increases and decreases?
- A: In an uptrend, wait for the price to break downwards through both SMA(8) and SMA(21) before opening a position for a price increase. In a downtrend, wait for the price to exceed SMA(8) upwards and then break through it again before opening a position for a price decrease.
GENERAL RISK WARNING
Kindly note that this article does not provide any investment advice. The information presented regarding past events or potential future developments is solely an opinion and cannot be guaranteed as factual, including the provided examples. We caution readers accordingly.
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