Binary options are one of the few forms of trading where substantial profits can be made through 60 second trading. The boom in popularity for binary options, which has fast become one of the most popular way to trade short term positions across a range of financial markets, is largely down to this exciting way to make relatively large profits in the space of literally one minute.
Why do people trade 60 second binary options?
The way that sixty second trading works with binary options is both straightforward and need not involve any of the large risks associated with conventional forms of trading. Traditionally, a trader looking to profit from a 60 second price movement would be looking for a very small movement on a very large position to make a reasonable profit. Needless to say, explaining to any trader that they can actually make up to 85% of their initial investment using binary options, rather than the huge risk-reward ratios that they would have been used to, is a fairly straightforward reason why so many have switched to this form of trading. Sixty second trading using binary options can risk as little as $10 on each position and can therefore earn a trader up to $8.50 profit in a matter of seconds on this small investment.
Patience is the key with so many minutes in a day
Many traders who are attracted to the short time frames offered by binary options trading have a system or strategy which they hope will help them to exploit the short term opportunities in the market. The fact that a 60 second binary options trades rely on a markets moving only slightly higher or lower than the strike price in order to be profitable means that the most successful traders will patiently wait for the highest probability trades in order to enter the market. Patience in waiting for these trades is one of the most important factors given that there are over 480 minutes to trade during an given 8 hour period of market activity.
Strategies employed to trade 60 second binary options
Choosing a 60 second strategy is a very important factor in becoming a successful short-term binary options trader. The strategy employed by 60 second traders needs to anticipate a quick move in either direction to occur and to last the lifetime of the 60 second options. Some of the most effective indicators to use for this are momentum indicators, such as stochastic and Relative Strength Index which show when a financial market may be considered as ‘oversold’ or ‘overbought’ on any given timeframe. Although these are not a rationale to enter a trade alone, they can provide a good initial indication that traders should be looking for reinforcing reversal signals. One of the most effective to use alongside this on a short-term timeframe as the 1 minute charts is to look for divergence within these oversold and overbought positions. Divergence in an overbought market will often result in a sharp correction as market participants realise that it is not only too high in value but also that there is diverging market strength at these levels.
Alternatively, some traders may want to purchase 60 second binary options when price breaks out and closes outside of the default Bollinger Band settings. As price very rarely stays for long in these areas, and usually returns to within its parameters very quickly after closing beyond the outside bands, it offers a good opportunity for a high probability trade. Some traders may also look for reinforcing signals within these chart set-ups, such as clear reversal candlestick patterns which combine to make a speedy reversal even more likely. Ultimately, trading 60 second binary options can be incredibly profitable but relies on the patience of the trader to choose trades selectively and when they offer a genuinely high-probability prospect of success.