Basic Strategy for 60 Second Options

Basic Strategy for 60 Second Options

expiryperiodsRecently the news came out that MarketsWorld, one of our top brokers, is adding 60 Second options to their lineup.  A number of other brokers we like already offer 60 Second options, including TradeRush and Banc De Binary.  What is a 60 Second trade?  It is identical to a High/Low trade in how it works, but the expiry times on these trades are always exactly one minute.  They are blazing fast, and give traders the exciting opportunity to gain (or lose) money in just 60 seconds.

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The Basics

Not already familiar with High/Low trading?  If you are brand new to binary options, you will quickly discover this is the most basic and popular type of binary options trade.  You look at a given asset your broker is offering a trade on, and you ask yourself a simple question based on the expiry time you see listed.  “When this trade expires, will this asset be trading above or below its current price?”  How far above or below does not matter, only that you choose the right direction.  Where price goes and what path it takes before the trade expires is equally irrelevant as far as the payouts are concerned.

If your trade expires in the money, with price trading the direction you indicated, you receive the payout on the trade.  If it expires out of the money, with price going the opposite way, you lose your investment.  Now picture all of that action unfolding in just 60 seconds, and you will understand exactly how 60 Second trading works.

Caution: Trading 60 Second Options is Challenging

Trading 60 Second options is especially difficult for most traders.  There are a number of unique challenges that go with trading on such a short time frame.  Here are the main issues which can hinder successful trading:

  • 60-second trades can be intense.  Traders who need time to think and act may panic and make poor decisions during the course of a 60-second trade.  For some, the pressure of executing trades that quickly may simply be too much.

  • If you take trades which rely on small movements for profit, you will be sitting in front of your computer looking for setups for hours a day.  You cannot simply check the charts once or twice per day, note any possible setups, and take them or shut off your computer.

  • The information on your charts for planning these trades is generally less reliable since each of the bars contains less data on a small timeframe than the bars on say, the daily chart.  This makes price more unpredictable.

  • There is often more choppiness and “noise” on smaller timeframes than there is on larger ones, so you may find yourself dealing with a lot of price spikes and fakeouts that can cost you money. How to avoid fakeouts? Find out here.

You can certainly overcome these obstacles in trading, but only if you approach 60 Second trading with a potent strategy.  A good strategy need not be complicated.  In fact, the best strategies for trading binary options are generally quite simple.  Simple strategies help you keep your head clear and focused while you are trading, and provide fewer conflicting signals.

Market Situations

As a 60 Second trader, you can profit in a market that is ranging or trending.  If price is moving predictably and relatively steadily in a particular direction, you have a great chance to profit.  If the market is ranging, you still can profit with 60 Second options since even small price movements can generate wins.  You should still be wary of especially choppy conditions however, since small price spikes away from your position can cost you your trade.

Trading Systems for 60 Second Trades

The same trading methods that work on higher timeframes can also work for fast trades like the 60 Second trade.  You do need some kind of a trading strategy, and not just your intuition, if you want to profit.  You need to know your system forwards and backwards, and be able to trade in your sleep, because when you spot an entry, you may have seconds to analyze whether or not you should take a given trade.  Here are some indicators and strategies you can try using separately or combined to generate a winning system:

  • Price action.  Looking for price patterns that signal changes in trends or confirmations of trends can work just as well on fast timeframes if you learn how to apply them accurately and quickly.

  • Technical indicators.  You might try looking for moving average crossovers to signal a new trend, or MACD divergence.  Fibonacci levels and support and resistance levels which you can identify can also be traded.  There are hundreds of indicators out there.  Some will come with your trading platform, and others you can download.

  • Trade the news.  You may also try trading financial reports or other news which can move the markets.  Fundamental analysis works well for many scalpers, but requires advanced, comprehensive understanding of economics in order to be consistently profitable.

If you already have a strategy for trading High/Low options which you use on trades with slower expiry times, you may be able to adapt it to 60 Second trading.  Give it a try with historical trades and demo trades first before you try to do it live with real money. You can even demo trade a 60 second binary option at Marketsworld!  Trading fast options is a completely different experience, even though these trades are still technically High/Low trades.  You will save yourself a lot of money if you trade on paper before going live, even if you are a veteran binary options trader.

Before jumping into 60 second binary options – read the articles listed below for details: