Binary trading is one of the few instruments that can provide substantial profits through 60 second trading. The popularity of purchasing options which expire after just one minute has been growing steadily as asset traders look for alternative scalping methods. These don’t necessarily rely on market momentum to generate profits. The fact that binary options are all-or-nothing investments means that they simply rely on the market moving fractionally higher or lower than the strike price in order to be profitable. This differs from traditional forms of investments which require movement in the market in order to generate a profitable position. For this reason, binaries can be used as an excellent scalping tool and there are a number of popular ways to take advantage of this.
Ideally, when purchasing binary options for only 60 seconds you will want the market to move as powerfully in your chosen direction as possible. This reduces the potential for the options to expire out of the money. This is also beneficial to reduce the anxiety and emotional difficulties associated with trading. A strategy that can provide this is going to be both profitable and enjoyable in the long run. Despite binary trading not requiring substantial momentum in market prices to be profitable, this momentum will certainly provide an advantage. Breakouts are one of the few situations where markets can travel in a straight line in the very short term. The momentum of a breakout trade can also satisfy the ideal situation of moving away from the strike price in order to secure profits on the 60 second options.
Breakout trading involves looking for price to move out of an area of consolidation. This is identified as a sideways range or technical pattern such as a rectangle, triangle or head and shoulders. When price moves out of this range it will often be with fairly substantial momentum. The most influential breakouts can be spotted on the higher timeframes such as the 15 minute and 1 hour charts. These offer good opportunities for scalpers to take advantage of this momentum and attempt to catch price moving higher or lower in their favor. The most awkward aspect of these trades, however, is the entry strategy. The trader wanting to be involved as soon as possible needs to minimize the risk of getting caught by a reversal or ‘false breakout’.
Entries on breakout strategies can be straightforward. If we assume price will pull back following the initial break to confirm whether the breakout is genuine. Binary options scalpers can take advantage of this knowledge and trade the high or low of the first pullback. This is similar to a straightforward 1-2-3 trade. Although no strategy will be profitable every time, the momentum beyond the pullback should last at least 60 seconds. Furthermore, preparing a hedge in the opposite direction should the trade appear to fail will minimize losses in the event of an unsuccessful breakout.
Trading the news
60 second options traders take advantage of the market movement created by powerful news releases. These are the price spikes seen on price charts where the market has become over extended. This is due to the increased volatility caused by trader’s reaction to the news. Most traders will admit that these sudden price movements have a tendency to return to normal. They sometimes fully retrace once the period of volatility has subsided. However, for scalpers who only require price to continue in one direction for a period of 60 seconds these can be very profitable opportunities. The traditional adage is that markets should be left for up to 30 minutes to settle before they return to normality and, therefore, purchasing binary options just as the news is released and the market begins to move is a popular momentum trade.
One thing to observe when trading news releases is whether the news has an interpretation element. By this we mean whether traders could interpret this differently and cause price to swing wildly in both directions which may adversely affect very short term binary options traders. News releases such as the US non-farm payroll has a tendency to have this effect. Scalping strategies may be most effectively executed on news releases such as interest rate decisions, which may push the market in a single direction. Always something to consider when news trading.