In terms of strategy, 60 Seconds options take a very special place. While all binary options are short term oriented compared to regular trading, 60 Seconds options are even more extreme. Due to their incredibly short expiration time of only 60 seconds, they need a special 60 seconds binary options strategy. In this guide, we will explain everything you need to know to create your own successful 60 seconds binary options strategy.
In detail, we will answer these questions:
- What are 60 seconds binary options?
- Which unique challenges does a 60 seconds binary options strategy have to handle?
- Which types of 60 seconds binary options strategies do exist?
With the answers to these questions, you know everything you need to understand the nuances of trading 60 seconds binary options and to make money with the perfect 60 seconds binary options strategy for you.
Which unique challenges does a 60 seconds binary options strategy have to handle?
A strategy for 60 Seconds options faces a few unique challenges. Most of these challenges relate to the short time frames that you have to use to trade 60 seconds options. While some aspects of 60 seconds binary options strategies can be adapted to other strategies, some of them are unique to 60 Seconds options. In general, every trader will benefit from thinking through these strategies at least once because it will provide him with a greater insight to how the market works.
On short time frames, market movements are especially erratic. Fundamental influences such as a company doing well, for example, are almost meaningless. If you knew that a company would post record earnings this year, you would be unable to predict whether this company’s stock will rise or fall over the next 60 seconds. Even if you knew how an asset would perform this day, you could not predict what the stock will do in the next minute.
Short time frames are dominated by almost random actions. The only reason why an asset’s price rises or falls over 60 seconds is the relationship between supply and demand, and there is no way in the world to understand why there is more supply or more demand in the market.
Luckily, you can make valid predictions for 60 seconds options without understanding why the market is rising or falling. All you have to know that the market is rising or falling. This is what technical analysis is for.
Technical analysis focuses on the only thing you know about short time frames: the price movement. By recognizing certain price movements and understanding what they usually lead to, technical analysis can help you to make valid predictions about what people will do even if you know nothing about why they will do it.
To understand the nature of technical analysis, think of a person walking into a convenience store. Without knowing anything about the person, you could predict that the person is likely walking into the store to buy something. Of course, this prediction would not be right all the time, some people might walk into the store to return something or to work there or to go to the bathroom, but if you made the prediction at a Walmart, you would be right at least 95 percent of the time. That’s not bad.
Technical analysis adapts this approach to trading. Some patterns of price movements are highly likely to lead to rising prices; others are highly likely to lead to falling prices. By recognizing these patterns and understanding the outcomes that they are likely to lead to, you can find profitable trading opportunities for 60 seconds options.
How to deal with these challenges in your 60 Seconds binary options strategy
To make sense of the erratic price movements in these short time frames, technical analysis uses instruments such as trends, and candlesticks are invaluable instruments.
To create your own 60 Seconds binary options strategy, you have a few options. First of all, you can look for trends in short time frames. Trends are zig-zag movements that take the market to new highs and lows. Trends on short time frames are short lived, but they allow you to win a 60 seconds options when you recognize them.
Another ingredient to your 60 Seconds trading strategy could be candlesticks.
Candlesticks are a special way of displaying market movements that provides more information than the classic line charts many traders new from TV. Candlesticks display the opening price and the closing price of each trading period as two lines connected by a thick line and the high and the low of each period as a thinner wick to each end. With this simple way of displaying market movements, you know the entire price range of a period and never miss any information.
Because candlestick charts cram so much information into every candlestick, a single candlestick is often enough to allow for sophisticated predictions about what will happen next. By learning a few simple candlestick formations and the predictions for which they allow, you can easily find trading opportunities that are ideal for 60 seconds options.
In this case, make sure each candlestick represents a time frame of at least 15 seconds, or the movements will be too random. Finally, you can use technical indicators like the Moving Average to generate signals. In any case, the experience is an especially important ingredient to making good decisions in such a fast paced environment.
The advantages of a 60 Seconds binary options strategy
Compared to strategies for other binary options types, 60 seconds binary options strategies offer a number of advantages.
When trading High/Low options or Touch options, for example, you are operating with far longer expiries than with 60 Seconds options. Instead of only a few seconds, all other binary options types use expiries that range from 15 minutes to a few hours or, in the case of long-term options, even a few months.
In these bigger time frames, market movements become less erratic and more predictable. As a 60 Seconds trader, you, therefore, have to work with less secure predictions than all other traders.
On the other hand, a 60 seconds binary options strategy offers you three advantages:
1. You can make more money than with any other strategy
Compared to other strategies, a 60 seconds binary options strategy generates have an abundance of trading opportunities. Instead of generating only a few signals every day, a 60 Seconds binary options strategy can generate tradable signals every few minutes. Although you have to accept a higher percentage of losing trades, if you still manage to make a profit, a 60 Seconds binary options strategy can help you make a lot of money in a short time.
A 60 seconds binary options strategy offers an unmatched potential for earnings. You can easily find five to ten trading opportunities per hour, and if you invest a few hours per day, you can win a far higher number of trades than with any other binary options strategy.
2. You have to invest less time
Another advantage of a 60 seconds strategy is that it allows you to cram all your trading in a smaller window of time. If you want to place 5 trades a day, a strategy based on other binary options types would require you to trade for at least a few hours every day. On such long time frames, it simply takes longer for the market to develop trading opportunities.
On the shorter time frames of 60 seconds options, you will find a new trading opportunity every few minutes. When you are looking for a trend that can last for the next 60 seconds, you will find significantly more opportunities than if a trend has to last for the next four hours.
Traders that are limited on time will find that a 60 seconds binary options strategy is much easier to execute for them than any other time of strategy. Even if you can only spare five minutes here or there, with 60 seconds options, you can find quality investment opportunities. When you are stuck in traffic, waiting in line, or taking your girlfriend shopping, 60 seconds options are the only options type that allows you to fit in a quick trade here or there.
3. You learn more quickly
With every trade that you make, you learn something. You learn how the market works, which tools help you to make money, and which style of trading is right for you. These lessons are crucially important, especially for newcomers. With 60 seconds options, you get more lessons in a shorter period of time than with any other binary options type.
20 trades a day will teach you more than 5 trades a day. With a 60 seconds binary options strategy, you make more trades a day than with any other strategy, which provides you with a faster learning curve than any other type of strategy.
If you are new to binary options or trading in general, it can make great sense to start out with a 60 seconds binary options strategy. Especially if you are starting with a demo account, you can use this risk-free environment to make as many mistakes as you can as quickly as possible and get as many lessons as possible in a short period of time.
With these advantages, a 60 seconds binary options strategy is something every trader should try at least once in their career.
Examples of 60 seconds binary options strategies
There is an almost limitless amount of possible strategies for 60 seconds options. To help you get a successful start, we have gathered the most effective strategies that even newcomers can master quickly. These strategies will provide you with a good starting point, and later, you can adapt them to your preferences.
60 seconds binary options strategy #1: Trading candlesticks
On short time frames, complicated price formations are rare. The market is simply too erratic and nervous to form trends. Luckily, there is a great tool that allows you to find profitable trading opportunities nonetheless. This tool is candlestick formations.
Candlestick formations are an alternative way of displaying price movements. Compared to the classic line charts most traders know from TV, candlesticks communicate more information and allow traders to make better decisions.
The trouble with line charts is that they are unable to display every single price movement. When you look at a chart that displays the price movements of an entire day, the charts has to exclude most price movements and create its charts based on only 15 to 20 prices for the entire day – there is simply no more room. As a result, you miss most of the information. What seems like a straight without much movement up or down could be an optical illusion where prices moved far from the periods opening price but moved back before the next period.
This information is crucial because it tells you whether the market is volatile and nervous or calm with low volatility.
Candlesticks provide you with more information by displaying the opening price, the closing price, the high, and the low of each period. Every single price is included in this way of displaying market movements, which is why you can even look at a chart that displays market movements of an entire year and see every single price this asset had over this time.
Candlesticks make predicting the market so easy that one candlestick is often enough to allow for a prediction. When you have an especially long candlestick, for example, where the market rose or fell significantly and closed near the high or the low of the period, you know that the market was in a strong movement. This movement is likely to continue with the next candlestick, and a 60 second option is the perfect way to make money with this prediction.
Significant candlesticks will form on any time frame. When analyzing the short time frames you would trade with a 60 seconds binary options strategy; candlesticks are a tool that can help you understand what is going on despite the market’s erratic behavior.
Learn a few of the most frequent candlestick formations, and you will be able to make sophisticated predictions for 60 seconds options.
60 seconds binary options strategy #2: Trading oscillators
Oscillators are one of the most helpful tools to predict what the market will do on short time frames.
As we pointed out earlier, the market rarely moves in long lasting trends on short time frames. Consequently, you have to decide whether the current movement has still some energy left to continue and whether you can still invest in the current movement or should wait for the market to turn around and move in the opposite direction.
Oscillators are the ideal tool to understand whether a movement still has some momentum to continue. Oscillators analyze past market movements and put them in relation to each other. The relative strength index (RSI), for example, compares past periods with rising prices to past periods with falling prices and returns a value between 100 and 0.
- A value of 0 indicates that prices fell in every analyzed period,
- A value of 100 indicates that prices rose in every analyzed period, and
- Any value between 0 and 100 indicates the relationship of rising to falling prices. The closer a value is to 100, the more did rising prices outweigh falling prices. The closer a value is to 0, the more did falling prices outweigh rising prices. A value of 50 would indicate that the market fell just as much as it rose.
When the market is moving up or down, the RSI’s value helps you to understand whether you can still trust the movement.
- Any value of over 70 is considered overbought. When the market is rising, and the RSI reaches a value of over 70, you can expect the movement to weaken. Stop investing in the direction of the movement, and wait until the RSI drops back under a value of 70. This drop back is considered a signal that indicates falling prices.
- Any value of under 30 is considered overbought. When the market is falling, and the RSI reaches a value of under 30, you can expect the movement to weaken. Stop investing in the direction of the movement, and wait until the RSI moves back over a value of 70. This move back is considered a signal that indicates rising prices.
Based on these indications, you can easily create a trading strategy. Wait until the RSI reaches an overbought or oversold area and moves back into the main regular range between 30 and 70, then invest in the direction of the drop back.
This strategy is so easy because you can ignore all market movements. You only need to understand the RSI and how to interpret the value it generates. Even complete newcomers can execute such a strategy from the start.
60 seconds binary options strategy #3: Trading moving average crossovers
To make money with binary options, you have to know whether the market is currently rising or falling. The easiest way of understanding whether the market is currently rising or falling is using moving averages.
Moving averages calculate the average market price over the last periods. The logic behind moving averages is simple:
- When the market is currently trading higher than the moving average, the market must have risen recently.
- When the market is currently trading lower than the moving average, the market must have fallen recently.
- Based on this logic, the market crossing the moving average is a strong sign of a changing market environment. Where prices mostly seemed to go in one direction earlier, they are now moving in the opposite direction. As a binary options trader, you can use this event to invest in a binary option:
- When the market crosses the moving average upwards, you know that there must be an upwards movement. Consequently, you know that this is a good opportunity to predict that this movement will continue and invest in rising prices.
- When the market crosses the moving average downwards, you know that there must be a downwards movement. Consequently, you know that this is a good opportunity to predict that this downwards movement will continue and invest in falling prices.
With this simple strategy, you can generate plenty of trading signals in any market environment.
The one thing you have to understand is that the time of your moving average determines your relationship of risk and reward.
- Moving averages that factor fewer periods into their calculations will react more quickly to price changes. This quickness can help you to catch new market movements immediately after they start, but it can also generate false signals because the moving average is too quick to react.
- Moving averages that factor more periods into their calculations will react slower to price changes. This delayed reaction can help you to avoid false signals that are created too early, but it can also generate false signals because it reacts too late and the movement no longer exists.
To make sure that you trade moving average crossovers profitably, you have to adjust your expiry to your moving average. We recommend using an expiry that is about one-quarter as long as your moving average. If you are using a 20-period moving average with a length of five minutes per period, your moving average will use a total time of 100 minutes for its calculation. Consequently, you should use an expiry from 15 minutes to 30 minutes to trade your 60 seconds binary options strategy profitably.
How to make the best predictions for 60 Seconds options
You can, however, create a strategy that will enable you to have a high percentage of winning trades with a 60 Seconds options strategy. To do this, you have to combine different time frames.
This means you can look for a trend in a daily or in an hourly chart. When you find one, you wait until the price is about to break through the price level of the previous point 2. Then you switch to a smaller time frame and look for the trend that will lead the price to break the point 2 in the bigger time frame. By doing this, you can make your timing exact enough to work with a 60 Seconds options. As soon as you see that the price is about to break through the previous point 2, you place your 60 Seconds option, and profit from the big price movement this event will create.
With a strategy like this, you will be able to win a high percentage of your trades. Still, you will have fewer trading opportunities than with other 60 Seconds trading strategies. You can try to make up for this disadvantage by searching for trading opportunities in many different charts and assets.
60 seconds options are a unique binary options type. Due to the erratic and nervous market environment on short time frames, classic binary options strategy are ill-fitted to generate profitable trades with 60 seconds options. This is why you need a 60 seconds binary options strategy.
A 60 seconds binary options strategy can be based on a number of different tools. With candlesticks, momentum indicators, and moving average crossovers, you can find simple yet profitable trading opportunities for 60 seconds options and can create a 60 seconds binary options strategy that even complete newcomers can execute.
References and Further Reading:
1. Trading system for fixed-value contracts (L Kohls, BF Clare – 2006)
2. Private prediction markets and the law (TW Bell – 2008)
4. A course in financial calculus (A Etheridge – 2002)
5. GARCH vs. stochastic volatility: Option pricing and risk management (A Lehar, M Scheicher, C Schittenkopf – 2002)
7. Extended BDD’s: Trading off canonicity for structure in verification algorithms (SW Jeong, B Plessier, G Hachtel – 1991)
8. The efficacy of regulatory intervention: Evidence from the distribution of informed option trading (RC Anderson, DM Reeb, Y Zhang, W Zhao – 2013)
9. The Forex Options Course: A Self-Study Guide to Trading Currency Options (A Cofnas – 2008)
10. Options and Options Trading (RW Ward – 2004)