#binary options profitable strategy

welcome to a profitable strategy in trading binary options this topic is brought to you by binary options net a you all successful trading systems or strategies use a predefined set of trading rules to generate objective buy and sell signals for binary options traders the variety of trading strategies is almost limitless however the most profitable of systems have a number of elements in common which maximize the chances of trading success the first element is a high probability trades setup a profitable trading strategy must have a high probability setup that is when a trader feels a trade or trade direction has a very good chance of success to a liberal trader a high probability trade is one which is successful two out of three times to a conservative trader the success rate is four out of five times to identify a trade as being high in probability a trade up should always look at a securities price history and back test the theory to statistically evaluate the strategy's profitability and market success next for binary traders a profitable strategy must have a high win ratio depending on the strategies correct analysis of the market and predetermined payout percentage from the broker a binary options trader can expect 60 to 85 percent on a winning in the money trade or 100 percent loss for an out of the money trade so for example let's say a trade is placed with 100 dollars in the winning stake that is associated with the position is 70% if the trade closes in the traders favor that is it is in the money then the payout is 100 dollars plus 70 percent of that $100 which is 170 dollars in this case the payout for the trade would be 170 dollars the maximum payout fur trade will be clearly visible on the brokers platform but what this means for binary traders a high win ratio of at least six wins out of ten trades is essential to the trade up for profit for a strategy to be considered profitable there must be opportunities to trade a traders profit can be limited by low numbers of potential trade setups therefore a profitable strategy must offer reliable but semi regular buy and sell signals because binary options traders are not concerned with how much an asset moves in price only direction a profitable strategy must offer clear market direction signals to ensure the trade buyers in the money the trader of a call option will be of the view that the market will move in an upward direction while the trader of a put option anticipates the market will move in a downward direction an incorrect trade which expires out of the money renders the trade on 100% loss so correctly identifying the direction of the market is essential for profit so what tools are available for us to help correctly identify the market direction traders most commonly use technical indicators technical indicators such as moving averages commodity channel index Williams accumulation distribution etc a mathematically based trading tools which traders used to analyze either past price trends known as lagging indicators or predict future price patterns known as leading indicators as opposed to fundamentals traders who use economic reports and indicators to interpret the market technical traders utilize indicators to identify profitable trading opportunities typically technical indicators can be used as signal filters and triggers which form the basis of most trading strategies while there is no sure thing when it comes to trading for profit there is a small group of technical indicators that have been used successfully over the years for profitable trading this group includes the stochastic oscillator the stochastic oscillator is a momentum indicator that compares the stock's price to its price range over a certain period that is it measures the capacity of bulls to close prices near the top of the recent trading range and the capacity of bears to close them near the bottom it ties the high of the range representing the maximum power of bulls with the low representing maximum power of bears and with closing prices representing the actions of smart money in an upward trend in market the stock's price usually closes at or near the high during a downward trend in market the stock's price usually closes at or near the low plotted on a sub chart below the main price chart with a range of zero and a hundred the Socastee oscillator is displayed as two lines the main line is called percentage k displays the current close in relation to the periods high-low range the second line called percentage D is a moving average of percentage K the percentage K line is usually charted as a solid line and the percentage D line is usually displayed as a dotted line used to identify if the market is ranging that is when price is making the same highs and lows a number time's the stochastic oscillator is used to display oversold and overbought levels oscillator readings below 20 are considered oversold an oversold market is where selling pressure has taken the stocks closing price to below its true value that is it is undervalued in a prior correction to typical price or a significant bullish reaction or a price reversal is anticipated oscillator readings above 80 are considered overbought an overbought market is where buying pressure has taken the stocks closing price to above its true value that is it is overvalued and a price correction to typical price or significant bearish reaction or price reversal is anticipated the stochastic oscillator is a reliable and effective indicator which when used as a trading strategy generates profitable returns considered a leading indicator predictive in nature the stochastic oscillator generates buy call and sell put trades at key reversal points signaling overbought and oversold levels a buy or call signal is generated when the stochastic oscillator crosses below 20 and the percentage K line crosses over the percentage D line indicating that the current price is 20% above the lowest low of the last 14 days and 80% below the highest high and therefore nearing its inter period low a stochastic oscillator value of 20 is considered an oversold marker a sell or put signal is generated when the stochastic oscillator crosses below 80 and the percentage K line crosses below the percentage D line indicating that the current price is 80 percent above the lowest lower of the last 14 days and 20% below the highest higher and therefore nearing its inter period high so is using the stochastic oscillator profitable there is no short road to trading success because price is a discrete random variable it is important that every trade up studies the market and researches any trading strategy before placing a trait while the strategy discussed using the stochastic oscillator is considered to be one of the most important technical indicators and is used with success in ranging markets false signals can be generated in strongly trending markets in a trending market to counter false signals a trader can trade both bullish and bearish divergences with the stochastic indicator a bullish divergence occurs when prices fall to a new low while an oscillator fails to reach a new low this situation demonstrates that bears are losing power and that bulls are ready to control the market again often a bullish divergence marks the end of a downward trend a bearish divergences signifies potential downtrend that is when prices rally to a new high while the oscillator refuses to reach a new peak in this situation bulls are losing their grip on the market and the Bears are ready to take control again for more information about this topic and more binary option trading strategies please visit binary options net au you