This video shows examples of the 5 minute binaries and UK Rate Announcement using the Nadex binary options and spreads. In the video, Gail shows why waiting for the EURUSD to start moving before entering a trade is important. You can see that prior to her trades, the market was not moving (less than one strike in a 5 minute period). However, once the ATRs aligned then Gail could anticipate a stronger bounce.
5 Minute Binaries and UK Rate Announcement Examples
In this video, Gail Mercer, founder of TradersHelpDesk, shows you examples of when she trades the 5 minute binaries and how she creates both long and short positions for the UK rate announcement. The key is low risk binary options and spreads. The lower your risk is and the higher you can get your reward, the lower your winning percentage needs to be. This is one area that most new traders do not realize the correlation. For example, there are traders that may have a 33% winning percentage but their risk to reward is high (ie 1:4). With binary options, if your winning percentage is at least 55% and you can achieve a risk to reward of 1:1.4, then you more than likely will make money.
For example, if you opt to trade only the $25 risk strikes on the 5 minute binaries, only during periods where the market is likely to more, and are able to achieve a 1 : 3 risk to reward ratio, then after 600 trades, using a 33.50% winning percentage, your equity graph could look like this:
This equity graph is based on 600 trades, 33.50% winning and 66.50% losing. Your average profit would be $6.50 (after exchange fees) and you would have 201 winning trades versus 399 losing trades.
Can you expect to lose more often on the 5 minute binaries? Yes, because you are so close to the market. But this is also why you design a strategy with more reward than risk (reward heavy versus risk heavy).