End-Of-Day Binary Options Strategy
The end-of-day period brings some key benefits as volume falls and volatility rises, offering opportunities for sharp-eyed binary options traders who know how to spot a live gap. At the same time, not every trader is looking for fast-paced, high-intensity 1-minute binary options trading strategies, and some traders don’t have the time to devote to watching charts during a workday. End-of-day binary options trading fits the bill for both types of traders. In this guide, we will cover the best end-of-day binary options trading strategy, why you should trade them, some of the steps, ideas and tactics you can use, tips, tricks and more.
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End-Of-Day Binary Options Trading Explained
End-of-day binary options trading is not a single approach, but simply the activity that takes place in the final period before a market’s day ends and during the market’s closed hours before the next day’s trading begins. There are several reasons to trade binary options during these periods, and end-of-day trading can be attractive for a few different varieties of trader.
The first type of end-of-day binary options trading we will discuss refers to the trades that take place just before the market closes. During this period, it is common for a number of traders to take action around the same time to close their positions, leading to increased volatility. This can lead to an opportunity for binary options traders who can snipe gaps in the market and place bets on those gaps closing.
Some binary options traders also wait for the end of the trading day due to time commitments or because they prefer to make lower-frequency, more measured trades at their own pace rather than engage in quick-fire intra-day trades. For them, the period after the close of the market is a good time to study charts and plot longer-term binary options trades.
In other words, there is not one single end-of-day strategy for binary options. As such, when talking about end-of-day strategies we typically mean implementing investing systems and signalling approaches towards or after the end of a trading day.
Which End-Of-Day Binary Options Strategies Should I Use?
The great thing about end-of-day binary options strategies is that you can use a variety of investing systems. Some factors that commonly influence strategies used in end-of-day binary options trading include:
- Following trends – when dealing with longer timeframes, investors can identify the overall direction of a price movement and use this to plan their position.
- Following news – keeping an eye on news events is important while trading, and it can also be highly productive for planning binary options trades without involving technical analysis.
- Technical analysis – most profitable investors will use charts to inform their predictions of market movements. There is a broad range of techniques to do this, and budding binary options traders should spend some time reading up on several of these until they are confident in their grasp of them.
In the following section, we will describe two binary options strategies that can be used during and after the end-of-day period. The first – closing the gap – is a tested method that experienced traders can use to extract profit from volatility just before the close of the market. The second – inside day Bollinger bands – is suitable for longer-term planning and trading, so it can be used effectively by binary options investors once markets are closed.
Closing The Gap Manual
You can theoretically use any binary options strategy during the end-of-day period, but closing the gap works especially well because of the prevailing market conditions during this period.
The number of traders active on the market tends to thin out just before markets close, and the lower volume means each trader’s relative influence on the market is stronger.
A gap in binary options trading refers to a sudden jump in price action. For example, if an asset’s price moved suddenly from £100 to £100.10 without moving through the intervening prices, this would be considered a gap of £0.10.
During the normal investing day when volume is high, gaps are sometimes caused by news events that are significant enough to move the needle. But during end-of-day binary options trading, this is not often the case, and instead, sometimes single trades can cause the market to jump.
Since these price movements are caused by individual investors and not broader market conditions, other investors will usually trade in the other direction since in trading a gap that does not have significant volume behind it is bound to quickly close.
If the price jumped upwards, binary options traders would take short positions, while if the gap moved downwards, they would go long.
Investors who spot a gap quickly enough can make lucrative gains by following this end-of-day binary options strategy, since the likelihood of the gap closing is high. As such, one-touch binary options and other contracts with higher payouts can be especially effective in these situations, as can using the double-up button.
Inside Day Bollinger Bands Manual
Here, we will cover a popular end-of-day binary options strategy involving technical analysis: Inside Day Bollinger Band turn trades. This can be a good and winning strategy for binary options traders who wait until the market has closed to plan and execute trades.
An Inside Day is generally a price pattern spanning over two days where the range of the price for the second day is completely inside the range of the first day. This would mean that the low of the second day would be higher than the low of the first, and the high of the second would be lower than the low of the first (example shown below).
Inside days are relatively common, typically occurring multiple times each month.
The graph below has the daily candlesticks for the EUR/GBP forex pair. But you can find multiple examples of inside days.
Inside days occur because of a fall in volatility and are often considered a continuation pattern. This means that the direction of price movement is likely to move the same way after the pattern as it did before.
However, this is not always the case, and we can combine this idea with Bollinger Bands to create an end-of-day binary options turn trading strategy.
Inside Day Bollinger Band Turn Trading
We can use Bollinger Bands to predict when the price movement of an asset, such as a FTSE stock, is going to turn. When prices hit the upper band, we consider them high. When prices hit the lower band, we consider them low. Whenever either band is breached, we will expect the price action to reverse, however, this isn’t always the case, and the price could ride out the band. When trading an end-of-day binary options strategy (where we are purely trying to predict the direction of price movement) this can be detrimental and lead to lots of losses.
To add more safety and reliability, we can combine the signals from Bollinger Bands with the idea of inside days as a confirmation function.
The end-of-day binary options strategy is to use the Bollinger Bands to signal the direction of the option we should open and the inside days as a confirmation of when to open the contract.
If the price breaks through the upper Bollinger Band and is followed by an inside day candlestick, then you set up a put option when the market opens.
If the price breaks through the lower Bollinger Band and is followed by an inside day candlestick, then you set up a call option when the market opens.
You will want the expiry time to be just before the market closes.
Using the chart from before, we can see that on 05/11, the price breaks the upper Bollinger Band. It is then followed by an inside day on 06/11. Following the end-of-day binary options strategy, we would open a put option, predicting the price to fall.
As shown above, on 07/11, the price does fall, meaning the binary option contract would finish in-the-money
This works because the inside day indicates a fall in volatility. This means that there will be a failure in making new highs, indicating a weakening price strength.
Pros & Cons Of End-Of-Day Binary Options Strategies
- Unique opportunities during end-of-day period running up to market close
- Comfortable work/life balance and little time pressure for binary options trading after market close
- Free market data at the top binary options brokers
- Can be less demanding than day trading
- Lower costs
- Trading binary options just before end-of-day can require quick thinking and expertise
- Out-of-hours trades are typically forced into longer timeframe binary options contracts
- Users require knowledge of sometimes complex trading systems to implement
Tips & Tricks
Learning to use an end-of-day binary options trading strategy may seem overwhelming, so here are some tips and tricks to help you get started:
You will need to accrue a sufficient baseline of knowledge before you can start planning and practising trades. This means reading up on specific strategies you may wish to use, since end-of-day binary options trading rewards a careful and well-thought-out signalling system.
It will also require familiarity with the specific markets and assets you intend to trade, and the current events that could influence prices, for example, regulatory announcements impacting the values of cryptocurrencies like Bitcoin or Ethereum.
When starting out, we recommend setting up a binary options demo account. These accounts let you practice trading and an end-of-day binary options strategy without risking your capital. Here, you can become more comfortable with how the platform works, and how to set up and use your signalling system. You can try mobile apps, available as a free download.
Make sure to try out different binary options brokers and platforms to find the one that offers you the features you want.
Continue to fine-tune and develop your end-of-day binary options strategy. Every asset behaves uniquely, meaning some strategies will be more effective than others. Practice using demo accounts to find the individual systems that maximise your win chance for every asset you’re interested in.
Once you’re happy with your end-of-day binary options strategies and start seeing some success, you may wish to automate the process. Many brokerage platforms allow you to set up an AI that will use your trading system and automatically open options contracts following the signals. This can be especially useful for binary options strategies like closing the gap, as it will help you execute trades quickly.
Bottom Line On End-Of-Day Binary Options Strategy
End-of-day strategies give binary options investors dual opportunities. They can look to profit from the unique dynamics as intra-day traders close their positions before the market closes, or they can turn to longer-timeframe trades that provide a calmer trading experience than the intense hustle of intra-day binary options investors.
Use our guide and cheat sheet to build an end-of-day binary options strategy to get started.
What Is End-Of-Day Binary Options Trading?
An end-of-day binary options strategy is when traders wait until the period just before a market closes to place a trade. It can also refer to trading binary options during the hours the market is closed, which some traders prefer because it gives them additional time to plan and execute longer-term trades.
Who Should Use An End-Of-Day Binary Options Strategy?
Our article provides a key summary of two types of trading for beginners associated with the end-of-day period, each of which has quite different styles and goals. Planning live binary options trades outside market hours can be especially useful for people that have little to no time for trading during open market hours. This includes those who work traditional working hours (e.g. 9am – 5pm). At the same time, the end-of-day binary options trading that takes place during the period just before a market closes can be excellent for experienced traders who can take advantage of the added volatility as traders rush to close their positions.
What Is The Best End-Of-Day Binary Options Strategy?
There is no best end-of-day binary options strategy that will work for all underlying asset classes and types. Traders should fine-tune their signalling systems and strategies to best reflect the asset they are looking to trade. No individual end-of-day binary options strategy will be effective for every asset, but one popular strategy is the Inside Day Bollinger Band Turn Trading strategy.
Binary Options Intra-Day Trading Vs. End-Of-Day Trading, What’s The Difference?
Binary options traders who like to sharpshoot gaps as the end of trading approaches will likely use many of the same skills as other intra-day traders. In fact, they may even have to be sharper and work more quickly to identify and exploit lucrative market gaps before they close.
Binary options investors who plan their positions after the market has closed will typically require longer-term expiry dates than day trading. You will most likely have to take out binary options contracts with expiry times lasting a day or more. On average, less frequent, long-term binary options contracts can be more profitable than high-frequency trades.
Can UK Investors Use End-Of-Day Binary Options Strategies?
While the marketing of binary options trading by UK brokers is banned by the FCA, British investors can still access binary options brokers by looking to either foreign or unregulated providers. Offshore accounts may prove useful to some investors as differing market open-close times can match up with their schedules better. With these accounts, UK traders will be able to use end-of-day binary options strategies.