5 Best Proven Quotex Trading Strategies for Binary Options

Binary options trading on Quotex isn’t just about luck—it’s about strategy. By using well-researched, proven techniques, traders can significantly increase their chances of success. In this guide, we explore five of the most effective Quotex trading strategies that will give you a competitive edge in the market.

Quick Summary of Quotex Strategies + Video Tutorial:

1. Fake breakout Strategy
2. Indicator-Based Strategy (MACD + Bollinger Bands®)
3. Candlestick Pattern Strategy with wicks
4. News Trading Strategy
5. Trend Trading Strategy

1. Quotex Fake Breakout Strategy

Firstly, let’s define a breakout.

How Breakouts Happen

Breakouts can happen in numerous ways.

• Chart Patterns: Specific patterns like triangles cause the price to contract in a tight area until it moves aggressively.

This process is called consolidation. Most breakouts happen during market consolidation, when the market does not move in a clear direction (i.e., a range or sideways market). The breakout could either continue the prior trend or initiate a reversal.

False Breakouts Explained

Typically, traders anticipate a breakout and place their orders at visible ‘breakout zones’ or support and resistance levels. However, the market can trick traders by creating a breakout that quickly reverses. This is known as a false breakout or false break. Other names for this include:

• Bull Trap
• Bear Trap

Developing a Fake Breakout Strategy

To create a strategy around false breakouts, you first need to identify potential breakout locations. Here are some methods:

Horizontal Support and Resistance

• Key Levels: Look for significant levels rather than minor ones. Go to a higher time frame and mark areas where big price movements began.
• Repeating Levels: Identify levels where the price returned and stalled, as these areas are potential breakout or false break zones in the future.

Chart Patterns

• Horizontal Patterns: Patterns like head and shoulders, double top, or double bottom rely on horizontal support and resistance.
• Diagonal Patterns: Patterns such as triangles, wedges, and flags use diagonal support and resistance levels.

Price Action Analysis

The next step is to incorporate price action into your analysis:

• Candlestick Patterns: False breakouts usually have candles with small bodies and long tails/wicks. This suggests that the market initially showed strength but then reversed.
• Engulfing Formations: Sometimes, a full-bodied candle is followed by an even bigger candle (an engulfing formation), signaling the reversal.

Using Trading indicators

Finally, certain indicators can be useful for enhancing your fake breakout strategy:

RSI (Relative Strength Index):

RSI can help you assess momentum in breakout areas.

• Look for a divergence between the price and the indicator, indicating a potential false breakout.
• Loss of momentum after the breakout can also signal a false break.

Momentum Clues: A genuine breakout usually comes with strong momentum (e.g., RSI reaching overbought/oversold levels). A lack of momentum may indicate a false breakout.

So, these elements can be combined in their fake breakout strategy. You may dive deeper into our Fake Breakout Strategy tutorial to learn more about this.

2. MACD and Bollinger Bands Indicator Strategy for Quotex Trading

When building a proper Quotex trading strategy, there are many indicator combinations available. However, two essential tools to focus on are:

• MACD (Moving Average Convergence Divergence): A versatile trend and momentum indicator that helps you identify trends, momentum, and divergence. (learn more)
• Bollinger Bands: A volatility indicator that shows how prices deviate from the moving average. (more info)

Combining MACD and Bollinger Bands for Breakouts

To use these two tools effectively, you’ll need to combine them. Below are the steps to follow for a breakout strategy:

1. Identify the Trend Using MACD:
   • Look for the overall trend by examining the MACD line and signal line interactions.
   • A divergence in the MACD histogram may suggest an upcoming breakout.
     
2. Look for Entry Points:
   • Find a potential entry when the price breaks the 20-period moving average (MA) on the Bollinger Bands.
     
3. Confirm the Breakout:
   • A valid breakout is confirmed when:
     • The price breaches the Bollinger Band.
     • The Bollinger Bands expand, signaling increased volatility.
     • The MACD histograms show increasing momentum.

Using MACD and Bollinger Bands for Trend Trading

You can also use MACD and Bollinger Bands for Trend Trading. Here’s how:

1. Identify the Trend Using MACD:
   • As before, determine the direction of the trend by analyzing the MACD line.
2. Entry Points via Moving Averages:
   • Use the 20-period moving average as a guide.
   • Enter the trade when the price bounces off the 20 MA, staying in line with the trend.
3. Confirm Continuing Momentum:
   • Look to the MACD for confirmation of sustained momentum in the trend.
   • The MACD line crossing over the signal line or the histogram expanding in the direction of the trend can serve as confirmation.

3. Candlestick Pattern Strategy with Wicks

Candlesticks, particularly their wicks, can tell binary options traders compelling stories. Most candles consist of a body and wick, and traders continuously study the ratio between the two.

• Full-Bodied Candles: Generally, a largely full-bodied candle has few wicks, indicating bullish or bearish dominance.

Small Bodies and Long Wicks

Things become more interesting when the candle’s body is much smaller, but the wick is long.

Common Candlestick Patterns with Long Wicks. These include:

• Morning/Evening Star – view more
• Hammer – view more
• Spinning Top – view more
• Pin Bar – view more

Trading Candlestick Patterns with Support and Resistance

The first popular way to trade any candlestick pattern is by using support and resistance, especially at key horizontal levels. However, candlestick formations may appear in various other patterns or set-ups.

Using Indicators for Confirmation

As with other trading strategies, indicators can serve as a confirmation factor.

• Pin Bar on a Moving Average: The appearance of a pin bar on a moving average is a stronger signal of the trend continuing.
• Hammer with RSI Divergence: Seeing another long-wicked candle, like the hammer, accompanied by RSI divergence, indicates a higher probability of a reversal.

4. Quotex News Trading Strategy

News Trading can be a profitable Quotex strategy for short-term traders. The appeal is that certain news events historically produced huge price movements in a small window of time. This strategy is often applied in the forex market when speculating on news announcements. 

News Trading in Forex

While you can trade similar events in other asset classes, news trading is more structured in forex due to the availability of the economic calendar. This calendar helps traders prepare for announcements and the most impactful events.

• No Economic Calendar on Quotex: While Quotex doesn’t provide an economic calendar, you can easily find options with a quick Google search.
• Cross-Asset Impact: Some forex-based events, such as interest rate changes, can affect other assets like stocks and cryptocurrencies.

Focus on High-Impact News

The first element to consider in news trading is to focus only on high-impact news events. These typically include:

• Interest Rate Announcements
• Inflation Figures
• Gross Domestic Product (GDP) Reports
• Employment Figures

Although medium and low-impact releases may be of interest, the actual price movement is usually smaller. Given the high volatility of news releases, it’s best to concentrate on high-impact events with the highest reward potential.

Analyzing News Outcomes

After the news is released, compare the actual outcome to the consensus prediction (based on market or analyst expectations).

Example Scenario
For instance, let’s say the USD interest rate was expected to be 4.5%, but the actual rate is announced at 5%. Naturally, one might expect the USD to strengthen across other markets. However, market reactions aren’t always straightforward.

• Unpredictable Reactions: It’s common for the market to move in the opposite direction from what was expected. Alternatively, the price could follow the expected direction momentarily before quickly reversing—a phenomenon known as ‘buy the rumour, sell the news.’

Risks and Considerations

News trading can be risky due to the rapid market movements. Here are key considerations:

• Execution Speed: You need to execute your trades as quickly as possible once the announcement is made.
• Stable Internet Connection: Ensure you’re using the fastest, uninterrupted internet connection available.
• Charting Time Frames: Monitor lower time frames (e.g., 15-minute charts or below) before and after the announcement.

Popular News Trading Strategies

Straddle Trade

One popular news trading strategy is the straddle trade. This non-directional strategy capitalizes on both sides of a news event’s outcome.

• Two Pending Orders: Place two pending orders before the news is released: one buy and one sell order, positioned at a certain distance apart.
• Order Execution: Once one order is filled, cancel the other. Ideally, the filled order will be the more favorable one.

However, the market can still move against you even after an initially favorable movement. This is why it’s essential to have a clear profit-taking strategy, as gains from news trading are typically short-lived and small.

Outcome-Based Trading

Another approach is to trade based on the news outcome itself:

• Sell when the news is negative.
• Buy when the news is positive.

However, this approach isn’t always straightforward. To increase the accuracy of your trades, you should incorporate other confirmation factors, such as Trading with the Trend, Trading Breakouts After the News Release, etc.

5. Trend Trading Strategies

Lastly, we have classic trend trading or trading with the trend. Of course, the first step is to identify whether a market is trending. Some traders rely on the help of indicators like moving averages, while others may include trend lines in their analysis. The scope of trend trading strategies is quite vast. Let’s cover some examples:

Mean reversion

The idea is to trade on retracement ‘bounces,’ which find support or resistance on moving averages. Look for other signals on or near the MA, like rejection price action and continuation chart patterns. Always confirm that the price is above (for buying) or below (for selling) the MA to confirm the trend.

Trendline bounce

This strategy comprises the same elements as the previous one. The difference is that you use a trend line instead of moving averages. Some traders may also include a channel.

Moving average crossover

This system uses multiple moving averages to confirm a trend or entry during a trend change. Traders can use three different MAs in this regard e.g., 10-20-50. Your highest-period MA (in this case, 50, blue line) would provide the directional bias, while the lower two MAs would offer the entry triggers. The goal is to enter once the lower MAs cross in line with the direction of the larger MA.

Stochastics with ADX

The purpose of this strategy remains the same even with another momentum indicator like the RSI. Analysing momentum helps traders determine the strength of a trend. The first way is with crossovers on stochastics. You can elaborate on this signal by entering once the ADX is above 50, a reading that traders consider a ‘strong trend.’  Seeking for overbought/oversold moments in place of crossovers can also help with trend trading.

Steps to Develop A Proper Strategy on Quotex

1. Choose your most preferred market on Quotex: is it forex, crypto, stocks, or indices? Each asset moves uniquely with varying volatility and other drivers like economic/news events. 
2. Decide on the type of Quotex trading strategy: will you trade trends, reversals, breakouts, or range-bound conditions?
3. Determine the indicators to use: each indicator offers pros and cons based on the chosen trading strategy.
4. Formulate ideal set-ups and entry rules: find the best conditions to derive optimal signals from your indicators, price action, etc. You should also develop clear and strict rules (which must be noted somewhere) to consider before executing a binary option.
5. Spend time on Quotex’s demo account: the demo stage is where you experiment with as many strategies as possible until you find the right one. Ideally, one should spend at least one year before finding the best Quotex strategy with a sufficient track record of profitability.
6. Fund your live account on Quotex: by this stage, one will be confident about their strategy. After all, live accounts have no give due to the inability to reverse losses. One must only fund money they can afford to lose.

Conclusion

These five strategies are just the beginning of your successful trading journey on Quotex. Start practicing on a Quotex demo account, and refine your approach until you’re ready to go live. Remember, the key to long-term success is consistency and continuous improvement.

FAQ: