Binary Options Strategies
Strategizing your investments is critical for your overall binary options trading success. Just as trades vary, applying the correct binary option system is also a dynamic art all traders ought to master. In order to obtain minimal financial risk, reach maximum trading flexibility and simplify the entire trading process, we have gathered below some of the top trading methods today's traders frequently apply. Read more about the different methods on ultimate4tradingpro.com Binary Options Strategies
Having a better control of your binary option trades is essential to your understanding about the financial markets behavior. The more you apply and follow these trading methods, the more probability there is that your trade will end as a successful one. Binary Options Strategies
Binary Hedging/Straddle Strategy
Applying the hedging/straddle binary options system is comprised of a simultaneous trade on one asset in opposite directions. This trading system includes risk management features which prevent you from enduring a full loss of your traded invested capital and the substantial chance to profit. The system is based on the presumption that “what goes up, must come down“, and it works as follows:
- Choose your general direction: decide if you wish to invest in a “Call” or a “Put” option. Binary Options Strategies
- Choose your underlying asset and invest according to the general direction you earlier decided upon.
- The trading system's tipping point; once the price of our underlying financial asset advances according to our predicted assumption, you make an opposing investment.
Despite the positive direction the trade has taken, traders ought to know that the potential threat of a sudden shift of the asset's general direction continuously lurks their trades. The accepted solution here would be to make an opposing investment. Binary Options Strategies
If in step 1, your general direction leads you to invest in a “Call” option, in step 3 you will invest in a “Put” option. Consequently, you're now trading both “Call” and “Put” options, thereby minimizing the risk of losing on both options, and maximizing the chances of gaining from one of them. Binary Options Strategies
In other words, the hedging binary trading system guarantees you'll end up “in the money”- its risk management in its finest form. To make things even better, if by the end of the trade the asset's market price was between the striking price of your first and second investments, you can actually end up benefiting from both trades.
Hedging/Straddle Strategy Scenario Explanation
Normally, if you invest $200 in the USD/JPY option, as disacted on the chart above, and the asset's return is 85%* (Amount to be credited in case the operation is successful), you either fail your $200, or alternatively, if you implement the above mentioned system, in the event that the trade ends up “In the Money”, you gain $170-even if one the options expires “Out of the Money”. Binary Options Strategies
Applying the straddle binary system will spring different results to your trade. If all of the conditions are correct; the price movement is in your predicted direction and you're “In the Money”, you can take this investment to a whole new level by investing in an opposing “Call” option. Binary Options Strategies
Generally speaking, there are 2 possible outcomes to this specific scenario:
- If the market's price either rises or falls over the striking price of the “Put” or “Call” options at the end of the trade's time frame, the trade ends “In the Money” for one option and “Out of the Money” for the other option. Hence, you made $170 and lost $200, leaving you with a loss of $30.
- In the event that the market’s price stays between the striking price of the “Call” and “Put” options, the outcome would be a gain of $340.
Correction Binary Strategy
During the beginning and ending of round hours, assets tend to undergo unexpected surges (both upwards and downwards). These surges also occur prior to, during, and after important market announcements and are exactly what you should look for in order to apply the Correction binary trading system. The principle of this system is founded on the Correction rule. The rule states that if a price of an asset surges upwards or downwards and a gap appears between the current and previous price of the asset, the asset will then correct itself, and return back (cfail the gap) to its previous price. Binary Options Strategies
Now that you know how the Correction rule affects an asset's market price, it is possible to leverage from it. Using the graphs' support and resistance lines, or the trend line that appears in technical analysis, you can identify price gaps. The Correction system asks you to detect such gaps and then execute a binary option trade in the opposite direction. Binary Options Strategies
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