You can increase your profit potential and reduce your risk exposure if you master Binary Option trading strategies. This article introduces some of the more popular Binary Options strategies which both novices and experienced traders have found very useful. It’s always best to test your binary options trading strategies with a binary options demo account before risking your own money. To see our list of brokers offering demo accounts Click Here.
Popular Binary Options Strategy
Binary Options Pairing Trading Strategy
This binary options strategy can provide you with windows of opportunity for high returns while minimizing your risk exposure. Imagine that you have opened a ‘CALL’ binary option with an opening price of 1.4000. Later, the price has advanced to $1.4050. However, you are now worried that a price retraction could wipe out your profits and even cause a loss
To safeguard your gains, you could now open a new ‘PUT’ option and pair it with your original ‘CALL’. By doing so, you would create an opportunity window between $1.4000 and $1.4050. If price should now finish within this range then you will receive payouts from both options.
Binary Options Betting Trading Strategy
You should implement this binary options trading strategy just after an asset has experienced a significant yet unexpected price surge. This is because this strategy takes advantage of the fact that many traders act in a very predictable way after such events happen.
Binary Options Stop-loss Trading Strategy
Many traders use binary options to hedge their investments with other asset types. For example, image that you are trading the EUR/USD currency pair and you are considering implementing a stop-loss as a safety measure.
Instead of deploying a standard stop-loss, you could instead activate a Binary Option, using the EURUSD as its underlying asset, in the opposite direction to your Forex trade. In doing so, you would provide a very effective protection for your EUR/USD trade.
Binary Options Index-asset Divergence Trade Strategy
This is a popular strategy that entails hedging a binary option, based on a currency pair, with one whose underlying asset is its correlated trade index. For example, imagine that you have opened a ‘CALL’ binary option with EUR/USD. You could now hedge this trade by activating a ‘PUT’ binary option based on the Dow Jones Index whose movements are closely correlated to those of the EUR/USD.
Binary Options Competitor Relative Value Trade Strategy
This strategy uses binary options to exploit the opposite price movements of two competing companies. For example, imagine that Microsoft is about to launch a new device that is expected to bolster its share value. You also conclude that arch competitors, such as Apple, could suffer as a consequence of this event. As such, you could activate a ‘CALL’ binary option with Microsoft while simultaneously activating an Apple ‘PUT’. By doing so, you would provide yourself with an excellent opportunity to double your payout if both options end in-the-money.
In summary, if you invest your time to assess binary options strategies then you could substantially increase your profits. This is because you can then provide yourself with opportunities to compound your profits within the same time frame whilst minimizing your risk exposure in the process.