As binary options become increasingly popular and more widely available, the increase in binary options trading strategies is becoming more evident with each passing day. Many of these binary options strategies have been developed by investors that have used them to profit considerably from the markets. If you are looking to get your binary options trading off to the right start, you should consider choosing a solid trading strategy to follow.
The problem lies in that there are hundreds of trading strategies that you can employ. However, all successful strategies have a couple of things in common. Every profitable binary options strategy is simple to use and maximizes profits while minimizing losses. Let’s examine a few popular binary options trading strategies that have proven to be successful by traders all around the world.
Binary Options Strategies for Simplicity
Sometimes, the simplest strategies are the best. The Call or Put Strategy is one of the simplest and most straight forward binary options strategies. When using this strategy, you simply purchase a call option if you believe the price of an asset will increase by the trade expiration time, or you would purchase a put option if you have determined that the price will decrease during the same time period. For example, if you decide to purchase a 30 minute binary option for Apple stock, and you feel the stock will increase in value in half an hour, you would simply purchase a call option. Even if your prediction is wrong and the trade finishes out of the money, you may still be able to receive 15 percent of your investment back.
Binary Options Strategies for Damage Control
The ability to minimize losses is paramount in becoming a successful binary options trader. A great risk control strategy is the Call and Put Strategy. To use this strategy, you first simply purchase a call or put option for an asset. If you see that the trade will finish out of the money, then halfway through the trade you would purchase an option in the opposite direction. This allows you to hedge your bets and at least break even on a trade that could have resulted in a significant loss.
Binary Options Trading Strategies for Maximum Profits
Reducing risk is great, but chances are you’re interested in binary options because you want to make some serious money. Well, the Doubling Strategy can do just that. The Doubling Strategy is popular amongst experienced binary options traders who know how to squeeze as much out of the markets as possible. It is basically the exact opposite of the previous strategy. So, instead of minimizing your losses, this strategy allows you to maximize your gains. With the Doubling Strategy, you simply purchase a second contract in the same direction as the first contract if the first contract looks like it will finish in the money. This allows you to double the profits you can receive.
This is just a small sample of the seemingly countless binary options trading strategies that you can employ during your quest to become a financially secure binary options trader. Most of the strategies that are available in the marketplace have been vetted and work the majority of the time when they are used properly. However, choosing the best strategies for your trading style and financial circumstances is entirely up to you. Successful traders understand and employ multiple binary options strategies in order to profit from nearly every situation. Therefore, the more strategies that you learn to implement, the more successful of a trader you will become.
Fundamental Binary Options Trading Strategies
1. The pairing binary options strategy:
The pairing strategy can consistently yield high profits from trading a single binary option contract. This popular strategy involves pairing up a money put with an in the money call. If the spot price of the asset falls between the two chosen prices upon expiry, the nested position allows you to still make profits.
2. Hedge and double position binary options strategy:
Another popular strategy is to hedge and use a double position to pair the call with a put. This hedging strategy not only reduces risks, but it can lead to huge profits as well.
3. The betting binary options strategy:
This common trading strategy involves a trader placing a call or put option if he or she expects a big market move in a particular direction. This strategy is often successful because traders tend to base positions on widely used indicators that can cause assets to gain price momentum in a certain direction.
4. Stop-loss binary options strategy:
This strategy is by far one of the most popular amongst binary option traders. The strategy seems simple upon first glance, but experience is often needed in order to predict the perfect stop-loss time. The following factors can greatly affect the stop-loss strategy and make it difficult to implement:
• Trading vehicle – The strategy depends on which type of asset you are trading, because each type of asset requires its own stop-loss strategy. Someone trading options might use a two-dimensional strategy, while someone trading stocks will likely use a consistent stop-loss level.
• Risk tolerance – The stop-loss strategy used by a trader is determined in large part by their risk tolerance. Every trader has their own aversion to risk, and this strategy is largely dependent on a trader’s personal risk preferences.
• Trading Style – Every trader also has their own trading style, which affects the type of stop-loss strategy that they feel comfortable implementing. One trader may feel more comfortable making 10 trades a day and another may prefer to focus on making one winning trade a day. The former would utilize a tight stop-loss and the latter would more than likely choose to use a wider stop-loss strategy.
• Market mood – The mood of the market also has an impact on the stop-loss strategy used by traders. Traders tend to use wider stops in volatile markets and tighter stops in quiet markets.
As you can see, stop-loss strategies depend upon numerous factors and can be quite complex. Each trader uses a stop-loss strategy that best suits their trading style and the trading system they have chosen to implement.
The high yields and quick returns of binary options are responsible for the rising popularity of this unique trading vehicle. Binary options may be simple for beginners to learn, but binary options trading is also perfect for advanced traders that can incorporate various strategies into their trading game plan. A solid binary options strategy can be responsible for nice profit returns, but using multiple trading strategies can erase someone’s money worries for the rest of their life.
Using any of the above strategies, it is very easy to reduce risks and make considerable profits in a short amount of time trading binary options. However, like any form of trading, there is always a risk of capital when trading binary options. Fortunately, many traders have found that experience combined with the right trading strategy can lead to lucrative profits in no time at all.
