Binary Options Strategies
A binary options strategy involves trading binary options on the same underlying assets that you are familiar with in the everyday markets. Binary options strategies are mainly dependent upon the state of the market condition at the given time. To earn the maximum output, experienced traders and brokers have designed some strategies on the basis of the market circumstances. Some of the major market conditions are discussed below.
Binary Options Strategy: Hedging
Typically when people think of hedging, they think of placing a trade opposite of their initial entry to hedge their position or reduce their losses. Some people think of it as a bad move because you’re putting more money into a losing position in hope to prevent big losses from your initial trades and the problem with this is that it is poorly executed.
The best strategy for hedging especially with binary options is to use it with caution and make it a secondary option. Don’t go into every trade looking for a hedging position and only use it when necessary although some people base their strategies off of hedging or insurance.
Most people hedge a losing trade to reduce losses, but they don’t think about it when they’re in a winning trade. When this happens, typically they are just looking to reduce losses rather than reduce profits. Reducing losses, however, doesn’t work in the long run because overall you are going to have net losses anyways. You need to hedge regardless of a winning or losing trade, but you only hedge up to a point though trying to maintain a net gain on your open trades. Technically speaking, hedging is a trading strategy because you’re waiting for another trade to enter within the same expiry time.
Binary Options Strategy: Straddle
This binary options strategy can be described as a complex method and at the same time, it is competent enough to bring double profitable returns for the investor as well. Placing both put and call options on the same asset is a way of predicting multiple price levels on the same asset and this process of straddling the asset at high and low prices will help the trader to earn double profits. By making multiple forecasts on the same asset; the investor will always stand in with a chance of winning at least one of the predictions and this method is highly suitable for quick and confident investors. The experts are of the opinion that this method minimizes the risk element and at the same time, the earning potential will get doubled as well.
The Market Pull Binary Option Strategy
This option is hugely popular among experienced and skilled traders, and it is being employed to earn huge profits within a short period of time. Investing in call or put option according to the dramatic changes in the market forms the basis of this method and it is being done by following news headlines. For example, if a trader comes to know that the value of a particular currency is dropping he/she would purchase a put option of the same currency and this method has become immensely popular among a huge number of people.
Apart from having a good binary options strategy, be sure to trade only with a recommended binary options brokers. As if your broker sucks, a good strategy might not be enough.
These three strategies were provided by the wonderful guys over at bestbinarybroker.com