Binary options trading come with plenty of misconceptions. The most popular one is that it can be done only by experienced traders. In reality however, with a little bit of extra effort and time spent dedicatedly, anyone can grasp the concept of this type of trading. To succeed, one needs to know the basic strategies to predict the direction the price of an asset will take. Those who have been successful binary traders often utilise simple and efficient strategies while leveraging the services of reliable brokers. Let’s get to the bottom of these strategies and know the ways to succeed in binary trading.
Bull bear strategy
Topping the list is one of the most commonly used strategies named Bull bear strategy. Commonly known as trend strategy, this is widely used by beginners and experienced trainers. The tactics of this strategy focuses on the monitoring, declining, rising and the flat line of the traded asset. In case there is flat trend line along with a prediction that the price of the assets will go up, a No Touch Option is usually implemented. In short, If the trend shows that asset is going to fall, you should choose “Call: and “Put” if the case is vice versa.
This strategy can be applied if trader are facing one of the three conditions:
- During market volatility
- Before the break of an important news relating to specific stock, or
- When prediction seems to be buoyant
This strategy is normally utilised through the global trading community and hence highly recommended. This strategy empowers a trader to avoiding the Call and PUT option selection and put them both on a selected asset instead. This means that a trader can utilise PUT when he presumes the price to rise but also can use CALL option if the price will bounce back soon. This can also be done in reverse method.
The result of straddle strategy is highly productive as it increases the chances of success in one of the trade trends. The strategy is known for producing “in the money” result and is greatly admired in times of volatility of the market.
Pinocchio strategy is used when the value of the asset is expected to fall or rise drastically in the opposite direction. You may need to select CALL if the value rises, and PUT when the value drops. Since this strategy has a drill to it, it is best to practice it first on free demo account. You can get your free demo account easily from any broker.
Risk reversal strategy
This is yet another highly recommended strategy by brokers and is most popular amongst experienced traders. It lowers the risk factor and increases the chances of a positive outcome with profit gains. In this strategy, the CALL and PUT action is put on a fundamental asset. This brings a win-win situation for the traders in which they get successful results in both rise and fall of the asset value.
Commonly known as hedging, this strategy is used together by binary options traders and traditional stock-exchange. This strategy is utilised by placing both CALL and PUT on the same asset at the same time. This leaves no stone unturned in bringing success as an “in the money” outcome.
In the world of binary trading, there are plenty of strategies to choose from. Selecting the best one can mean the difference of success and failure in this impulsive market. In the end, don’t forget that in-depth knowledge about your asset will help you gain better opportunities to make money. Knowing about the financial aspects of the company you are dealing with will increase your chances of future prediction.