Basic Binary Options Strategies |
Many people are drawn to Binary Options trading because of the simple investment decisions involved and the high and fast returns available to anyone with little or no financial trading experience. However, with the application of some very basic trading strategies your chances of profit and success in Binary Options are greatly improved.
Focus on an Asset
A very basic trading strategy but one which reap good long term dividends in Binary Options is to put your energies and focus on just one asset. There are many assets to trade in Binary Options and plenty to choose from in Stocks, Indices, Currencies and Commodities so find an asset to trade and focus your research on that particular asset. The reasons for your focus should be down to you and finding an asset with lots of ready information will help you become more knowledgeable and understand the reasons for the movements by the asset. It may be that a bit of trial and error is involved in finding the right asset(s) for you but in the long run, having an in-depth understanding of the asset should stand you in very good stead.
The Call Option
When prices are rising and a Bull Market is in place a CALL option strategy is used when the expectation is that the price will rise
The personality of short term tracking of financial markets, such as in binary options trading, means that there are always fluctuations in both directions, in the price. So, even when undertaking a CALL option strategy, it is imperative to keep track and a close eye on the results of all your open positions, and continually monitor the options open to you.
CALL options strategies –used when the market is rising and is expected to keep on rising
The Put Option
When prices are falling and a Bear Market is in place a PUT option strategy is used when the expectation is that the price will fall.
It is important to consider that the terms “bull market” and “bear market” are asset-specific. For instance, one asset could be rising (bull market) whilst the prices are dropping for a different binary option market (bear market). Therefore, a PUT option strategy has to be considered for assets individually and separately, and isn’t suggested to follow a put option strategy for all the markets.
For the more advanced and experienced traders following a PUT option strategy in a rising market to capitalize on short term losses in the market can pay dividends but can be risky and require a high level of expertise.
PUT options strategies are used when the market is falling and is expected to keep on falling.
The Put and Call Option
Also known as the ‘The Pairing Option’ The put and call option is one of the most commonly used and successful basic strategies for trading Binary Options. It is the bringing together of the ‘in-the-money call and an ‘in-the-money put:
Put Option – enabling the trader to set a minimum price at which to sell
And
Call Option – enables the trader to set a maximum price at which to buy
At the expiry of the contract if the spot price is between the two prices, a nested position can be created and if timed right you would be in-the-money and your risk greatly reduced. This is very much a timing strategy and very much suited to the fast paced quick trading of Binary Options.
About the author: BinaryOptionStrategy- David Frank
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