How to trade binary options
You will discover that trading binary options is a very simple way to speculate on the financial markets compared to other forms of investments. Consequently, you will have improved possibilities of making worthwhile and consistent profits by trading them. In particular, if you become a member of OptionRally then you will have the opportunity to gain as much as 78% profit per trade within an hour, even if you are a total novice.
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You can increase your profit potential even more and minimize your risk exposure at the same time if you invest your time to study and master binary option trading strategies. This article introduces and discusses some of the more popular strategies which you find of great use whether you are a novice or experienced binary options trader.
Pairing: Also known as hedge and double position, this is a clever strategy which possesses the ability to provide you with windows of opportunity for high returns while minimizing your risk exposure in the process. For example, imagine that you have opened a ‘call’ binary option which had an opening or strike price of $20. Now assume that you have achieved a favorable position and are now in-the-money with the current price standing at $24. However, you are worried that a serious price retraction could occur which could wipe out all your profits and could even cause losses. To safeguard your gains from such an eventuality, you could, at this point, open a new ‘put’ option and pair it with your original ‘call’ one.
By doing so, you would create an opportunity window between $20 and $24. This is because if price finishes within this range at expiry time then you will receive profit payouts from both options. In addition, you would also significantly reduce your risk exposure because should the value of price finish outside this window at expiry time then the profit of one of your options will almost totally negate the loss of the other.
Binary options betting: You should aim to activate this strategy just after any of your selected assets have experience a significant yet unexpected price surge. The binary options betting strategy takes advantage of the fact that many traders act in a very predictable way after such developments happen.
Stop-loss trading: Many traders use binary options as a method to hedge their investments with other asset types because they have been proven to be very effective. For example, consider that you are trading the EURUSD currency pair and you are considering utilizing a stop-loss in order to protect your account balance from suffering a serious drawdown.
Instead of deploying a standard stop-loss, you could instead activate a binary option in the opposite direction to your Forex trade by using the EURUSD as its underlying asset. In doing so, you would provide a very effective protection for your EURUSD trade.
However, although a stop-loss trading strategy looks quite simple at first sight, a successful one depends on the quality of your understanding and knowledge about factors such as risk tolerance, trading asset, your trading style and market conditions.
Index-asset divergence trade: This is another popular strategy that entails hedging a binary option based on a company’s shares with one whose underlying asset is the trade index that includes the same firm.
For example, imagine that you decide to open a ‘call’ binary option with Apple because you think the value of its shares will appreciate in the near future. In order to hedge this bet and if you also believe that the stock markets will generally fall in value, you could also consider activating a ‘put’ binary option based on the S&P500 of which Apple is a composite company.
Consequently, this strategy will help you minimize your risk and allow you to support your trust in trading your selected asset. In addition, you could provide yourself with the opportunities to compound your profits, maximize your returns and minimize your risk exposure. For instance, with the example just described you could achieve a double profit pay-out if your calculations prove correct.
Competitor relative value trade: This strategy can help you profit using binary options by exploiting the opposite price movements of two competing companies. For example, imagine that Microsoft is about to release a new product that is expected to provide a significant boost to the values of its shares.
In addition, you also deduce that rivals, such as Apple, could suffer market share decreases which would have negative influences on the values of their shares. Consequently, by following your fundamental and technical analysis to the full you should open a ‘call’ binary option with Microsoft and a ‘put’ one with Apple.
This action will then provide you with the opportunity to collect double profits by taking advantage of the competitor relative value trade.
Commodity stock affect trade: Many traders consider this to be a very powerful and effective binary options strategy. Basically the idea is to exploit the variance in the movements of commodities on the share values of companies that trade them.
For example, significant movements in the price of aviation fuel can seriously influence the share values of airline companies. Consequently, if you believe that a spike in the price of aviation fuel is imminent then you could consider activating a ‘call’ binary option with this commodity as its underlying option. In addition, you could hedge this bet by opening a ‘put’ binary option based on the shares of an appropriate airline because you are anticipating them falling in value as a consequence of this development.
In summary, if you take your time to evaluate binary options strategies such as those described above then you will find that this is a rewarding undertaking that could significantly boost your profits. This is because you can then provide with opportunities to compound your profits within the same time frame whilst minimizing your risk exposure in the process.
You will find by analyzing OptionRally’s binary o ptions trading platform that it has been specifically designed with this purpose in mind. So, why not 'Click here' now in order to open an account with OptionRally™. You will be very impressed about the quality and quality of the impressive trading strategies and tools available to all OptionRally clients especially yourself.
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