These are, however, kept as simple as possible with binary options. Unlike the exchange-traded options, binary options can only be bought. The direction is determined in the product itself. This makes trading easier on the one hand, but reduces the selection on the other.
That is why we would like to introduce you today to an unconventional trading strategy and to draw attention to some product-dependent trading options. In our Binary Options Strategy section you will also find a selection of trading strategies for different market situations.
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The strategy not to act
As already in last week's review, this is also a strategy based on market technology. Since retailers have to make quick decisions with a short time horizon, market technology is best suited in this case. Fundamentals are known to affect prices in the medium to long term and are rather unsuitable for binary options.
Let's look at the current chart of the currency pair USD / JPY in the web trader of the broker BDSwiss. In the 1-hour chart we can clearly see that the price fluctuates within a range. The broker BDSwiss offers binary options on the USD / JPY in several types and terms. The option shown in the picture has a duration of one hour and expires at 6:00 p.m.
We immediately notice that the strike price is quite close to the upper limit of the range. So the question immediately arises as to what is the probability that the price will break above this resistance? You can't answer that without further ado, because it depends on the current overall picture on a longer time basis. Is this just a short-term recovery or a longer phase?
But what we can assess better is the likelihood that the price will break this resistance within the next hour. The chart shows that the probability is very low. Because even if the price had the potential, it would possibly be slowed down by this resistance. That again takes time. Especially since the course bounced off this resistance three times and could not be overcome sustainably.
So not acting would also be a strategy. A dealer does 80% of his work with planning and analysis. Implementing or deciding not to act at an unfavorable moment is often a measure to limit risk. Because trading in financial market products is not reversible. If you have made a decision, there is practically no going back.
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What strategies are there for binary options?
In contrast to the self-developed trading strategies for estimating the direction, options as a financial instrument have properties in themselves that can be changed individually. At this point we would like to introduce you to some basic strategies for binary options. Binary options are often offered by brokers to a certain extent with regard to the exercise structure. In most cases, this requires an adjustment of the trading strategy. In addition to the regular put / call options, the broker BDSwiss offers two other types, the one-touch and ladder options. Brokers generally offer the following types:
- Up / Down
- One Touch
- Double Touch
- Either / Or
With the up / down option the trader makes a profit if the price after the term expires above / below the price at the beginning of the term for the option located. With this type of option, trend-following strategies would be well suited.
The Ladder option gives the trader the opportunity to increase his return. Ladder, the English word for leader, also makes sense here. If several predetermined price ranges are passed up or down, the return increases. The price ranges are color-coded in the picture. When the respective price range is reached, the customer can book additional income. However, if the price falls back into one of the areas within the term, the customer does not automatically lose the additional income if the price is still in the positive area after the period has expired.
The One-touch option enables the trader to make a profit when a certain price barrier is reached. This option is easily tradable if the trader is convinced that this barrier has been reached, but is not convinced that the price will continue to move in the same direction. This option could represent a chance of winning within a sideways phase.
An interesting variant of the one-touch option is the double-one-touch option. With this option, the trader is able to protect himself in case he is not sure about one direction. However, he has to expect a certain price movement. He can thus set two barriers that secure his profit downwards and upwards. However, it loses its stake (option premium) if the price remains within these barriers.
The Either / Or option is an option in which the trader switches between a unit of the underlying security (underlying) can choose or the payout. Other strategies for binary options can be the Boundary Options, which are specially structured for range trading. As already mentioned, binary options trading types can vary from broker to broker. It is therefore imperative to find out the details beforehand. The provider BDSwiss offers several options for this.
Use binary options strategies - 5 steps to the first trade
Numerous strategies can be used for trading, but inexperienced traders in particular often only get there via detours to the first trade, as they do not yet know, for example, what is important when trading binary options, how to find a suitable broker and which steps are ultimately necessary. The following slideshow serves as a guide and clearly shows what traders should pay attention to and how it is possible to get to the first trade in just five steps.
2 Minutes Strategy Binary Options 2020 (IQ Options)
Whether ladder, One Touch or Boundary - there are many options when trading binary options and a well thought-out strategy can make a significant contribution to trading success, although it is by no means to be understood as a guarantee of profit. Binary options are highly speculative financial derivatives and trading is always associated with risk. Anyone who deals closely with trading can use strategies in a targeted manner. Some brokers offer a demo account and thus allow you to try out strategies first without using real capital.