Binary options trading strategies

Binary options are a great investment to consider if you are looking for a way to earn some extra money. There are many different type of investment securities, but one that stands out the most, especially when trading online, is binary options. Its simplicity and high returns make them extremely popular.
binary options strategy graph
The basic principle of binary options, as with all investments, is to buy low and sell high.
As you are already reading this, you are probably familiar with binary options strategies and are itching to start investing. Or, perhaps you’ve been investing for sometime and want to know how you can grow your returns on your binary option investments. Either way, you’ve come to the right place, it’s about time we talk binary options strategy.

List of Strategies

Below we’ll discuss a few investment techniques that if used correctly can generate maximize returns.

Investing in Call/Put Options

Generally in binary options the most common type of investment are Call or Put options, depending on which option you chose you can gain money if the underlying asset is trending up or down. If the investment ends “in the money”, you take 100% of the investment. If it expires “out of the money” brokers usually offer a return on invested money, usually 15%. So you don’t have to worry about losing everything.
put call options

Investing in both Call and Put options at the same time.

If you want to gain the highest returns possible, there are some binary option trading strategies that can be very effective. For example, buying a put option and a call option at the same time. How does this work? If you bought a call option which is quickly approaching expiration “out of the money”, you can purchase a put option which will expire “in the money”, hedging your losses.

Doubling Down

The above binary options trading strategies for investing are the most typical. However, for those who know more about financial markets, you can choose to double down on the value of your investment. For example, if you’ve purchased an option and after close observation of the price trends, you anticipate it will expire “in the money”, a very successful strategy is to buy another of the same option, significantly increasing your profits.

Following the Market

Another effective but complex binary options strategy is based on following trending news reports regarding the asset in which you choose to invest. If we consider an investment in currency pairs for example, imagine that news outlets are running reports after reports the dollar will fall. In this scenario, it would be wise to buy a put option on dollar yen currency pair.

Similarly to currency pairs, if news reports suggest a shift on the market that can be beneficial make sure to seize the opportunity.
For investors with a sound understanding of financial market behavior and movements, who can analyze the news and even anticipate trends, it shouldn’t be very difficult to earn high returns on last minute investments. Obviously until you build up the analytical muscle to correctly interpret market behavior, you should avoid solely employing this strategy.

However, you should still maintain and develop your understanding about everything related to your investments.
Don’t forget to follow your economic calendar as a matter of habit. Economic news is generally released at specific times like the end of quarters. This news has a large impact on your investments.

Hedging Strategy

With the proper hedging strategy, you can effectively minimize risk and maximize profits, which is ultimately the reason you want to invest. The key to a good hedging strategy is to calculate price trends of an asset in a few minutes to determine where to place your money.

If, for example, you estimate the price of EUR/USD will be between 1.79 and 1.85, you can take advantage of this knowledge to buy both a call and put option. You can buy a call option that EUR/USD will trade above 1.79 and put option that it will trade below 1.85. If the calculation was correct, both options will expire in the money.

Exploiting Market Disruption

The objective with this binary option trading strategy is to find the point where investors instigate many movements relative to a buoyant market. This is called market disruption. Identifying market disruption is not easy, but with dedication you can differentiate between false breakouts or fakeout movements.

This strategy is well suited for the binary option markets because the market is less susceptible to leverage as other markets such as Forex.
There are many methods for identifying a market disruption. But the main thing to keep in mind is that market breaks generally come after there has been long term stability.

Betting against the market

strategy again the market
To successfully implement this binary options strategy, you will need your economic calendar handy as you time your bets against emerging economic news. This might seem somewhat convoluted, but we’ve provided an example below to clarify.

If, for example, a breaking news story discusses plummeting market values is released, you can invest immediately in that market with the intention others will attempt to buy in when the price is low causing the values to rise in the next few minutes. Of course the reverse is equally true and can be more effective, especially in markets such as FTSE or Nasdaq.

2 Comments

  1. 1

    Mark

    Interesting strategies. They are easy to implement :)
    It is hard to find such clear explanations for newbies.
    Hope that you can develop a strategy using pivots.
    Best!

  2. 2

    Jack Knorler

    Good idea Mark.
    We will work an strategy showing how to use pivots and post it soon.
    Thanks for your feedbacks.

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