This mode of making a profit on the options market cannot be called a classic strategy for forecasting the market – it is more of a logical technique or method based on simple mathematical calculation which uses the very features of the algorithm of the binary option. Nevertheless, the “Averaging” strategy for binary trading has a high level of efficiency and allows you to receive stable income at a rate of more than 200% in a week. In addition, this approach is universal and can be used as an additional means of working with options for any major technical strategy for market analysis.
The “Averaging” method – technical requirements
When considering the technical requirements of this strategy, it is necessary, first of all, to understand the very concept: averaging is the registration on the market of additional contracts against quote movement during inertial price movement at the moment of a short-term increase in asset fluctuation volatility. Simply put, the price when moving along the trend sometimes makes fluctuations that go beyond the limits of the extremum levels of the trend (the support and resistance levels) – this market situation is optimal for applying averaging.
To apply this method of trading, you will need a terminal with rather exclusive technical parameters:
- Non-stop trading mode
- A large selection of assets
- Access to chart analysis services
- The availability of turbo contracts with short expiration periods
- The fastest possible processing of orders
- Minimal trading conditions
We can provide a professional recommendation – use the technologically advanced, well-equipped tool from the licensed European Binomo broker. This platform offers the most optimal trading mode for averaging binary options:
- Trading without restrictions on the number of contracts
- 80 positions of financial assets for trading
- Chart tools for technical analysis
- Turbo contracts with expirations in the range of 1 to 5 minutes
- Trader order processing in 1.7 ms
- Trading conditions – the amount of the initial operating account starts at 10 dollars, the minimum cost of a bet is from 1 dollar
The “Averaging” strategy – trading methods
So, in order to obtain the maximum possible profitability results when using this logical method, a simple and accessible method of determining the boundaries of asset trend fluctuation will be required. This is necessary as a means of generating a forecast for the initial contract and it will become the benchmark for the averaging positions. We suggest using an effective and well-known technique – trading in the price channel with limited trend levels, where we have the opportunity to register short-term bets in two directions of quote movement:
When analyzing the chart shown in the screenshot, you can see that the classic signal of the asset quotes reaching the channel boundary and rebounding from it is not always the most accurate – in some situations the price goes beyond the boundaries of the channel due to inertia. We use this moment to obtain additional profit through the method of “Averaging.” In practice on the binary market, it looks like this:
- We make the first bet on the classic signal of the channel strategy
- During quote movement in the opposite direction of the initial transaction, we open additional market positions in the direction of the initial forecast of market movement
“Averaging” bets should be registered with a longer expiration period than the original contract – the optimal trading regime in this case is a difference in the expiration of each position of 1 minute.
The result of trading bet expiration
When applying this approach, we can see the following types of results:
- The quotes will return to the channel of trend fluctuations and all the trading bets will yield a positive result – according to strategy testing statistics, this type of expiration occurs in 75% of market situations
- Asset quotes will return to trend fluctuations, but with minimal dynamics that won’t allow for profit making on the initial bet – as a result, additional trading bets will compensate for the losses and bring a certain level of profit
- The asset price will reverse to build a new trend and the entire package of trades will bring losses – this is the only negative result from using the method in binary trading. However, given the statistics of this happening only 25% of the time, this option of trading bet expiration for the “Averaging” strategy does not have a critical effect on the overall trading result.
Given that trading position packages are used in this trading strategy, it is necessary to treat the calculation of trading risks more carefully, otherwise several unsuccessful outcomes of working on the “Averaging” system could destroy your operational capital. For security, we recommend using trading bets on the market with the minimum cost of $1. After an increase in your trading account, you can use bets with risk limited to the level of 3% of the volume of your capital, and the overall risk level for a package of contracts should be limited to 15%.