Binary Options Strategies For Experienced Traders
Binary option strategies allow the traders to maximize their profit. There are several different strategies that one can apply when trading options, some are straightforward and perfect for beginners, while some are complicated and best for expert traders. The strategies enumerated below are some of the binary options strategies that expert traders can apply.
Record High or Low Price Points Binary Options Strategy
One of the dangerous predictions when trading binary options is the prediction for an asset price to achieve a new record high or low point. This occurrence is seldom seen, but in case it does, you will profit a lot from it. The reasons why this strategy normally pays the larger amount is that there is an increased amount of risk involved. However, there are techniques which can be employed to reduce risk.
The record high or low prices can be seen during the times when market reaction concerning the asset is very strong. There are no restrictions on the types of events that can introduce traders into massive buying or selling activities. Every time the market reacts strongly, the asset will have the possibility to set a new record. Traders do not have the capability to predict a new record in advance, but for those who are aware of which signs to look for must be able to go straight into the market and perform a trade each time a new record seems likely.
The simplest way to predict a new price record is to search for economic reports which are way far off the calculated numbers. Investors depend mostly on analyst opinion, and in instances when the foreseen data are different from the actual numbers, the asset price will shoot down or up fast. This type of strategy is not used daily, however it should be in your strategy toolbox and to be used when the right time comes.
Risk Reversal Binary Options Strategy
This strategy is used in trading to reverse the risks needed in option trading. It is referred to as hedging strategy, but is more of an arbitrage because it includes both buying and selling out of the money options without the need of paying an extra cost. Since this strategy is not as easy as other strategy, beginners should learn the curves involved first. It requires a lot of time before a trader becomes comfortable with the risk reversal strategy.
To make this strategy work, the trader should sell an out of money put option and at the same time buying an out of the money call option on the same underlying asset. The only drawback with this strategy is that some brokers require a trader on high level before you can use the risk reversal strategy.
Long Shot Binary Options Strategy
This strategy is associated with higher tier of risk. But, the strategy should pay off only several times to be able to recover investments, but to construct impressive profit. This strategy is used in any kind of underlying asset. The idea is to simply buy a contract with a predicted price which is far beyond the strike price. Definitely, the distance away from the strike price the underlying asset price is, the trade will fail. The good thing is that even with small investments you can yield an impressive return in case these trades ends.
Included in this binary options strategy is the analysis. The trader should be able to determine how the asset price will move. It will be hard for the asset price to reach the predicted level. The brokers know this, and thus willing to provide high payout percentages if the prediction is accurate.
The long shot binary options strategy is not for everyone. However, those who are willing to accept a higher level of risk could very well be rewarded for being willing to take a chance. Since there is no need to risk a large investment on these types of trades, experimenting with this strategy should not be costly.
Knock on Binary Option Strategy
This strategy is considered as one of the more advanced strategy and can provide impressive profits. It is based on the idea that some assets have an impact on other assets. The connection between the two may result to rise or fall of the asset prices depending on how the other is reacting. Traders cannot link all the asset prices, but those that can be linked may offer several binary options trading opportunities.
This strategy does not require only establishing the link between two assets, but likewise learning the effect on the asset value in case the asset price of one or more changes. Determining a decrease or an increase in the asset value becomes a matter of anticipating the type of effect. In using this strategy, you need to use both fundamental and technical analysis.
Some of the things that might affect the asset prices are the market news and world events. It does not require a major event to change the trend of the asset price. Technical analysis includes tracking of how the price asset changes when the associated asset price changes. In most cases, the asset price will be directed in the same path. Sometimes, it will move in the opposite direction of the paired asset. When used appropriately, the profit on both paired assets is impressive.