Previously in the article “Binary Options, The brand new Investment Tool for the On-The-Go Investor” we discussed the origins and basics of Binary Options. In this articlewe are going to discuss the techniquesyou can use in Binary Options trading.
Typically, when trading conventional futures and options, traders use numerous strategies such as the Collar, Covered Call, Straddle, Spread, Protective Put, and moreto reduce their risk of loss once themarket is fluctuating up and downin an erratic manner; typically know as a volatile market. A loss in one CALL trade could be offset or perhaps profitable with a PUT trade made on a different Asset in another trade made at the same time. Frankly, this kind of strategy ought to be left to the experienced trader. I may go on for a lot of articles explaining all of the different strategies used in trading, however it would only bore the knowledgeable traders and would greatly confuse the beginning traders.
Simplified Trading At Its Best
The simplicity of Binary Options has enabledthe personin the pubto get into trading without needing todiscover the in-depth strategies of conventional trading. As an effect, it has brought a lot of new money in to the trading scene to the delight from the average on-the-street investor. The simplicity of the Price Up or even the Price Down and 2click trading with as much as an 81% profit has caught the attentionof atotally new segment of investors.
“RTSB” - The Simplified Strategy
Along with the simplified trading comes a simplified technique for trading Binary Options. I like tocall it “RTSB” which means “Read the Screen Bud”. Yep, that is right. Open your vision, turn offthe television, stop texting your friends, close your chat room windows, and check outwhat’son the trading screen right in frontof you. In addition to displaying the present price and trading period every Binary Trading options screen has a button that will permityou to definitely display the chart from the previous trading period.
While “RTSB” may be the visual cue to look atwhat’sbefore you the analytical cue is perfect foryou to definitelylook atif thecost of the Asset is certainly goingDown or up. The direction of motionis calledthe Trend Line and the question you have to answer on your ownis whetherthe popularityis certainly going Up or perhaps is it heading down.
If the Trend is going Up then you wouldconsider makinga CALL trade. However, if the Trend is certainly going Down you want toconsider making a PUT trade.
The “DDSS” Strategy
The “DDSS” Strategy is also fairly simple, “Don’t Make a move Stupid”. This technique is best explained by an example. As you are considering the charts for the Asset and also youbegin to see the current price begin togo Upafew minutes later it is going Down by a nearly equal amount, then acouple of minutesafter that itrises again. If you lookin the average price during this time periodyou shouldsee that it remains almost the same. Some traders refer to it as “Flat lined”, but the trading term is ” Sideways Moving”. This is where youapply the “DDSS” strategy and DO NOT make any Trades for your Asset. A Sideways Moving cost isvery hard to predict and mostof times your prediction is going to be wrong. Stay away from it to check out another Asset that hasan obviousUp or Down Trend Line.
I have to admit, the RTSB and DDSS strategies are actually attention getters to focus onthat you mustpay attention toyour workas you canlose money fast if you do not do your own research before trading.
The Spread Strategy
MultiplicationStrategy isa real trading strategy that hasbeen simplified by Binary Trading options. In conventional trading optionsyou use the Spread or Straddle technique to buy CALLS then sellPUTS onthe same Asset. However, in Binary Trading optionsyou cannot place a Calland set trade for the same Asset unless you are using two different trading Brokers which isn’t recommended.
The basicconcept ofmultiplication in Binary Options is to find two Assets in which the Trend line is Up for one and Down for that other. On the Asset the Trend lines are up you seta CALL trade on itduring the Asset in which the Trend lines are down you place a PUT trade onto itat the same time.
Multiplicationtechnique isknown as “hedging your bet”. If both trades end In-the-Money you canreceive an 81% payout on bothof these. A $100 Trade Price on each one of the trades would create a $162 profit. However, if a person trade ends Out-of-the-Money you’ve minimized your loss to $19; $100 loss on a single trade and $81 profit on the other trade. However, if both trades are Out-of-the-Money you wouldhave a $162 loss.
In trading, Risk Management is a major procedure thatyou have tostick to. Fortunately, Binary Options aremade topossess a fixed payout along with a fixed loss per trade thus limiting your risk on each trade. However, the only limit on poor judgment and gambling fever from youis the own perseverenceto NOT trade when market conditions are poor or when you are consistently Out-of-the-Money on amajority of your trades. Take a break, step back, and analyze why much of your trades are Out-of-the-Money. Doing your own research in the Trend Type of each Asset is essential to minimizing your risk when trading.