As the popularity of trading Binary Options increases and becomes one of the fastest growing industries online, the amount and the popularity of advanced trading strategies increases too. Despite Binary Options being the simplest and in many cases, the most profitable way to invest in the financial markets; the application of a few differing advanced trading strategies can substantially increase the likelihood of success when trading binary options.
The method of ‘doubling up’ is probably the most straightforward, yet one of the most profitable strategies a trader can apply in Binary Options. It works on the premise that your initial investment in an option is performing up to a standard that means you should double your investment. For example, you have invested £100 in the price of Gold being higher than a target price of $1689.56. The price has been rising consistently and your research into the fundamental and technical analysis all point to further increases; you make a further investment of £100 into the price being higher supported by your research and not on emotional trading chasing a losing investment. Doubling up on a fundamentally and technically supported investment decision requires an advanced level of knowledge regarding the markets. The method has the added risk of the increased exposure, but the rewards doubling up offers can very often justify the risk.
A complicated strategy for Binary Options traders to master is the straddle. This is method whereby a trader purchases both Call and a Puts options on the same individual underlying asset. The premise behind the strategy is that an investor straddles the same asset at a high point as well as a low point. This would create an area in between the two options can that can double the success if the expiry is in the area between the two points. It also means that at the very least, one option will be correct and the losses would therefore be minimized. The trader would ideally place a Call option when there is a low point in the assets price and then place a Put option when the market rises and there is a high point. This ensures that the best scenario is that they both finish ‘in the money,’ and the worst scenario being that at least one trade will finish ‘in the money’, keeping the losses down to a minimum. The best tactic to employ when buying the Call and Put options is to make the initial investment on one option with a longer expiry and then wait till the direction of the asset has established itself before making the second purchase.
Although this considered a very basic strategy to implement; it requires a well researched understanding of the financial markets for it to be implemented correctly. An investor will need to study the different interrelationships between the various assets and learn how to read and use the economic calendar to their advantage. Accesses to good free economic calendars is easy and are available to everyone with an internet connection, but learning when to put a Call or Pull option on a particular asset when a newsworthy event happens or when data is released by governments or companies, takes time. For example, Oil; one of the most highly traded assets in Binary Options. The price of oil is very sensitive to global tensions, most of which in the oil producing Middle East. When tensions rise for whatever reason, the threat of reduced supply pushes prices up. Also, Oil exporters like Canada have oil sensitive currencies which mean that when the price of Oil goes up, the Canadian Dollar (CAD) increases in value too. This theory is extremely popular amongst traders as when mastered, with an advanced understanding of the assets, it can form the core of a successful trading strategy.
Now read Basic Binary Options Trading Strategies