Traders earn money through taking risks in the stock, currencies and commodities markets. They can also lose money which is why a strong risk management system is important to be put in place prior to even touch the platform. This helps to determine the capital necessary to make this form of trading viable and then consider if it is still worth it for you as a trader. With binary options, traders have the best of both worlds: they have the predetermined costs/risk and possible gains before they start trading a stock and the profit that they can get from it is comparable if not larger than the riskier form of stock option. As you will now see a hedging strategy is an excellent way to keep your capital for as long as possible.
Hedging means being able to lock-in the profits earned from the assets being traded. It’s almost like taking two sides of the same trade. Let’s assume you are a trader with 15 minutes left until expiry time on the EURUSD. With your current trade running in the money, the strike price of your $100-deposit on this asset at 85% return is already valued at $185. At this point in time, you may employ hedging strategies in order to lock the current profits. At this point put on the trade. If you see five minutes before expiry that the movement is going against your trade then place CALL. That way you have hedged your trade and will get most of your money back. Now let’s look at some at a forex options trading strategy.