13 August 2012 12:23

What Are Binary Trading Strategies And How To Manage Their Risks?

Binary _options _trading1

As a concept, Binary Options trading is fairly straight forward and simple. It is nothing but predicting whether an asset would rise or fall by the end of a time period. However, it is much easier to earn and maximize your profits if you are aware of the strategies that binary options brokersand experts use. The following are some binary trading strategies you must know about -

Straddle - Straddle, as a general strategy, means that you forecast different levels of price for an asset. The prediction could be that the price would rise above a certain point or that it will fall below a certain point. Because you have set a range, if the actual price is within the range anticipated by you, you would end up on the winning side. In binary options, you buy a call and a put with the same expiration date and strike price to create a straddle.

 Reversal - If your estimates show that the market might change direction, then you follow this strategy. It involves going in the opposite direction of what you have been following thus far.

 Knock On Effect - Some assets affect other assets when their price changes. They are complimentary assets whose prices follow a certain function in relation to each other. So, forecasting becomes difficult in this case because you have to ensure that your estimates take all these future effects into account.


The main purpose of all the binary option trading strategies is to manage your risk. The idea is not simply to reduce risk to a bare minimum but to create the right balance between risk and returns. You might be aware that risk and returns have a direct relationship. This means that your returns increase with your risk and hence, managing risk is important.
Never follow trends and rumors blindly but this doesn't mean that you should not know what is going on in the industry. Even if some rumors are untrue, they tend to have an effect on prices and you must be there to cash on the benefits.
You should always research well before you zero-in on an asset. Guesswork never works in trading, always back your guts with facts and figures and never gamble. This doesn't mean that you would never lose money. It simply means that the chances of losing money would be reduced. Binary Options trading requires utmost patience and determination and you would require these qualities to become successful.

Comments

#1 | Tuesday 18 Nov (17:47)
I am exploring this subject as part of a report I need to do on possible careers I might choose. Thank you for your post it has valuable information on this topic.
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#2 | Tuesday 2 Dec (17:51)
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#3 | Tuesday 2 Dec (17:56)
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