Preferred Binary Trading Strategies
As you progress through your journey in binary trading you may start to look at strategies to assist you to maximise your profits and minimise your losses. There are many strategies employed by traders to help them achieve this, some are simple strategies that anyone can use, others may require a bit more experience and knowledge to be able to use them to their full effect.
Our knowledge means that we can demystify a so-called binary options winning strategy for you and explain in a more comprehensive manner what they are and if they really work. Here we share 4 tried and tested strategies and tactics that can be adopted at all levels. To make any strategy work we highly recommend you have at least a basic grasp of how to read trading charts.
That said we can't predict the markets or the outcomes and advise that you are comfortable with your daily strategy before applying it to your trades. Don't try and trade outside of your comfort zone and make sure you know what you are doing and following basic trading tips before you try new markets.
In this guide, you will learn:
- 4 of the key binary options strategies
- Why you should find a winning strategy
- What level of experience you'll need
The Hedging Strategy
The Hedging Strategy is also known as pairing and a perfect hedge trade is designed to return no profit. So why bother then? Well if you are looking to minimise risk and are happy to grow your profits slowly and steadily the Hedging Strategy can be an effective way to do so. Hedging involves placing money on the same asset at the same time to rise/fall or call/put within a designated expiry time.
This can be anything from a minute to an hour or longer if you are undertaking longer term trading. Hedging ensures that whatever the outcome the trader doesn't lose money or that the loss is minimal and the executed effectively you can actually return a profit.
Assuming you place the same amount of money on the call and put option and only see 80% returned on the win then you have made a loss. The trick is to place one amount on the favoured outcome and a smaller amount on the opposite. This way if the trade goes your way you will make some money but not as much as if you had only placed your money in one direction. This can be employed by anyone of any experience but if you are looking for quick wins and fast profits it is probably not the one for you.
It is a method that should only be used by those that have a lot of experience.
The Trend Line Strategy
Another binary options strategy for beginners is the Trend Line which doesn't require the trader to have any prior knowledge or experience. It is suitable for all traders since all it requires is for you to study the trend of an asset. The Trend Line Strategy can also help you to choose which assets to trade in. By studying several assets if some of them stand out as having very clear trends and look to be consistent then these could be considered to be safer assets than those that are very transient.
Before adopting the Trend Line it is important that the trader gets familiar with the asset that concerned. If they wish to trade on the price of gold for example it is worth looking at the trends of gold over a period of time not only by day but also at peaks and troughs throughout the day. It would be foolish to start trading in anything unless you had conducted some prior research. It is important to study the highs, lows and the flat lines and to use this to assist you with your trades.
The Pinocchio Strategy
This should not be used by beginners or those that are recently new to binary trading systems. It is a method that should only be used by those that have a lot of experience. Also known as the Pin Bar it is a complicated system that involves more technical knowledge than other strategies and takes a level of analytical skill.
If the trader expects the price of an asset to rise or fall dramatically they would employ the Pinocchio. The trader is looking for "the nose" (hence the name) which essentially means they are watching for a line to grow. Just like a wick on the candle the assumption is that the price is rising when in actual fact the longer the line becomes the more chance of the price going in the opposite direction.
Sound complicated? Well we did say it was more technical than the others and our advice is to only employ this technique if you know what you are doing.
The Ladder Strategy
This binary options trading system should only be considered if you have considerable trading experience and excellent analytical skills. The Ladder Strategy is for those who really know what they are doing. This is designed to allow the trader to gain when the price is out of the money or when the prices fall.
Firstly the trader chooses the call or put option and the expiry time. Then the trader chooses a trade or trades from each exit point until the expiry time. To profit from the trade the price of the asset has to hit all 3 levels within the correct time-frames. Like rungs on a ladder if the expiry time is an hour you must correctly predict where the price will be at certain points within that hour.
We advise that this should only be considered by those who are confident traders and only if you are trading with a reputable and trustworthy broker. It takes a lot of experience and skill to make so many predictions and the risk associated is much more than a simple call/put trade. Like anything the greater the risk and degree of difficulty the greater the rewards if successful but don't get greedy, only trade within your own limitations.
Shelly is proud of her current position as Head of Brand for a well-known organisation that owns several brokerages in the trading sector. She’s consulted for us since 2015 and readers can benefit from her insider knowledge of how brokers work. Learn more.