Nowadays, Binary Options has become one of the most popular trading in financial market. Experienced traders as well as the newcomers are in rush to include this trading trend in their portfolios. We know that in any form of investment, we require a proper strategy for a consistent win, and that is exactly the same in Binary Options trading too.
Any investment which we we make without a strategy or a tactic, is simply a gamble. Thus, just relying on a luck while trading in binary options is not at all a good idea, you will eventually end up loosing all your investment. You should know the right techniques to make right predictions everytime. You should work on a strategy, which is easy to understand, implement and could increase the chances of winning consistently.
Types of strategies
What any ostensible “experts” or signal providers will advise you, remember, no strategy could be perfect in trading, all have several flaws and weak points. No one can suggest perfect mathematical model, thus, you must be aware of all the pros and cons before using any strategy.
Well, this is not define to discourage you, just want to keep you informed about all the important things. Let’s see what are some strategies, which can make you profitable most of the times.
In general, all the trading strategies are broadly divided into two groups, they are as follows :
- Strategies Based on Market Behaviors: These are the strategies in which investors fully rely on the technical and statistical data. These strategies are bit harder to understand and worked on, however, it could prove out most successful, if you know all its objectives. These techniques help you understand some of the data, like charts, graphs etc..
- Strategies Based on Betting Model: The strategies come under this model are designed to raise the possibility of winning. Instead familiarizing with financial market, traders make a prediction and bet on what they think is appropriate in particular circumstances.
Most recommended strategies are as follows:
Basic Options Strategy
First in our list is quite a popular one among the traders. This strategy is used to safeguard yourself from incurring the total losses of your investment. In this strategy, a trader picks an asset of his/her interest and according to the market conditions, makes a prediction. Let say, the price is going higher and trader has chosen a CALL option. At the same time, he/she will also make a PUT options on the same asset.
For example, you have invested $100 in USD/EUR with a CALL option and the expiration time is about 20 minutes. The payout is 85% if you win and 15% if you lose. After 10 minutes you made a PUT option for the same trade and the stake is also the same. Now the outcome after 20 minutes will be, you will win a 85% profit from a winning option and you will also get a 15 % consolation refund from the losing trade. And this will reduce the risk involved in it. As it is almost impossible to loose both the trades.
Fundamental Analysis Strategy
Under this strategy, overall performance or the attribute of a company is analyzed. As a binary options trader, you should know th balance sheet, income statement and the cash flow statement of the company before you consider buying an option. The other factors to look on include, the employee and the business partners’ satisfaction. Summary of the story is that, in this strategy, an investor should consider the overall picture of a business.
Technical Analysis Strategy
It is quite a popular technique used by most of the traders these days. This strategy focuses on studying the past data and predict the future movements on the basis of patterns that one finds in those data. You can see its live example here. Most common tools used in technical analysis are Bollinger bands and Moving Average.
There are many strategies available and you could easily end up with a one that matches with your trading portfolio and patterns. For new traders, it is very essential to perform a deep research and choose the one strategy that is compatible in all the market condition.