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Binary Options Strategy

Binary Options trading is very similar to forex or stocks trading by the fact that you must determine the direction where the market will go in order to make money. However, there are some key difference between normal trading and binary options trading, and those differences can result in special strategies designed to maximize your binary options profits.

Normal trading tips

In order to detect the direction where the market will move it is essential to analyze the charts and the past movements. This is called technical analysis and is based on the assumption that the market moves in patterns. Analyze the asset's chart and try to find the correct direction where it will go.
A good strategy for winning using binary options trading is to buy Call Options after a big market fall or Put Options after a big market raise. The market tends to correct a little after big movements, so if the asset has gone too high in a short period of time, it is likely to go down a little, and you can exploit this by buying a Put Option.

Binary options strategy

There is a very popular strategy among successful binary options traders, called Binary Options Hedging. This strategy is based on the idea of hedging your open option if it had a good start. The easiest way to explain this strategy is by giving an example of how it works:
Let's assume that at 12:00 you buy a Call Option worth $1,000 on EUR/USD at a rate of 1.3500 with the expiry at the end of the day (in 12 hours). The Option's payout is 170% and the refund is 15%. The price of EUR/USD moves up to 1.3570 at 17:00.
Now it is the time to buy a Put Option on the same asset and with the same value and deadline. This means that you hedge your current option.
In this situation there are three possible options for the outcome at the end of the day:
1) EUR/USD closes below 1.3500 -> first option is a loser, second option is a winner -> total payout is $1,850 resulting in a Net Loss of $150
2) EUR/USD closes between 1.3500 and 1.3570 -> first option is a winner, second option is a winner -> total payout is $3,400 resulting in a Net Profit of $1,400
3) EUR/USD closes above 1.3570 -> first option is a winner, second option is a loser -> total payout is $1,850 resulting in a Net Loss of $150
By using this hedging strategy you limit your potential loss to only $150 in the above example while having a potential profit of $1,400 (almost 10 times higher than the potential loss).

Strategy for Touch Options

Touch Options are special options where you win if the market hits a certain level before the expiry time. This kind of options have very high payouts that can go as high as 350%. Brokers like Option Bit offer this kind of options.
To exploit this kind of options you must trade before big market events using a smart strategy. I will explain how to do it in a very simple example.
Let's assume that you are half an hour before NFP (Non Farm Payrolls) is released. The price of EUR/USD is 1.3500. A Touch Up option with the deadline in 60 minutes requires a value of 1.3580 to be hit in the next hour to be a winner and has a payout of 300%. The Touch Down option with the same deadline requires a value of 1.3420 to be hit in the next hour and has the same payout.
You know that after 30 minutes the market will move like crazy in one direction, depending on the news release. What you don't know is the direction where it will move, making this information useless for normal forex trading. However, by using binary options you can exploit this information. You will buy a Touch Up and a Touch Down option worth $1,000 each.
After the news release the market will move at least 100 pips up or down, and this means that one of your touch options will be a winner. With a 300% payout you will get $3,000 with an investment of $2,000 resulting in a Net Profit of $1,000.
The strategies presented on this page are only some of the tactics that can be applied to binary options. This amazing way of trading makes it much easier for you to profit from the market moves and make a steady income.
More binary options strategies can be found here:
Binary Option Brokers
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Trading derivative instruments can generate high profits in a short period of time but it is also risky. By trading binary options you acknowledge that you are aware of the risks involved, including the possibility of losing the entire investment. Never make speculative trades online with money you can't afford to lose.  
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