Popular Binary Option Trading Strategies

Trade with the right strategy

Adopting the correct trading strategies is also crucial when binary options are traded among financial institutions and other major players in the market. Traders also have the option to choose from a plethora of different binary option strategies, as per their own preferences and convenience.

Hedging Strategy

Investors looking to ensure a fixed, locked-in payoff figure should ideally follow a ‘hedging strategy’. This technique is effective as a means for financial risk-management too. Under this strategy, traders can sell off some part of the assets of their ‘in-the-money’ binary options as the expiration date approaches, in order to cover for unexpected and unfavourable price changes. The investors can, of course, still benefit if the prevailing trends continue, via the portion of the contract they retain. In this context, binary option-holders should also be aware of stop-loss strategies, in order to minimise damaging financial losses.

60-second strategy

The ‘60-second strategy’ is increasingly gaining in popularity among traders who have low upfront investment amounts and prefer instant payoffs. Under this strategy, traders are required to follow real time information and trends from the economic and financial markets for a period of 60 seconds (which, of course, is the total duration of this strategy). If the trends move in a favourable manner, investors can earn really high profits. Investors can continue pursuing several 60-second strategies one after the other, in order to reap further benefits.

Be a good quarterback Straddle Strategy

In order to make sure that trading profits actually accrue on the maturity date of binary options, investors can opt to pursue a ‘straddle strategy’. Under this strategy, traders typically hold both a ‘call’ as well as a ‘put’ option on the same underlying asset, thereby covering for market price movements in either direction. Thanks to the nested positions that the traders can get into, the risk levels also get significantly reduced.

Reversal Strategy

Binary option holders can select the ‘reversal strategy’ to benefit from sudden fluctuations in the price levels of the underlying assets. For example, if the prices start rising rapidly, but that trend is unlikely to stay on for long, traders can quickly purchase and execute a call option. Put options can be purchased in case of rapid, but temporary, price falls.

Bungee Option Strategy

Yet another popular strategy for investors seeking quick and high profits from binary options trading is the ‘bungee option strategy’. Under this strategy, the binary option matures within a short period, ranging from five minutes to an hour. If price movements follow the predictions as made by investors, this strategy can indeed yield impressive payoff amounts.

Market Pull Strategy

The ‘market pull strategy’ is a useful way to get into an advantageous position from fresh global economic news and updates. Every important financial and/or economic announcement or policy-change has evident effects on different types of assets. Provided that the source of such news is reliable, traders can base their strategies on the same to get good profits.

All the above binary option strategies have their own, specific merits. Traders need to be absolutely sure about how they wish to operate in the financial markets before adopting any of these strategies.

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