Binary options investing offers an innovative yet simple way to make money; a person can make huge gains or lose his entire money in a span of few minutes. The trader has to place a call option, if he expects the price to rise. On the other hand, a put option is placed, if anticipations indicate downward price movement of the asset. All trading strategies are formulated on the basis of these two simple fundamentals. The trader has to speculate this simple but important part, and take his trading position accordingly.
Binary option investing terminologies include straddle as one common term of the trade. It is a type of strategy wherein the trader places both the call and put options simultaneously. In such a situation, the price of a given asset is expected to increase after a certain time period. Therefore, the trader places a call option initially to profit from the upward movement of the asset price anticipating that the price will move upward after half an hour. However, if the price of the asset seems to be decreasing after 10 to 15 minutes, the trader might expect that the asset price will fall further. Hence, he will place a put option on the same asset but at a current running price. Such a trading position will ascertain that the trader will have money at the end of the trade.
Folks who have considerable amount of experience in binary options investing often employ non-directional strategy. Such a strategy helps the trader to speculate even in an unstable market. During unstable times, the value of the asset is fluctuating. Hence, it is important to take immediate decisions and speculate for shorter time periods. In this scenario, no fixed formula can be applied to predict asset price movement. Decisions are based on market conditions and the judgment of the trader. Such a trading strategy is based on instinct and needs great experience to ensure winning trades.
Another strategy which needs to be researched to understand is the reverse strategy. It enables the trader to cover up losses by placing a reverse trade on the same given asset. In this strategy, the trader will not gain much compared to other strategies that can fetch him up to 500 percent gains, but the best thing about this strategy is it still allows the trader to cut down his losses.
No matter what strategies are utilized in binary options investing, it is essential to stick to the most accurate consideration and study. There is no single strategy which can ensure continuous winning trades. The market can go against the expectations of the trader multiple times disturbing his predictions.
A better long term strategy is one which delivers gainful trades while cutting down losses. Instead of giving credit to one particular strategy, it is a wise idea to assess the success of strategies based on overall profits over a period of time.