Hedging is a strategy that can be used to offset losses while providing you with at least some amount of profit. In binary options, hedging equates to purchasing opposing trades, with some basic math being done beforehand to ensure that the one winning position will cover the cost of the loss and leave some profit behind to go into your account. Below, weâ€™ll discuss how to hedge with Digital Plataform One Touch trades.
Within the Digital Options platform, One Touch trades are available for purchase during the weekend. The profit rates offered on these trades are substantial, a fact that makes it easier to profit from using a hedging strategy. Significant price movement is typically needed in order to profit from these trades, which is why the profit rates are so high, but hedging helps to reduce the risks.
Hereâ€™s an example of binary options hedging in actionâ€¦
Letâ€™s assume that youâ€™ve done your homework and are expecting so serious price movement on the asset youâ€™ve selected throughout the coming week. Maybe youâ€™ve based your assumption on the fact that an earnings report related to your asset is set to be released sometime during the week. These reports can cause substantial price movement and hedging can allow you to account for both upward and downward price movement.
With a potential payout of 350% being offered, you could invest $100 into a prediction of an upward movement touch and $100 into a prediction of a downward moving touch. If either of these trades finish in the money, your account will be credited with $350. Now, we subtract the $200 total investment that went into both trades, leaving you with a net profit of $150. Not too shabby, eh?
There is the risk that neither investment results in profit, so it is beyond important that you feel certain that the asset price is going to cover enough ground for a touch to occur. It helps to be sure to select an asset that is going to receive plenty of attention from investors at some point during the week. Your economic calendar can help point you in the direction of the key economic releases of the upcoming week. Digital Optionsâ€™s daily market analysis can help with this as well.
Hedging is less risky when used with basic binary options trades, but it can certainly be applied to One Touch trades as well. As previously mentioned, the payout rates on these trades is substantial, making it easy to yield plenty of profit so long as one of the two trades finishes in the money. Keep an eye out for the big movers of the upcoming week and prepare to profit from them.