The opposing trade strategy covers both trades that result in profit and trades which result in loss. For this reason, it gives you either the opportunity to earn double profits, or the ability to recover from a loss. The correct setup and timing for execution are everything with this strategy. Master the correct use of when to use opposite trades and you’ll have one more tool to utilize for building your profits.
The foundation for the opposing trade strategy is to be able to note times when the purchase of a trade that is the exact opposite of one that you just entered into is likely to be profitable. Once you’ve mastered the use of this strategy, you’re likely to discover plenty of applications for it as you go about your trading. Although the premise is simple, what you’ll really need to pay attention to is how to identify such opportunities. The following are just a few examples that you can be on the lookout for on a regular basis.
The best example may be times when a digital options trade has finished with the asset price being close to either its historic record price (either high or low). Prices absolutely can exceed record levels, but rarely do. Therefore, it would be rather safe to assume that once the asset price hits this wall of sorts, it’s likely to either stabilize for a period of time, or reverse direction for a period of time. In either case, you could enter into a contract based upon the anticipated upcoming price movement.
Next up, let’s assume that the record price is exceeded and that you’ve been riding the price trend. In this case, you know for sure that a reversal is coming. Support and resistance will make sure of that. Here, you’ll want to take action quickly since you know that the price can only go so high or so low. This could be a multi-investment opportunity should there be a strong shift in market sentiment. In fact, if the sentiment should change drastically, you could opt to simply ride the trend back in the opposite direction. This scenario is the dream setup for any binary options trader, and it does happen. You simply need to identify it when it does.
The digital options trade types which should be targeted for reverse include basic binary, One Touch, and in some cases, No Touch. The No Touch would only need to be used in cases when the asset price switches from being in motion to being stable. A boundary trade could also be used in this instance. Note that while price stability is easy to identify, it’s not always easy to know how long a price is going to remain in the same general range. One viable option would be to switch from using a boundary or No Touch trade to using a basic binary or One Touch whenever you note that a stagnant price is once again on the move.
In addition to the opposing trade strategy, keep the straddle strategy in mind. This involves the basic digital options trade, with both put and call positions being purchased at the same time. This is a fine option during times when you feel less than certain about a specific price movement prediction. The thought process with this strategy is that by covering both sides, or straddling the trade, one has to finish in the money. While this is guaranteed, you have to make sure that the profit on the winning trade exceeds the loss on the trade that finishes out of the money.
The opposing trade strategy is special in that it can allow for easy profits and easy profit recovery after sustaining a loss. You simply must be able to identify situations in which the opposite binary options contract from the one which just completed is going to be the right choice. Opposite trades, just like all trades, aren’t assured of always finishing in the money. However, when used correctly, this strategy can be an impressive profit generator.