Once upon a time those who trade binary options had no way to exit the market once their trades had gone live. Today, brokers such as Broker Options Trading are allowing traders to sell their open contracts and exit the market before these positions finish running through their expiry. With the invention of the sell feature comes a need for an exit strategy. A strong exit plan will ensure that you get the most out of selling your open options.
An exit strategy in the traditional marketplace is centered around exiting the market while the price of the asset is up higher than what it was at the time of purchase. Selling in that type of situation can provide varying profits. The same scenario can take place when selling a binary options trade that is currently in a profit position. The deeper in the money the trade currently is, the higher the purchase offer is going to be. Since asset prices are almost always in motion, the goal will be to sell at a time when the offer price is the highest.
When trading with Broker Options, it is also possible to sell an open binary options position that is out of the money. In this instance, the offered purchase price will be less than the investment amount. However, selling can be an excellent idea when a trade is headed towards a loss. Recovering some of the investment amount is much better than losing the entire investment amount. Again, knowing exactly when to sell an open position is quite important.
So, when should you sell? There are no set rules for this, as every trade is different. When selling an in the money position, consider noting in advance the highest realized price for the asset in the past twelve hours or so. By knowing the top level for this time period, you should be able to determine when the asset is in a good position to sell. When selling an out of the money option, action should be taken when it is clear that the position is headed for a loss. If it is bouncing around, the decision can be tough, but a clear trend away from your prediction is a sign to sell.
Part of your strategy should be to make a decision in advance about whether or not you might want to sell. When you know in advance that selling is an option, you’ll be in a position to watch the price movement with a different point of view. Open trades must be monitored closely if you’re going to get the most money for your binary options positions. Keep in mind that you are never under any obligation to sell, but ignoring this critical trade tool could be a major mistake. At times, exiting the market can be the smartest move that a trader can make.