This binary options strategy involves the use of a Traderâ€™s Choice bar, along with a series of investments. The Traderâ€™s Choice bar is now included in many, but not all platforms, and what it does is show you the percentage of traders who are taking each side of the trade (Put or Call). When the percentage on one side is clearly higher, it is safe to assume that many people feel that the asset price is going to increase or decrease, as the case may be.
The following strategy is suitable for new traders, but it should be noted that it is not without its fair share of risk. The risk level associated with this method will be higher than that associated with strategies that call for the completion of technical and fundamental analysis. The benefits are that it is not at all time-consuming, and when market conditions are optimal, it can produce a nice amount of profit within a short period of time.
The financial aspects of this strategy are simple. Start with an investment amount of $10 (if allowed within your binary options platform). Should that trade result in a loss, open a new trade using the same asset and trade type, but this time with an investment amount of $26. Another loss? Increase the investment amount on the third trade to $65. The next would be $150. Now, if at any point one of these trades finishes in the money, take the profit and start over using the $10 amount.
The Traderâ€™s Choice bar will be used to select the price direction that is being shown as predicted by the majority of traders. Sound crazy? The line of thought behind this method is that mathematically, the odds of four consecutive losing trades are reduced. As the investment sums increase, the profits coming from the first winning trade of the four will eclipse the loss amounts and provide some amount of profit. Of course the offered payout rate will determine whether or not this will be true.
Although the odds may favor a win once a number of trades have been completed, there are no guarantees. The entry rates and final expiration time will change with each new position. These changes can make a difference. There may also be some concern in regard to the Traderâ€™s Choice tool. Just because 70% of traders feel that Call is the right selection does not mean that it will be. Is the accurate percentage even being shown? The answer to this question will lie in just how reliable your binary options broker is.
To improve the win rate associated with this strategy, consider performing your own analysis rather than completely relying on the Traderâ€™s Choice bar. Feel free to use the bar to pinpoint opportunities, but consider taking the time to learn why a larger number of individuals are investing on either Put or Call. There is much to be learned by delving into the reasoning behind this selection. Analysis can also help with the selection of an appropriate expiry time. It may be that the majority are correct about the upcoming direction of movement, but off on the timing of that movement.
For some, this strategy is too risky. For others, it is not. Should you decide to give it a try, consider first doing so on paper, without committing any actual funds to the trades. Paper testing is advised for all binary options strategies, but it becomes even more important to test when a strategy comes with a higher than average level of risk.