2 Profitable Binary Options Trading Strategies Exposed

Congratulations, you’ve decided to start trading binary options, you’ve selected a binary options trading platform and you are ready to go. If you haven’t decided on which binary options trading platform is best for you, we suggest reviewing the comprehensive review video we recorded and published in last week’s Binary Options Weekly and make an informed choice. So what now? How do you start? If you haven’t decided on a specific strategy to follow in your binary options trading activities we suggest considering these two popular strategies traders are using to profitably trade binary options…

The Early Trade Hedger

The early trade hedger typically uses some sort of moving average, candlestick system for determining entries and hedges and is always looking to place a trade early in the expiration cycle. By focusing on these early expiration entry points, the binary options trader gives himself or herself time to determine whether or not to place another trade on the same position, effectively hedging the position. The early trade hedger usually places an initial trade using half the lot size he/she may otherwise use anticipating that he/she will get an opportunity to add to the position or hedge later in the cycle. We covered the various binary options hedging strategies traders use in the Hedging Strategies For Your Binary Option Positions and Managing The Risk In Your Losing Binary Options Trades reports several weeks ago.

The Early Trade Hedger Game-Plan can be summarized as follows:

  • Use a candlestick charting, moving average strategy to place an initial trade, using half your typical lot-size, early in the expiration cycle (e.g. 11:00-11:15)
  • Re-evaluate your binary option position later in the expiration cycle (e.g. 11:35-11:50) to determine next steps:
  • If the option is well in the money, leave the position alone and likely collect 75%.
  • If the option is slightly in the money, consider buying the opposing option to hedge downside risk. If you believe shares will continue to move in your desired direction, consider purchasing another option of the same kind to double your exposure, this, however, does increase your maximum loss potential.
  • If the option is well out of the money, either take the loss and move on to the next opportunity, or look to make two more trades to create a ‘profit zone’ range as we discussed in the Managing The Risk In Your Losing Binary Options Trades Report.
  • If the option is slightly out of the money, either leave the position alone and risk the loss on the ‘half lot-size’ trade or purchase the opposing option to create a wide-ranging small loss zone. This clearly is the hardest decision to make with most opting to risk the half lot size loss unless the chart convinces them otherwise.

This is a solid binary options trading game-plan as its core focus is always on risk management and to only take aggressive stands when the probability of success is substantially high.

 

The Last Minute Trader Game-Plan

No decision tree for this one. The Last Minute Trader is exactly how it sounds, someone who makes the majority of his/her trades as close to the lock-out period as possible. This game-plan is mostly used by traders who believe they can predict very short-term price movement (e.g. 5-15 minutes) with greater than ~60% accuracy and are willing to take the full risk (-85% to -100%) of a one trade strategy. Basically, last minute traders make one trade as close to expiration as the platform allows. This is the more risky strategy of the two but we’ve seen traders achieve great success using this approach. If you intend to go down this route we suggest you open up a free practice account with CitiTrader and test the strategy out a while to determine if this is a risk profile you’d like to entertain in your binary options trading activities.

Next time in Lesson 6 we discuss Common Mistakes Binary Options Traders Make, Avoid These At All Costs.

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