Trading binary options is a straightforward process where you forecast whether the price of an asset will rise or fall by a set time. However, you’re more likely to be consistently successful if you adopt a variety of binary option strategies in different circumstances. You therefore need to be aware of the situation and plan your strategy accordingly. A few useful strategies are shown next:
Reversal applies when a trend is about to change direction. In this case, your strategy is to forecast an asset’s price will move in the opposite way to that being followed previously.
Straddle is where your strategy is to make separate forecasts at different price levels for an asset. You may forecast the price will rise from its lower level and fall from the higher level. If the price ends somewhere in the middle, you’ll win on both, whereas at worst you should win on one and minimize any losses.
Knock-on Effect is when an asset’s price change may influence the price of another asset. A rising oil price, for example, will cause the share price of producing companies to increase but may result in those of large consumers going down. Your strategy is to make several forecasts from a single event.
An important binary options strategy is to practice good risk management. Although binary options trading is relatively low risk since you’re staking small amounts on each trade, you still risk making losses as you will with any form of trading. Indeed, if your binary options strategy involve taking no risks, you’ll never make serious profits.
The aim of the binary options strategy of risk management is to minimize losses and so, overall, maximize profits. To do this, you must analyze and research the assets you trade, follow trends when established and never gamble — always make trades based on facts rather than guesswork. Accept you’re going to make mistakes and learn from them so you don’t repeat the mistakes. If necessary, record what you do so you’ll remember each successful and unsuccessful binary options strategy.
However successful you are, you will at some point hit a bad run. A good binary options strategy at such times is to reduce the amount of your stake so your funds last until the run ends. If, for example, you adopt the binary options strategies of putting 10% of your available funds on each trade, your money will last longer, you’ll lose less when on a bad run and you’ll make greater profits when on a winning streak and your funds have increased.