Binary Options Strategies – Volatility and Direction Trading
Binary options strategies are only limited by the resourcefulness of traders who employ them. Their versatility can allow binary options traders to focus on the long-term profits or make some quick money just as easily. This, coupled with their fixed payout (and let’s not forget fixed expenses as well) makes binary options the leading choice on the modern financial markets. Especially true, if the broker is customer-oriented, transparent and reliable. There are many binary options strategies – most traders have their own preferred methods – but as a rule of thumb, most are centered around either volatility or directional trading. This is their general overview; in-depth analysis will have to be set aside for another article.
Volatility is all about the changes in price, either in the short or the long run. One way to trade volatility is to get out of the money binary options, which are cheaper (because of the higher risk associated with them), but the payout is much greater – when it happens. This strategy is very risky, but can also be quite rewarding if it pays off.
On the other hand, if you foresee no major price shifts in the nearby future, buy in the money binary options and keep your fingers crossed, hopefully nothing will happen by the time they’ve expired. The payout is lower, and the exchange fees can be a real bother, especially when it comes to “slam-dunk” cases. Both examples constitute volatility trading; one relies on high volatility (the out of the money binary options) and the other on the low volatility (in the money options); the former welcomes the unlikely price movements, while the other dreads them.
Of course, you are under no obligation to hold on to your binary options if you do not want to; whether you want to cash in early or bail out in the nick of time, this is something quite feasible, provided you have the skill (and a bit of luck). The rest is up to you.
Directional trading strategy gets its name from the direction price movement in the financial market in question. Exchange fees are still a factor that should be taken into account, but this is becoming less of an issue as time goes by. Binary options directional trading strategy enables you to place trades on any direction of price change, even on a small scale; fixed payout means you don’t have to worry whether or not you’ll be able to cover the exchange fees and come out on top – such things are obvious from the start. In fact, your only concern is the actual price movement, and nothing else.
Binary Options Strategies – Conclusion
Whether trading volatility or direction, the binary options strategies are the same: you pick your binary option, price, quantity, expiration date etc. and pay your premium, while the seller covers the rest. Upon completion, the winner gets 100 dollars per option, and the loser remains empty-handed. The strategy and its particulars are entirely up to you. Good luck.