A couple of the most important binary options strategies which are frequently used by traders are Hedging, Straddle, and Momentum. Most traders use these strategies without realizing that they can be combined. When used together, you’ll have yet another outlet for executing profitable trades based upon your excellent price movement prediction skills.
The straddle strategy is typically thought of as a technique for experienced traders. It consists of the utilization of both the Call and Put binary options, using the exact same expiry time and strike price simultaneously. This strategy is excellent for times when you feel unsure about the upcoming price direction but are relatively certain that the change is likely to be considerable.
There are a number of conditions which need to be met prior to making use of the straddle strategy. You need to make sure that the asset price change is likely to transpire inside the short time period. Also, the asset price variation needs to be substantial or else the profits may not go over the price of the two binary options trades. Finally, the implied volatility needs to be increasing. Clearly, there is a lot of take into consideration.
Delta Hedging is a different method of utilizing the straddle strategy. Using this technique, you can decrease the risk connected with variation in the asset price by offsetting the shorter and extended market placements. Irrespective of whether the movement is up or down, the exposure threat now results in being zero. The financial risk is limited to losing any costs paid out to set up the hedge.
Now we move on to consider the addition of momentum trading. The goal here is to search for underlying assets that are shifting in one direction and are showing strength, along with high volume. If you’re capable of finding the traction of the asset price variation, you can then ride this momentum and ideally profit multiple times from it. Use the momentum indicator in your preferred chart to recognize a potential breakout in advance.
On the other hand, momentum trading isn’t flawless. This binary options strategy can be taxing for some traders, particularly when you are holding out for the momentum to decelerate prior to leaving the market. For this reason, momentum trading isn’t really advised for traders which make too many decisions based on emotion.
This is just one example of a way to use more than one binary options strategy on the same trade. Many believe that a combination of strategies is the best in many situations. However, if you are new to trading, consider mastering one strategy at a time before concerning yourself with the use of several.