Working with binary options daily, the trader will come to realize that exists many binary trading strategies to select from. The selection of the asset depends on the expiry date of the asset and its prospects. While working closely with binary options daily closely, the trader will be able to determine the long-term and short-term strategies for augmenting the results of binary options.
In case of binary options, there are three categories of expiry times:
- Hourly
- Daily
- Weekly
In case of hourly options, the expiry of the binary option expires after an hour of call or putting on an option. The daily options will expire after the end of a day. The weekly option is one which expires after a week. Thus, the assets are spread over these three categories. For each of these hourly/ daily/ weekly categories, the strategies vary.
1: Hedging and risk reversal
While thinking of trading strategies, focus on those which work on the principle of hourly options. The expiration rate is fast and furious. The hedging/ pairing strategy employs the hedging strategy to work with two options closely for augmenting the profits twofold.
For example, if a trader has put a call option on JP Morgan but thinks it might fall down after the hour, the hedging strategy might work by putting a put option securing the trader on both fronts. In case, the asset falls, the trader remains safe and vice versa.
2: Risk reversal strategy
This strategy is amazing for hourly strategy. If the asset is drifting towards a distinctive direction which wasn’t anticipated, then trade on the asset which alternates from its path.
The daily options: Different strategies
People who are working with binary options daily are aware that in case of daily options, the options tend to vary. The strategies coming into play are:
- Straddle
- Knock off
1: The straddle strategy
The straddle strategy is quite similar to hedging strategy. It is more suitable for the daily options market. The daily options require a longer time to react to variations in the market. Armed with straddle strategy, place a call or put option on the asset. The asset’s movements must be watched carefully enough for that matter. It’s a tough job keeping an eye on binary options daily. Select the time to place the trade on call and put option.
2: Knock off strategy
In case of the knock-off strategy, the asset’s relative movement to another asset is observed. Both assets are compared. The traders can observe which assets are fundamental to purchase. For instance, Apple’s share is on the rise continuously. Meanwhile, NASDAQ moves in a similar pattern too. They are moving parallel to each other. Thus, the knock-off strategy will be useful here to employ for working out the variations in both stocks.
Thus, working with binary options closely is an arduous and tough task requiring strenuous work and research for accumulating profits. These tools and strategies are for the trader to gain competitive advantage.
If you think that you are ready for binary options trading, you can pick up one of the Best Binary Options Brokers here and pick up the best one for you!
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- Quantitative Trading with R: Understanding Mathematical and Computational Tools from a Quant’s Perspective
- The Death of Money: The Coming Collapse of the International Monetary System
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