We all know that binary options trading is getting more and more popular with experienced traders but also with the beginners. Because of this, the top brokers and investors have come up with some binary options strategies to help you succeed in this market. There are probably too many strategies to count, but the four most used ones will be described in this article. Not all of the strategies will deliver the same results for the traders in this risky financial trading game, but this shouldn’t stop you from trying it out. If you play your cards right, you could make a considerable return. The main goal of every tactic is to establish and develop a specific plan that you could use to minimize the risks that are always involved in financial trading. If you decide to invest in binary options, you will find that to deliver good results a specific trading strategy or a combination of two of them need to be used.
1. The Reversal Strategy
The reversal strategy is the most famous strategy in binary options trading. It means buying an option contrary to the asset’s present trend, especially if the price of the asset is moving radically up or down. A broker employs this strategy when he figures out that the price of an asset will not remain at a certain point indefinitely and it may actually revert to its original value. Reversal is based on the knowledge that what goes up must come down and it usually happens at the same speed at which it climbed.
2. The Straddle
This strategy is said to be the most complex of all the strategies, but it is also associated with higher rewards for the trader if everything is done correctly. The straddle tactic is used when the broker buys both put and call options for the same asset/commodity for a certain time period. The trader has to straddle the asset from its highest and lowest prices to create a so called nest that will double the rewards when the trade expires at the given time.
3. Double Trade Tactic for experienced traders
To get maximum returns, this tactic is used by the brokers who have in-depth knowledge and experience. It is applied when a buyer invests in a specific asset and gradually, after realizing the market conditions and his predictions are going in the wished direction, the trader purchases more options of the same asset.
4. The Knock On Effect Plan
This strategy is considered to be the most useful approach in binary options trading. It’s connected to the move of the prices of a specific asset that will eventually impact the prices of another asset. For example, the change in stock prices will impact the index prices.
Whatever binary options strategy you decide to apply, you need to have a great understanding of the market plus its trends, you also need to be able to use your resources wisely, and you need to have enough discipline to keep going with the strategy you chose each time you trade to earn a big enough return.