There are a lot of strategies in the binary trading options that a trader can implement. However, for the inexperienced traders, they should stick to only one type of strategy and not confuse themselves else they will suffer loss. The usage of these strategies requires a lot of experience and once the trader is experienced and professional, they can use the combination of these strategies. These combinations can be used if you are trading at different levels with different underlying assets or if the time frames of the trading places are different. The main strategies that are used by the traders have been briefly explained here.
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Long Up Binaries:
If the up binary option is purchased by the traders, it gives the trader a fixed payout in cases the market exceeds the strike price of the binary option at the expiration. The up binaries are used for the purpose of knowing the overall view of the underlying market. If the strike price of the binary is higher, the cheaper the cost will be, but it will payout less likely. The long up binary position has the risk of limited downside and limited upside potential.
Long Down Binaries:
If the down binary option is purchased, it gives the trader a fixed payout in case the market gets below the strike price of the binary option at its expiration in return for a known up front cost. These binaries can be used for the purpose of keeping a bearish view over the underlying market. The lower is the strike price of the down binary, the cheaper will be the cost but it won’t have much chances of the payout. These binary positions have limited risk of the downside and limited potential on the upside.
Binary News Trading:
The binary news trading has the taking of binary positions around releasing of some news and important event or economic data. These are ideal for the news trading because of their limited downside risks that can be known in advance. This contributes to helping the traders in avoiding costly slippages on loss orders, which may occur in volatile post-release markets.
These binary news trading strategies can involve the predictions that how this market will react to some news event. The popular economy release can include issues like the decision of central bank regarding interest rates, the retail sales data, growth, inflation or employment.
Binary Chart Level Trading:
This involves the review of exchange rate charts for the prominent and necessary levels of the resistances and supports. The support levels are below the current market and show that the market can reverse at higher level. The resistance level can be above the market and they show that where the market is likely to reverse lower.
The traders of the binary chart level usually attempt at buying the down binary which is ahead of resistance, or buy the up Binary ahead of support. They might also go for closing out their binary option position for loss if the chart level breaks.