Interested in binary options, but do not know how to use them effectively? There is no universal approach that will suit every trader. Still, one can single out a few strategies that enjoy the biggest popularity among professionals. So, start by familiarizing yourself with them.
The first question you will probably ask is: “What are binary options?”. These are such deals when you need to predict whether a price of an asset selected, for example, a stock or a precious metal, will move upwards or downwards within a specified period. So, if your forecast comes true to life, you will win and get the funds risked back in addition to a 70–80% return. And in case your forecast turns out to be wrong, you will lose all the money put at bet. Yet, you must bear in mind that this trading instrument involves significant risks along with huge returns, which is why experts advise sticking to small bets ― no more than 5% of your capital.
So, how to make such bets at a profit? Below, you can see the top basic binary options strategies:
1. Following trends. Have a look at the charts, find the asset that shows a clear rising or falling trend, and make a bet. There is a good chance that its price will increase or decrease along with the corresponding asset. But avoid the products with stable prices (the corresponding charts will have a form of a straight line).
2. Monitoring the news. For example, if you learn that some company is about to present a new fascinating product, the price of its stocks will probably increase.
3. Straddle. You can also take advantage of stock rate fluctuations caused by exciting announcements. For example, when a company releases some innovations, its stocks grow in price for a short period, then, they fall downwards and rise again.
4. Pinocchio. It involves betting against the current trend.
5. Candlestick formation patterns. It requires analyzing historical charts to find out at which times the asset chosen usually falls or rises in price and to which point. That allows determining its pattern.
6. Fundamental analysis. This approach involves deep research on the asset (or the company related) so that you can use this information later when the market situation is volatile, and you can predict the direction of the price movement.
7. Hedging. One makes two opposite bets at the same moment. Regardless of the price movement, one receives a profit. But it is essential to accurately calculate potential losses and wins and to compare them.
In the end, we must highlight that, regardless of the strategy chosen, you must pay enough time to prior market analyses and stick to minimal bets. Also, we recommend you test every new strategy or approach with virtual money via a demo account before you make a real bet.