Whether you have years of experience or are new to the binary trading scene, you will quickly appreciate the importance of having a strategy ( for example binary options 5 minute strategy ). There are many different ones to choose from and you will, almost certainly wish to tray several if not implement several at the same time.
One of the best options available at the moment is to learn and utilize the straddle strategy.
Understanding this Technique
Generally you trade according to the direction the price of an asset is likely to move in. However, sometimes the market is too volatile to be certain of which way a price will move. To compensate for this and allow you to continue trading you simply purchase a put and a call option. To ensure this strategy works you will have to ensure that the profit made by one successful trade will offset the cost of both trades and still leave you with a profit.
The reason this is possible is because the market volatility will create a sudden movement which can be quite drastic. This increases the risks and therefore the rate of return. Trading both directions allows you to maximize the potential payout.
Is it a Good Binary Options Strategy?
Yes, when applied correctly. The most important ingredient in this type of trade is that the rate of return is high enough to generate a profit after the costs of both trades have been met. This is only possible when a big shift in price is expected. For example, if your average rate of return is eighty percent and you win half of your trades. Putting $100 on each direction means the trades will cost you $200. Your profit on the successful trade will be $80 leaving you with a $20 deficit.
The same trade can be successful if you place a lower amount on one trade and are relatively certain that the price is going to move in the other direction. However, if you are wrong it is simply a means of regaining some of your funds. However, when highly volatile markets are operating the broker will often offer a higher rate of return and you may generate enough profit to cover both trades.
Other Options
There are a variety of other trades which you can utilize in these situations, such as the one touch or even the no touch. The rate of return on these options can be as high as five hundred percent. Combining a touch with the straddle can make a very effective partnership.
Alternatively you can set upper and lower limits for your asset and allow the trade to run between these. This effectively allows you to trade the volatile markets without excessive risk.