subject: Binary Option Strategy Vs. Emotional Trading [print this page] As online trading evolved from various forms into it's latest innovation, Binary Option Trading, many of us online investor are given a web-based platform in which we can trade various assets in different markets from the comfort of our home. The problem with Binary Option is that we're not reporting to anyone, to a boss, to a coach as we're engaging in this high risk form of trade and without a proper strategy we're taking a put/call gamble. Knowing it would take an increase of %20 in our success rate to start making profits we must consider adding a strategy into our game plan and avoid emotionally based predictions.
Often you will find many people looking at the graph, setting the expiry of the option for an hour and pray that the price moves in their direction, and even though you would still have a %50 chance to land in the money and get your %70-%80 profit within 1 hour, however overtime without an actual trading strategy there is no way to consistently generate profits with binary options.
I came across a few interesting strategies both in the field of technical and fundamental graph analysis and through my trading experience I focused my attention on two main strategies that work very well with Commodities and assets with a direct correlation with different assets.
The Correlation Analysis Strategy is a very simple technical analysis strategy in which we place two graphs on one screen on our binary option platform, two assets with a direct correlation, which means that the price movement of one asset affects the price movement of a second asset, a good example is the Euro/US currency pair and Oil, as both assets move in the same direction and in many cases the Euro/Us moves first and opens a small window of opportunity for us to place our prediction on the Oil option based on the movement of the Euro/Us graph. One would set the expiry of the two assets for 1 hour and wait for for right moment, ideally around the last 15-10 minutes of the hour. Another great example of a direct correlation is between the SP500 and Gold. Watch Mike's short Correlation Analysis Video on YouTube for more insight into this great binary option strategy.
The second trading strategy that I found to work very well to minimize the risk and increase our profit potential when we trade with binary options is the 'Double Profit Strategy' in which we identify an asset with a neutral trend in which the asset is not moving in a down or uptrend and consistently moves within from lets' say -3 to +3
so our aim is to set the expiry time for one hour and purchase the two options during the hour when the graph is at the lowest/highest resistance points or as close as possible, and this way as long as the price of the asset expires between the Call and the Put options (in the double profit zone) we will receive %70 profit on each of our predictions and in the worst case if the price expires above or below the profit zone, we end up with a loss of -%15 of our investment since we are in the money on one prediction but out of the money on the other prediction, therefore we are able to minimize the risk with this strategy and increase our profit potential.
The conclusion is that we must use a strategy and use actual market indicators to base our predictions instead of basing our trades on impulse, emotions or intuitive decisions. A combination of technical and fundamental analysis can definitely increase anyone's rate of success with binary option trading.
by: Michael Freeman - Binary Options on Youtube
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