Binary Options

Binary options are a type of forecast about how the price of specific stocks, indexes or goods will change over a certain period of time. Even though the name might seem complicated, this is probably the easiest way to try and earn money on the Internet. Unlike the forex markets, where you buy real money or stocks, here you only try to guess whether the specific value will rise up or go down. Every transaction has a fixed income that varies from 60% to 90% for a transaction (when you risk with X units you can receive 1.9X units, if your guess is correct).

How To TradeBinary Options3

In this picture you can see CALL and PUT options and how they work

 You can see the value of a product in a certain period of time in specific charts. You have to choose, whether the price of the product will rise (CALL) or go down (PUT). You will also have to choose the period of time (1 minute, 15 minutes, 1 hour or 24 hours). The most risky action is to bet on the 1 minute period because it is basically trying out your luck.

But if you choose a longer period of time, the chance of using various strategies to reduce the risk arises.

Use these strategies to reduce risk:

Hedging Binary Options Strategy

The aim of hedging is to reduce the risk of losing and to increase the income. To use this strategy you need to make a bet twice – both on the price of the product going up and down. With doing that you will create a situation where both of your bets can win and one of them will definitely win.

The Strategy:

In the picture below you can see a graph of currency rate movement

binary options trading

In this situation when using the hedging strategy you would have to bet in point A that the rate will go down (DOWN) and bet in point B that the rate will rise (UP).

If, after your chosen period of time, the rate will be in the hedged area C, you will have won both bets. If the rate will be outside the hedged area, then you will have won either the bet A or bet B.

The worst possible scenario would happen if you had bet that the rate will go down (DOWN) in point A, but it keeps rising (UP), because then you lose all of the money you bet.

If you had bet 10 Euros, then in the case C you would win 16 Euros, in cases A and B you would lose 2 Euros and in the worst possible scenario you would lose 10 Euros.

This strategy is effective because, as you can see in the chart above, the rate has a tendency to change (“jump”), so it’s easy to predict the high points and make the right bets at the right time.

Advantages Of This Strategy:

  • Very profitable if used correctly
  • Can be used in a small period of time (15 minutes)
  • Easy to understand and use. Good for begginers

Disadvantages Of This Strategy:

  • If the rate goes against your prediction you loose all your bet

Tips For Bigger Profits

  • Play for minimal stakes at the beginning
  • Hold on to strategy – turn off your emotions

Follow The Trend Binary Options Strategy 

Trend lines are one of the most valuable and effective tools for a binary option trader. Traders who learn how to apply trend lines for shaping diagnosis of the market patterns are likely to rely a lot less on the many technical indicators that are frequently used. It can not come as a big surprise an uptrend is a case where the prices keep getting higher highs and also higher lows.A downtrend is a situation where there are lower highs and lower lows.

Trend Analysis

The power of trend analysis is its ability to predict into the future. Keep in mind that the trend lines are not indicators, and they are not lagging. Trend lines are in fact actual maps that define the boundary optimism and fear.

In the Graph below is shown a very good example of downtrend line. You can see EUR/USD price fluctuations in 7 hour time and as you can see the price is getting lower and lower. 

Binary options trend trading

Trends like this might be very profitable, if you know the right strategy. 

This is how you draw an downtrend line (Bearish trend)

  1. Find the recent high
  2. Draw a line next to the immediate lower high.
  3. Extend the line to the right end of the chart beyond the latest date and into the future

The Strategy

1. Find a clear uptrend or downtrend line in any market available in your binary option broker or here

2. Choose the expiry time of your trades. 1-2 hours are the best, lower expiry times may be risky.

3. Place your bet following trend. After it expires place another bet on the same direction.

Advantages Of This Strategy:

  • Very profitable if used correctly
  • Can be used in a small period of time (1-2 hours)
  • Easy to understand and use. Good for begginers

Disadvantages Of This Strategy:

  • If the rate goes against your prediction you loose all your bet

Tips For Bigger Profits

    • Play for minimal stakes at the beginning
    • Hold on to strategy – turn off your emotions

.You can mix this strategy with martingale strategy for bigger profits

Martingale Binary Options Strategy

Similarly to casinos, you can use the Martingale’s probability theory in the binary option markets. If you choose to trade in a short period of time, the rate fluctuations are very difficult to predict, thus a 50-50 situation occurs and a system where you can double the next bet all the time. Another good poit of this strategy is fixed payout. That let us easily caclulate net bet if we lose the first one.

The Strategy:

binary options martingale startegy

This picture and instructions below shows how Martingale strategy works

1. We make a bet of 10 Euros in point A that the rate will go down (DOWN).

2. Let’s assume that this time the bet has lost. Now we make a bet in point B and say that the rate will go down (DOWN) again, but this time we make a bet of 28 Euros.

3. IF the bet has lost again, we increase it once more and say the rate will go down (DOWN), but as we can see in the picture, point C is below point B, so we have won.

4. Repeat all of the actions mentioned above. Some time you will lose more that one bet in a row! But do not panic, just double it up and wait for winning one!

 Some calculations for this example:

The amount of the invested money = (10+28) =38 Euros

Money won = 28*1.71=47.88, so, we have won 47.88-38= 9.88 Euros in 30 minutes (if we bet on 15 minute expiry time)

Advantages Of This Strategy:

  • Very profitable if used correctly
  • Allmost 100% chance of winning
  • Easy to understand and use. Good for begginers

Disadvantages Of This Strategy:

  • Doubling up will require some money
  • There is possibility of bigger loosing streaks

Tips For Bigger Profits

  • Try this strategy out with lowest stakes at first
  • Bigger deposit – bigger chances to earn

 


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