Basic Options Trading – Four Great Strategies

Binary Blog Post

Whether you’re a new trader or highly experienced, one aspect of binary options that cannot be ignored is that a good strategy can often pay dividends. Essentially, if you’re not already making use of a strategy then you are most likely missing out and that is exactly where this feature comes in. We have put together four simple strategies that can be utilised effectively by traders of any level and, providing that market conditions are correct for what you are looking to achieve, they can make a real difference to any portfolio.

The Long Shot Strategy

We like to go big when picking out investments and so it is only right that we start off with the highest risk strategy of them all. It is important to bear in mind that the Long Shot Strategy is specifically designed for those seeking higher rewards while able to absorb the risk, so it may not be truly ideal for beginners.

This strategy can be ideal for traders that are particularly active, as it relies heavily on placing a number of trades on little-known or even low performing assets in the knowledge that while many will fail, a successful trade will lead to an overall profit. One of the most important aspects of the Long Shot Strategy is to ensure that your chosen assets do at least have some potential – this method is certainly not there for the purpose of constantly backing losers! The strategy itself is perfect for those that seek out one big hit among a number of trades, and is definitely only for braver investors with suitable experience levels.

The Market Pull Strategy

Options trading is the perfect way to make use of the laws of cause and effect to result in a profit. It is all about identifying connected assets and then investing on the basis of developments with one resulting in changes with another. This is a great strategy for traders that keep their finger on the pulse when it comes to economic news, as they will be best placed to take advantage of developments. It is all about identifying these connected assets in the first place too. An example could be shares in one company falling upon the launch of a new, highly regarded product by its main competitor.

The Double Up Strategy

The Double Up Strategy is perhaps the simplest of all, as it relies on traders knowing when one of their investments is performing well and then increasing their stake in the asset or, specifically, doubling their position. If you are confident that the market is moving in the correct direction, then simply placing an identical trade that doubles your exposure can make the most of market conditions, resulting in enhanced returns with little by way of additional research.

The Range Strategy

Our final method is one that, while not explicitly related to investments, can be ideal for binary options trading. It is just as simple as the others, whereby traders will be looking to profit solely from flat price movements. A position is opened and maintained with the idea being that an asset will reach a certain price within the specified timeframe. Rather than being reliant on an upwards or downwards movement in price, traders are instead relying on relatively small changes in asset prices, ensuring that the entire trade does not depend on big swings.

As noted, some of these strategies can be riskier than others and much of any decision on which to use will rely on an investor’s own profile. Some prefer slow, steady profits over time while others seek out big returns from fewer, riskier investments. However, something that is not reliant on a trader’s own style is the overall importance of a strategy, which can bring consistency and effectiveness to any portfolio. They are, in our opinion, crucial aspects of any trader’s skillset and knowledge.