An Easy Binary Options Strategy

A wise binary options trader must have a trading strategy to protect his money. As there are more complicated strategies employed by experienced traders, a simple strategy will suffice for a new binary options trader. Let it be said, however, that there is no Holy Grail when it comes to binary options strategies. The strategy may or may not work because the asset market is very dynamic and volatile. Thus, it is important for any binary options trader to monitor the successes and failures of a chosen strategy so that necessary changes can be done before a lot of money is lost to ineffective trading strategy.

For this simple strategy to work there must be some basic assumptions. One, what goes up will eventually go down. The asset market is always known to correct itself. This means that if the price of the asset goes up previously, it will go down the next time frame. Two, the strategy will work only when the market is calm and no major fluctuation is expected. Of course, this basic strategy won’t work if there’s either an uptrend or a downtrend.

A binary options contract usually has a short time frame. Usually a chart is shown on the trader’s screen to showcase the price movement of a particular asset. If the contract is set to expire in 15 minutes, the chart will show the price movement of the asset for the last 45 minutes which will serve as basis for the trader’s decision. If the opening price of the asset is lower than the present price, the price is likely to go down therefore the binary options trader must buy a PUT option. If the open price is higher than the present price, the binary options trader must buy a CALL option because the price is expected to go up.

The new binary options trader must be wary with this strategy as it will ultimately fail if the trader fails to recognize an emerging trend. Also, he must monitor the economic news which will be released during the trading session as this can cause the price of the concerned asset to be erratic. Thus, it is best for the binary options trader to know the schedule of the news release during the session so that he can decide accordingly.