Arguably, this may just be the one trillion dollar question which all traders seek an answer for, and despite long lasting, harsh and sweaty investigations, they all fail in their quests. Now, before I miserably mislead you to believe that I have found the holy grail of binary options strategies, please bear with me, read about the 2 strategies I recently started practicing and decide for yourself whether they are or aren’t best, for you.
My mother always used to say that in order for me to succeed in doing something, or better yet -anything, I first have to start at the basics and later on, as I progress, start exploiting more complex and demanding tools to successfully complete my ultimate goal. Therefore, to become a successful binary options trader and identify the binary options strategies which best work for you, you must first fully understand how to utilize the basic binary options trading strategy, and as your trading skills develop and improve, diversify your capabilities with more advanced strategies.
Thus, the following strategies: the Fundamental and the Straddle, are two strategies you should definitely give way to because not only can they minimize risk and maximize your winning potential, but also because you should follow a very intelligent and inspiring human being – my mother, of course.
Binary Options Strategy #1: The Fundamental Call or Put
The art of binary trading is as simple as choosing whether to drink wine or beer when watching sports, obviously beer is the natural and correct option in this case. Like sports, when trading binary options you also have two options; Call and Put.
Your choice relies solely on your prediction, concerning the market price of an underline asset. If you predict the market price of the stock, commodity or currency you invest in shall rise, you’ll then trade with a Call option. And if your predictions lead you to believe that the market price of the option you’re interested in shall fall, you’ll invest in a Put option.
As a guiding rule, most brokers offer you various tools to assist you with forming your prediction and developing your own strategy, these tools are known as fundamental and technical analysis.
A proper fundamental analysis covers political and economic topics which can affect the prices of assets, while a technical analysis presents you with past data on the asset for better identification of future price movements. By blending the information you gather from both of these sources, you have a better chance of increasing your success ratio.
Binary Options Strategy #2: The Straddle
Since I still remember the first time I was explained about the straddle strategy, I believe it has to be a good way to share and introduce it with you. Hence, simply imagine a gymnast doing the splits, for us men the image is normally followed by an aching ‘auch’ sound, though you get the picture – straddle involves the full stretch of our investment ability.
Basically, this binary option strategy asks you to purchase Call and Put options and invest them both in the same underline asset. The results of such action prevent you from suffering considerable losses and enable you to reap profits regardless to the direction of the asset’s market price.
I’ll explain; you noticed the market of Gold is volatile together with a considerable difference between the asset’s market price and the strike price, compulsory conditions for applying the straddle strategy. And for these reasons you then purchase Call and Put options on your Gold asset.
Your action may lead to 3 possible outcomes:
- You’re ‘In the Money’ with the Call option but ‘Out of the Money’ with your Put options, leaving you with a fractional loss of 5% of your investment.
- You’re ‘In the Money’ with the Put option but ‘Out of the Money’ with your Call options, leaving you with a fractional loss of 5% of your investment.
- You’re gonna love this outcome; here you’re ‘In the Money’ for both options! And you actually yield a 170% profit!
So, discovering which binary options strategies produce the best results is without a doubt a subjective kind of thing, and if you’re not willing to listen to either mine or my mother’s advice, your only way out – is learning for yourself.