Binary options trading is highly dependent on a multitude of market factors that are affected by risks and economic news. Therefore, it is important for a trader to formulate a strategically planned layout as to what his entry and exit points would be, what should be the expiry time for the underlying asset and what amount should be invested etc.
A good binary options trading strategy can sometimes even turn out to be bad if not implemented properly. A good trader must carefully devise a system in place to not only make a strategy but also methodically implement it. He must pay attention to even the most intricate details. A trading strategy when accompanied by good market research and proper use of technical indicators and logic, instead of plain betting, help traders to reap huge profits.
et us take the example of the double red trading strategy. This type of strategy is useful for bearish movement in the short term on an asset. The expiry time ranges from one to fifteen minutes usually. It can be used for high/low or the rise/fall options trades. However, this strategy if not implemented at the right position may cause the trader to incur some losses. For example, if a trader decides to use this strategy for a newly released asset then there is little chance he would see any green, as the trade can be taken out by the unpredictability of the news quite easily. Also, the trader might get to see double red in case the expiry is too long or too short.
Such instances show how different strategies apply to different scenarios and different time instances.
Plenty of binary options brokers have turned out to be scam ridden in the past because of the very nature of the trade, most of which happens over online transactions. A trader must carefully choose a broker based on past experience and legitimate reviews. Even after choosing a broker, a trader must not disclose his personal details to customer support representatives and also ensure that the broker has a security system in place against unauthorized access.
The binary options strategy which would be best depends upon the trader, the type of trade he wishes to execute, the type of asset, the amount of time the asset has spent in the market, market news and a multitude of other factors. Taking all these into account, a trader must pick or create the best binary options trading strategy that suits him. For example, at any particular time of trade, one trader decides to straddle (i.e. makes different forecasts for different levels of the price) while another broker at the same time implements a strategy which uses the “knock on” effect to determine the price of one asset based on the price of another asset. Whatever strategy one chooses, it must be followed by effective risk management, or you might just end up losing everything.