Binary Options Types in the Current Market and their Strategies

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Contents

Binary Options Types in the Current Market and their Strategies – Binoption

Have you gone through the basics and terminologies of binary option trading and wondering what are the binary options types available in the present market that can be considered for trading?

Curious to know what are the simple styles and complex type of trading binary options?

This page will help you to get all necessary information regarding the various binary options types and the working style.

With this information as a trader you will be able to take a call and decide with options are simple and budgeted and which needs lot of effort, investment and time.

It’s crucial to pick trading assets and instruments that go along with your trading style.

Else there will be no relation between the two and will not work to generate profits.

Binary Options Types

Here is the list of commonly traded types of binary options.

From the basic call and put up to Trading 60 Seconds Binary Options is explained below and this information will be a one stop solution for with all information on binary option trade types.

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1. Call and put option: The first and most basic type of option any new trader who would like to pick as it is easy to understand and has very simple process.

This is also the best option to get started with a career in binary option trading.

It is said to be a call option when you have picked up an asset that you wish to trade and post analysis you determine mine the price of the asset is going to shoot up.

Predicting this you will decide to place a trade on the asset and will choose Call option.

This is done at the basis of technical and fundamental analysis of the present and past conditions of the market, any financial news out break or due to some political reasons.

On the other hand Put option in binary trading is the opposite of call option.

Here you will predict the market price to go down and in that case you will book the trade and choose Put option.

Thus even if the market price falls than the current price, you will make a profit.

Also in binary option trading it is essential to keep in mind, the assets or the whole value of the asset is not exchanged.

Just the difference between the buy and sell (profit) is given by one trader (trader who losses) to the other one (the one who wins).

2. One touch: In this type of option there will be a pre-determined barrier which is known as the trigger level.

If the current market prices hit this trigger level then the trade would be in the money and if it does not reach until the expiration date, then it would be out of the money.

Another important point to be considered is if it is an American option, European option or Bermudan Option.

In American Option, the expiry of the trade is any time during the whole period of the trade.

In European option, the expiry will be determined only on the expiration date at the expiration time.

And Bermudan options where is the expiration dates are customized as per the requirement of each trades.

3. No touch: The opposite of one touch option is no touch;

In this case there will be a pre-determined barrier which is known as the trigger level.

If the current market prices does not hit this trigger level then the trade would be in the money and if it does reach within the expiration date, then it would be out of the money.

Basically, it’s the vice versa of the previous one.

4. Double One Touch: The logic of one touch and double one touch is the same.

Only difference is in double one touch there will be two trigger levels.

As an example if the current market prices hit this trigger levels either trigger 1 or trigger 2 then the trade would be in the money;

And if it doesn’t reach until the expiration date, then it would be out of the money.

Traders prefer this one more than one touch binary as there is an upper limit and lower limit.

The risk is less and there is chance of making profit is market swings unusually either ways of the current price.

5. Double no touch: The simplest way to explain this is it is the opposite of double one touch and works with the similar strategy of No touch binary trade.

If the current market prices does not hit the trigger levels either trigger 1 or trigger 2 then the trade would be out the money;

And if it hits before the expiration date, then it would be in the money.

Traders prefer this one instead of one touch binary as there is an upper limit and lower limit.

The risk is less and there is chance of making profit is market swings unusually either ways of the current price.

6. Paired options: This is an exotic type of binary option.

Not every broker offers this type of options for trading as there are lot of complexity and relativeness required between one asset and the other.

A pair of assets is choose and traded and these are expected to outperform during a selected period of time.

Binary option depends on the result of the option which is either the price goes down or goes up.

The payout is dependent on the predictions and investment of the trader.

If the prediction turns out to be right, then there will be profit else it will lead to loss.

The types of binary options does not end here, there are still more types of options.

However, these are some of the commonly traded less complex styles of binary option.

Apart from these some traders even customize their transaction with various probabilities and it is called as structured trades.

If traders can understand the mechanism of these trades, making profits will be like cake walk.

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Best Binary Options Strategy For Beginner & Experienced Traders – Binoption

Traders are constantly in need of a working binary options strategy for their trading.

Without a trading strategy, no trader can achieve success in trading.

Whether it be forex, crypto, stocks, indices, or any other asset, you need a strategy that suits your trading style and brings you consistent profits.

The common misconception among non-traders is that trading is a game of luck. The reality is far from the truth.

Trading is a very complex activity. There is a lot of reasoning behind every action that is performed.

A trader carefully selects his trading asset, analyzes its market, performs technical analysis, and then performs the trade.

Even after all this, the chances of winning are pretty slim. You cannot out predict the market.

Binary Options are based on a yes/no proposition.

Earning a payout depends on accurately predicting the outcome of the market beforehand.

If you guess wrongly, you will lose your investment.

Therefore, it is extremely important you trade with caution.

A trading strategy is the backbone of any successful trade.

Our strategy section contains various articles that will cover all aspects of binary options strategy.

You will learn how to utilize different strategies and when to use which one.

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What Is Trading Strategy For Binary Options?

A trading strategy is basically a well-thought out plan that is designed in order to profit from the trading market.

A strategy is formed on the basis of both fundamental and technical analysis.

Fundamental analysis involves analyzing the factors that affect the asset’s market value such as economic and financial conditions, interest rates, company earnings, competitors, and much more.

After analyzing these factors, the asset price will be estimated.

The analyst then compares this estimated price with the current market value and determine if the asset is undervalued or overvalued.

If it is overvalued, the recommendation would be to sell it, and buy if is undervalued.

Technical analysis is the process of analyzing the market through trends and and information collected from trading such as volume and price movement over a certain period of time.

Using indicators and graphical tools, trends are recognized and future price movement is predicted.

When forming a trading strategy, you need to combination of both.

In our strategy guides, we guide you step-by-step, to do exactly that.

The Need For Successful Binary Options Strategy

Though many new comers are of the opinion that there is no need for trading strategies for making money through binary options , this article will help you to understand the real reasoning for the need.

These binary options strategy collectively will help you in understanding and analyzing whether you made profit at the end of each month.

In order to know this, firstly every trader should be aware of what they are doing.

Basically as a trader you should be aware of where the results of your trades are arising from.

Trading without strategies is driven by emotions and will be random.

After certain point of time, you would have either made some money or not.

But there will be no certainty thus you will be unable to be understand what helped you to make or lose money.

This lack of information will be a block for improvement.

This can also result in try different trading styles on a regular basis and will be unable to settle with some style that will surely help you to make some money.

In order to make trading fruitful, learn how to trade binary options.

As you will have clear picture of the amount of money you make and the source for the same, there will be less chance of failure or struggle.

In this way, you can concentrate on those styles of trading that are your strength and can eliminate the chances of you failing.

It is essential to keep in mind, no one is a master in trading binary options nor are they born with the skill of trading.

All these are learnt through information and experience.

However, following some binary options strategy are a tool that will help you to improve your trading overtime.

It can be said that- ‘Only with the help of knowing what you are doing to your trades, you will be able to judge or predict the result of your initiatives”.

To summarize, you will need a working binary options strategy for the following reasons:

  • Profitable trading
  • Focus on trading without distractions
  • Measure and improve performance
  • Eliminate emotions from trading
  • Prevent over trading
  • Enrich your trading knowledge
  • Reduce risks in trading

Binary Options Strategies

Binary options offer market players a great way to trade on the direction of an asset or the overall market due to their all-or-nothing character. In addition to straight-forward risk/reward profiles and defined risk, they can be used for shorter-term strategies due to hourly, daily or weekly contract expirations.

Get Familiar with These 6 Option Strategies

Directional Binary Options Strategies

For a purely directional trade, let’s use the US 500 Binary as an example. This is a contract Nadex offers which is a derivative of the E-Mini S&P 500 future and uses a Nadex calculation of the last 25 futures trades just prior to contract expiration.

If you believed the E-Mini S&P 500 futures contract was headed for new highs after trading through a resistance level, you could buy the US 500 Binary to capitalize on your market opinion.

On the other hand, if you believed the E-mini S&P 500 future won’t reach a certain price level target; you could sell the binary strikes above your price target in the exact same binary option.

For this directional trade example, let’s assume the following:

  • E-Mini S&P 500 futures contract trading at 2756.75
  • Bullish view on the E-Mini S&P 500 futures with 2770.00 price target by end of the trading day
  • Current time is 10:50pm EST
  • Daily contract expires 4:15pm EST

Looking at a screenshot from the Nadex platform, there are four different strike prices that have active markets below your target price of 2770.00 expiring at the end of the trading day. Each strike will have its own unique risk/reward profile relative to the underlying market price and binary strike price.

Buying the Binary Option at the Offer Price:

US 500 (Sep)> 2760 – Cost $45 / Potential profit $55 / Return 122% At Expiration

US 500 (Sep)> 2763 – Cost $34 / Potential profit $66 / Return 194% At Expiration

US 500 (Sep)> 2766 – Cost $27.75 / Potential profit $72.25 / Return 260% At Expiration

US 500 (Sep)> 2769 – Cost $21.50 / Potential profit $78.50 / Return 365% At Expiration

Assume you decide to buy the US 500 (Sep) > 2763 for $34.00. All binary option contracts settle at $0 or $100 at expiration and it is important to remember that a binary option needs to be only .01% in the money for it to expire at 100. So essentially, your US 500 (Sep) > 2763 contract needs to expire above 2763 in order for you to receive the maximum payout of $100/contract. If the binary expired at the strike of 2762.00 or below, your maximum loss would be your initial $34.00 cost/contract. (Note: these examples don’t include exchange fees).

In this example, the contract will settle at $100 even if the bullish move was not as strong as expected, provided the underlying market remains above 2763 at expiration Another important point to remember is that you are in no way committed to hold your position until expiration when trading binary options. You can take your profit or cut losses early at any time before expiration if you would like to exit the trade.

Trading Volatility

Binary options may also be used as a vehicle to trade the volatility of the underlying market with limited exposure when trading the underlying market directly in volatile conditions can be quite risky.

With binary options, you can buy or sell market direction using strikes which are out of the money, i.e. cheaper initial cost. If the underlying market goes higher as anticipated and finishes above the strike if you were a BUYER, or at or below the strike if you were the SELLER, the contract is valued at $100. There is no cap to profit potential when trading the underlying market but the binary choice offers a comfortable way to participate with limited risk and potential positive return.

Low Volatility/Flat Market

If you believe the market will remain flat and trade sideways, you can trade binaries that are in the money. These binaries will have a higher initial cost and a lower return due to the capped payout structure at expiration. As long as the market remains flat, the binary is already in the money and you want no changes because the contract will be worth $100 at expiration. For example, if you paid $80 for the binary position, your net profit not inclusive of exchange fees would be $20 at expiration.

The Bottom Line

Traders can take advantage of binary options through numerous strategies on the Nadex exchange. Nadex is a fully regulated US exchange offering contracts on currency pairs, equity indices, energy, metals, agricultural and events. These strategies involve risk and may not be suitable for all investors.

Best Binary Options Brokers 2020:
  • Binarium
    Binarium

    1st Place! Best Binary Broker 2020!
    Best Choice for Beginners — Free Education + Free Demo Acc!
    Sign-up and Get Big Bonus:

  • Binomo
    Binomo

    2nd place! Good choice!

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