Sunday, January 19th, 2014 by Tim Lanoue
Perhaps one of the best advantages with trading binary options is the ability for traders to profit from predicting whether the direction of an asset will go or up down within a certain expiry time. It is this pivotal advantage that allows traders to achieve higher win percentages and returns compared to traditional trading methods. Although this method can be applied with nearly any style of trading on a binary options platform we are going to focus primarily on a style of trading mostly known as the In/Out trade, or Range trading.
The primitive rule of this style of trading is accurately predicting whether the price of an asset will stay within a certain price range or will break a certain price range. One of the best advantages about this style of trading is that it typically offers higher returns compared to other styles of trading like 60 second, digital or touch options. Moving forward, in the picture below we can get an idea of how this style of trading would be implemented. In this picture we have the EUR/USD asset set at a time frame of 15 minutes where our expiry time is displayed by the red line drawn down the chart. Now before you place your trade you will see where your expiry time is set at, you cannot custom setup an expiry time for this option of trading so it is imperative you enter your trade at an appropriate time. Meaning that you don’t enter a trade too early to determine a possible trend or too late where the trade may not perform as you may have thought.
Now there are two ways to place this type of trade, either we can predict that the price will stay within a certain price range or will break the given price ranges. In this example above we see that price broke out of top price barrier meaning that if we would placed a trade predicting that the price of the asset will stay within that top green region we would have lost the trade. However, if we predicted that the price of the asset would break that top barrier then our trade would have been successful. The red line indicates our expiry time, the expiry time along with the price barriers are all displayed before you enter your trade so it is important to take note and realize where the price is at before entering your trade.
The In and Out Trading Strategy
It is important before entering our trade that we use a reliable trading asset where we know volatility may not hurt our probability of winning. Reliable assets to trade would be the currency pairs EUR/USD, USD/CHF or USD/CAD. Other assets that one could trade would be Apple, Oil, Gold, or Caterpillar. Now that we have chosen a reliable asset we now look at the set expiry time and the price barriers presented to us on our broker platform. If the price barriers are respectable, meaning that they are not totally out of reach then we can consider placing a trade. The next thing we look at is the price action of the asset, mostly asking ourselves how is the trend looking? If the trend has a strong neutral trend then chances are we may be best off with a trade predicting that the price will stay within a certain price barrier. However if there is a strong bearish or bullish trend we are more likely best off with a prediction that price will break the price barrier.
Not a tasty “animal Style” In-N-Out Burger 😉 but a great binary options strategy!!
This strategy is not complex and can be performed by traders of all experience levels while offering high returns. Not only is it easy to implement in your binary options strategy arsenal but it allows you to become a more dynamic trader as well so when times get tough you always have a backup strategy to implement.