Binary Options Hedging Strategy


There are many different strategies which can be adopted when attempting to consistently make money from binary trading. Although it is relatively easy to look for market trends and purchase trades based on the market trend, it is not sufficient to ensure consistent success. To generate a good rate of return it is essential to understand the market and use several strategies to assist you in getting the right result.

InvestManiacs propose you to use only reputable automated trading software. Try Binary Robot Plus

The binary option hedging strategy is designed to reduce the risk of placing losing trades by hedging your bets and using put options, as well as call options to create the right trading environment. In essence the aim is to protect one investment by undertaking a second trade which will act as an insurance policy for the first trade. In doing so you will be able to guarantee yourself a profit; you simply need to make sure that this is more than the cost of investing this way. Whilst it is possible to use the binary option hedging strategy on all types of binary trades it is especially good trading in currencies. In effect you are relocating the risk usually associated with a trade to place it above the normal stop zone. At first it may seem complicated, but it is, in fact, very simple to understand and use the binary option hedging strategy;

The Principles

The first stage of this tactic involves studying the market and deciding which direction your asset is likely to move in. You can use general trends or a more sophisticated approach such as the Bollinger bands. Once you have decide upon your asset and the direction it is likely to move in you need to calculate the cost of the trade versus the return; you will then know your expected profit and costs. To ensure your money is not at risk you then need to place a trade which goes in the opposite direction. The profit on either trade must be greater than the cost of both trades; this will ensure you end up in the money regardless of which trade is successful.

It is important to understand that this is not a guarantee of a successful trade; it is possible for the asset to move too far in one direction or not far enough to warrant the expected profit and costs. Although it is not a foolproof method of successfully trading it does dramatically reduce the risks associated with binary trading.

It may be easier to understand how this concept works by following this example:

You decide to invest $250 in a trade which is due to expire in one hour and the asset must be above the price of $10 at the end of the trade. You will be happy to see that after just twenty minutes the price has already exceeded the required amount. Hopefully the price will hold or increase, but you may be worried that it will drop at the last moment costing you your profit. To protect you initial investment you will need to purchase a second trade on the same asset. In this one you will specify that the asset must reach a price below $10; this will be a safeguard and provide enough profit to cancel out the cost of both trades. Should the price continue you to rise or remain steady, you will earn the agreed rate of return and created a profit. If the price suddenly drops you will have a successful second trade which will cover the costs of both your trades; leaving you free to start trading again.

Choosing to utilize a binary options hedging strategy will help you to reduce the risks associated with a rapidly changing marketplace.

TOP BINARY OPTIONS BROKERS

BROKER Details U.S.-friendly? Info RATING
Binary Mate
Binary Mate

TRADE!
Min. deposit: $250
Min. invest.: $1
Return: 92%
Trading: CFD, Forex, Binary
Autotrade: GO!
REVIEW
4.9
Finrally
Finrally

TRADE!
Min. deposit: $250
Min. invest.: $10
Return: 91%
Trading: CFD, Binary
Autotrade: GO!
NoREVIEW
4.8
24Option
24Option

TRADE!
Min. deposit: $250
Min. invest.: $24
Return: 88%
Trading: CFD, Forex, Binary
Autotrade: GO!
NoREVIEW
4.7

More related articles:

 10 Day Social Profits System Review
Making a profit in ten days is fantastic; especially if it involves using a system and a market you have no experience of. The 10 Day Social profits system offers just this opportunity. However, with this kind of promise is 10 Day Social Profits an attractive and genuine offer...
 7 Figure Challenge Review
There are many binary options which can produce impressive returns; then there are those which promise to turn you into a millionaire within a few weeks or months. These are the ones which are most likely to be scams. The 7 Figure Challenge offers an impressive rate of returns...
 97Partners Review
There is no doubt that investing in the binary markets can be a lucrative use of your time. However, if you do not have the necessary experience to make a success of this instantly you may find yourself drawn to software like 97Partners. These automated trading systems are pre...
 Account Doubling Money App Review
There are not many products which will offer to double your money in just seven days! The Account Doubling Money App professes to be able to do this or give you ten thousand dollars. The question is whether this promise can be upheld or not. Read this review to find out! &...
 Algo Cash Master Review
The internet has made it easy for people to look at different ways of earning money. The possibility of high returns has drawn many of these to look at the variety of options offered within the binary markets. Unfortunately this is one sector which has become inundated with ne...
 Amissio Formula Review
Trying to choose a system to help you trade successfully in binary options is extremely difficult. There are hundreds of different options; unfortunately many of them are simply scams. Before you commit to any you need to check the reviews. In the case of the Amissio Formula s...
TOPICS:  
Binary Option Auto Trading

 

TRADE WHILE YOU SLEEP!

SMART AUTOMATED TRADING SOFTWARE

 

100% Secure