In this era, we have plenty of investment options, one of which is a method of trading. Financing your money through trades is becoming quite popular, and people are moving towards it more and more.
Trading can be of different types. Among them is binary options trading, which is a simple “yes or no” trading type. Unlike other investment ways, binary trading needs constant attention and continuous learning because one poor decision can make you lose all your investment.
But with the right broker and on-spot strategy, you can earn real money in no time. The reason behind the success of the traders is becoming skilled and grasping the best trading strategy.
It is possible to win trades without any plan, but they will be based on your hunch and pure luck. If you want to use binary trading in the distant future as well, you can’t rely only on gut feeling. You need to calculate the ways to turn your trades into returns.
Binary trading strategies
The strategies are those methods which when used in the right way, generate profits in binary options. They can also be called plans or policies that are formed based on your chosen asset and the amount of money invested.
The key to winning any trade is the use of the best approach possible. Binary trading is no less than a gamble, and to win it, you have to form the right plan. A solid plot will help you in the long run; otherwise, you are relying solely on fate which is not the right approach to win.
The strategies can be of different types. Some focus on the expiry time, while others depend on the use of filters and indicators. No matter what you pick, a precise way to deal with your money in binary trading will produce profits.
Why use strategies?
Applying strategies ensure that your trades end in success. There could be several different strategies as per the situation; hence, timing is the key. When you make a prediction using the right plan at the right time, you are basically safeguarding your invested money.
To make your own strategy from scratch, observe the market trend, previous scenarios, and for better results, use the indicators. You can start with demo accounts to get a hold of the trading realm and apply your strategies there.
Everyone has their own ways of tackling situations. Therefore, they are formed differently. Winning strategies boost your morale and help in forecasting the future of the asset. From veterans to novices, it can be used by anyone.
Basis of strategies
Binary options strategies can be based on:
- Market Trends
- Fundamental Analysis
- News Events
You can form the plans as per market situation, the ongoing events that can affect the financial market, and or by analyzing the fundamental factors.
Examples of different strategies
Some of the commonly used strategies are:
#1 Strategies Based on The Time Scale
- 1-Hour Strategy
- 5 Minutes Strategy
- End of Day Strategy
#2 Double Red Strategy
#3 Indicator-Based Strategies
- Momentum Strategy
- Rainbow Strategy
- Using Bollinger Bands
- Volume Strategy
#4 Breakout Strategy
#5 Straddle Strategy
#6 Robot Strategy
#7 Pinocchio Strategy
And many more. Use them according to the market trend to generate profit.
What is Zero-Risk Strategy in Binary Option?
The zero-risk strategy is formulated to save the investors from the risk of squandering all their money. Using this strategy, the trader can invest in the underlying assets without the fear of losing any investment.
A zero-risk strategy in binary option is something every trader wishes for. Though the use of this particular strategy is almost impossible in different forms of trading, binary options do offer you the concept of risk-free trades to a limit.
Is Zero Risk Strategy possible?
There is no strategy that always stands right. Sometimes the market trend follows an unexpected turn, and you can lose the trade despite using the right approach because you can’t always predict the right outcome.
There could be an event that eventually affects the financial industry. Any fundamental factor like geographical, political, or demographical aspect can make the market go upside down. And no one can foresee such causes every time.
Moreover, in binary options, even a second can alter the results. Hence, the risk is always involved in trading, and we can’t claim zero risk or a loss-free trading strategy every time.
However, involvement of risk does not mean that you cannot sideline them. There are a few methods when you can use the zero risk strategies.
How to achieve Zero Risk trades using strategies?
There are two ways where you can use zero risk strategies.
#1 Using Demo Account
Demo accounts are free practicing accounts and are available on almost every brokerage platform. They work just like the live account but with no real money and are useful for both beginners and experienced traders.
The beginners can learn the basics of trading and can practice until they hone their skills. Whereas, the experienced traders, without risking real money, can check the platform features that whether they are as per their style or not.
Demo Account and Risk-Free Trades
Demo accounts are the epitome of zero-risk trading. They do not require any real funding because they are already stocked with virtual money from the broker’s side, which means they can be used freely without any fear of risking live monetary funds.
You can practice trades over and over with new strategies until you become confident in your skills and plans.
Benefits of Using Demo Accounts
The free practicing accounts are offered by many brokerage firms, and using them really helps. Though many stock or index brokers also offer demo accounts, they are much more difficult to use as compared to binary accounts.
Because purchasing a stock means waiting for days and even for months to get the result of your used strategy. The wait is so long that it becomes impossible to use the same strategy again, and hence, in the end, there is nothing you will gain.
However, on the contrary, the binary options display a big advantage. The time frames are small, and you can adjust them as per your comfort level.
The average expiration time starts from 1 minute and goes up to 4 hours. If you need a bigger time frame, there are many brokers who will get you covered since they offer expiration time up to weeks.
Therefore, when you use strategies in binary, you will get the result within minutes. This helps you in establishing the right plan and discarding the useless ones. This ensures that you get the right approach in the trading without risking any real funds.
After using the strategies again and again and getting profits in the demo account for months, you can now switch to the real account and apply them there.
The second method is the strategy of arbitrage. This includes buying an asset from one place at a low price and then selling it at the same time at another location at a higher price.
The condition is that while buying and selling the asset in arbitrage, the quantity of the asset has to be the same.
Arbitrage and Zero Risk Trade
This is all about buying and selling the asset concurrently. When you use the strategy of arbitrage, you can get the profit with very minimal or no chance of losing the investment.
Let’s understand the arbitrage strategy with an illustration. Suppose that you buy an asset worth $200 from a New York-based trader. At the same time, you sold it to a buyer from Tokyo who is willing to buy an equal quantity of assets for $205.
Here, you purchased the asset at $200 and sold it for $205, which gives you $5 as profit. Although the profit is less since the execution of trades happened instantaneously, there is no risk.
Arbitrage in Binary Options
In stocks trading, the assets are bought and sold from exchange markets, but since binary trading has no particular central market, there is a need to alter the strategy. The binary trading demands high volatile market. In this way, you can trade with different brokers and their different payouts.
Another aspect you can look for is the inverse relations between different assets. For example, when the USD gains a hike, the price of oils drops. This creates an arbitrage opening.
Additional Risks Associated with Arbitrage
Using this strategy seems easy and profitable, but there are two things that can eliminate its use.
First are the trading charges. With buying and selling of the assets, you have to pay the trading cost, which might result in your loss rather than profit.
The second is the frequent price changes. In binary options, the prices can change with the speed of light. And if this happens before the execution of trades, the chances of getting profits become very slim.
Complications in Zero-Risk Strategy
Using this strategy is not easy and has its own complications and downfalls. When used improperly, the chances of losing the trade increase potentially. There are two hitches involved.
- The Timing of the Trade
It is quite difficult to get a cut-rate in the market, and the application of the no loss strategy needs to be placed at the right time.
- Brokerage Charges
As stated in the arbitrage strategy, considering the additional charges is important. In zero risk trading, you can get the profit, but these charges can put you on the losing side.
The zero risk or no loss strategy is an effective way to win trades, but it is not that easy. Even in binary options, you need to get a perfectly balanced market in order to apply these strategies as the opportunities appear once in a blue moon.
Check and carefully evaluate the market trend, use indicators and follow up on the news events. The binaries are not easy to deal with, but with the right approach and consistent learning, you can form your own strategies and win the trades.