At no time should any binary options trader fail to account for the current position of an asset price prior to entering into a trade. There is much to be learned about where a price may move next simply by taking into consideration its current placement. There are three key price levels – high, low, and average. When combined with an evaluation of market sentiment, each of these can paint a clear picture of the forthcoming direction of price movement.
One of the best trading methods will be to select underlying assets that have a price placement that is close to their all-time high or low levels and then prepare to trade with the reversal. The price of an asset can push past a record level, but this does not occur often. When a price nears its highest recorded level, prepare to enter a “Put” position as soon as it reverses. When a price nears its lowest recorded level, prepare to enter a “Call” position as soon as it starts to climb.
It may be possible to enter into a number of profitable trades once a reversal takes place. This is where the average price becomes important. This is the price level that that the asset remains at the majority of the time. Whenever the price shifts away from this level, it will continually work to pull back to it as market sentiment calms. By noting the average price, traders can gauge with some degree of accuracy just how long a price reversal can be traded upon.
In order to maximize profits just after a reversal, consider using short expiry times such as 60 seconds. These binary options trades run quickly, allowing for a large trade volume to be completed in very little time. Since one-minute does not provide enough time for major shifts in market sentiment, these positions can be a fine option for trading along with a price reversal. Additionally, since they do not lock the trader into a lengthy time-frame, the market can quickly be exited as soon as changes occur.
There does exist another way to profit from the average price, but instead of being based upon movement towards that level, the trade will be based upon lack of price movement. Whenever there is nothing impacting market sentiment, the value of an asset can remain stable for quite some time. The strategy here would be to check market reports to ensure that no upcoming earnings or economic release is scheduled in relation to the asset. If not, enter into a Boundary, Range, or No Touch trade. Each of these requires limited movement in order to be profitable.
Traders have access to many different price charts, with most providing the necessary information. The charts found within most modern platforms do show the current movement, along with past movement for a period of time. However, these may not provide information related to all-time highs and lows, nor the average price level. If not, this information can easily be found online by visiting any of the major financial news websites. Those who trade binary options should already have at least one or two preferred information sources, as these help with fundamental analysis.
***Your capital may be at risk. This material is not investment advice.***
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