There are indeed a number of specific elements that help to determine how successful a binary options Boundary trade is. Every trader who either currently utilizes, or plans to utilize this type of instrument should know precisely what these are. Knowing what makes for an excellent Boundary trade, or any other type of trade for that matter, enables the trader to place themselves in the best possible position to profit from the markets.
Asset price stability is one of, if not the most important element of a Boundary or Range trade. Unstable or erratic market conditions can cause price movement to be quite difficult to forecast. Such a circumstance is undoubtedly undesirable whenever entering into a trade that requires that the asset price remain within a specific range. When market conditions are volatile, asset prices can easily exceed this range, and in doing so cause the trade to end in a loss.
Profitable Boundary-style trades are rarely those which have a smaller gap between the upper and lower target. The tighter the range, the higher the level of risk. In order to decrease the level of risk when the range is small, detailed analysis is an absolute must. Risk may also be decreased by selecting shorter expiry times. A shorter trading period will allow less time for the asset price to launch into a movement that would allow it to escape either the upper or lower target levels. While this instrument is never combined with expiry times as short as 60 seconds, some brokers do allow it to be used with reasonably small trading periods.
Boundary trades can typically be implemented at any point throughout the trading day. Even so, note that trade volume can be quite erratic in the hour just after the markets open for the current session, as well as in the hour just before the market closes for the day. Additionally, overall trade volume increases whenever the hours of operation for major markets overlap. Not trading binary options during these more active times can decrease risk. Do keep in mind that certain asset classes such as currency pairs are traded at all hours, but can still offer stability during non-peak hours.
There is one time period which frequently offers limited asset price movement and this is when many investors pause their buying and selling just prior to the release of an economic report or earnings release. Just prior to the release of this type of information, investors tend to be reluctant to take any action, deciding instead to hold out to see the latest information prior to making investment important decisions. Any detailed economic calendar will tell you exactly when to expect the release of specific market and asset reports.
It may not seem the case initially, but Boundary trades can be just as simple and profitable as any other type of trade. The primary difference will be that limited price movement is desired rather than active price movement. The push and pull that goes on within the markets does keep asset prices in motion, but there will be times when the motion slows and provides prime entry points for boundary-style binary options trades.
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