There are a handful of binary options strategies which call for the use of linked or connected asset pairs. The success of these strategies is often dependent on the ability to know which underlying assets are connected in some manner. For that reason, it’s wise to create a list of pairs in advance. Once this task is complete, the list can then quickly be referred to each time once of these strategies is utilized.
Not every asset pairing is clear-cut, and therefore some traders do struggle just a bit with being able to pull assets from the same or different classes and link them together. There are some pairs which are going to be extremely easy to link, while others are simply going to require a bit of thinking outside the box. Below you’ll find an easy method for creating pairs, documenting them, and then using them in various investments.
The starting point is to take a look at the asset index provided by your broker. Should you use more than one broker, there will need to be more than one list and each should be specific for just one broker. You’ll want to start with the asset classes (stocks, commodities, currencies, and indices) and create pairs in single classes first. Let’s say that you start with stocks. Inside this group you’ll be able to make specific stock and stock connections, after which you can move on to stocks/commodities, stock/indices, and stocks/currencies.
This process will continue on until each asset class has been completed and compared with other classes. There should be plenty of extremely obvious connections, such as the coffee commodity and Starbucks stock. These are no-brainer pairings which are absolutely ideal candidates for having the price of one directly impact the price of the other. Remember, the price impact can be either positive or negative. You merely want to be able to note the times in which a substantial chance in the price of one asset is going to influence the price of another.
As soon as this step is finished, replicate the process, but this time be on the lookout for pairs which aren’t quite so obvious. These are going to be the assets which can be paired, but aren’t always going to influence the value of one another. One example here is Facebook and Apple. An Apple based app for Facebook could be a success or failure. This would primarily reflect upon Apple and could have no impact on the value of Facebook. By observing these pairings, you’ll increase the list and should have more options for use with binary options strategies.
Creating an asset pair list is work, so make sure you record the pairs using whatever means you wish. Failure to do this would mean that you’d need to replicate the process. The list will need to be updated from time to time, as brokers often make changes to their asset index. Lists are great, but the more often you actually trade with these pairs, the simpler it’s going to become to commit them to memory. You may not remember all of them, but you’ll only need a few in order to identify fast profit opportunities.
It’s not possible to link every asset to another and with so many great pairs there is no reason to force it. Whenever strong connections are in position, you may be able to double your profits by purchasing two contracts based on just one event. Another option would be to increase investment amounts whenever pairs and specific events make it extremely easy to predict the upcoming price movement. With so many options for extra profits, trading with asset pairs should be a part of your general binary options strategy.
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