Boundary and Range instruments are unique to trading in that they allow traders to profit from a lack of asset price movement. Unlike the standard trade type, which requires at least some amount of movement, these instruments provide the most profit during times when market conditions are flat. Not only do they provide yet another way to profit from trading binaries, they offer another chance to profit from what traditional traders would consider less than ideal market conditions.
To begin, first note that the only difference between Boundary and Range instruments is the name. While each broker may offer this type of trade along with different underlying assets and expiry times, the goal remains the same. Profiting requires that the price of the selected asset not exit out of a set range or boundary while the trade remains open. If the price remains within the top and bottom boundaries throughout the duration of the expiry time, the trader is rewarded with the fixed offered return rate.
The first step to generating profits from this instrument is to search the markets for underlying asset that are currently trading flat. Once these have been identified, the next step will be to refer to an economic calendar in order to see if any upcoming data releases or reports are going to impact the price while the considered trade will be live. Should you be able to confirm that the price is likely to remain flat, the next step will be to move on to completing technical analysis.
Technical analysis should include a check of how the price has been moving over the past 12 to 24 hours. This should include a look at the highs and lows for that time period, along with the average price. The expiry time that is being considered can serve as a guide for technical analysis. For example, with a one hour expiry, looking at price action for 24 hours prior is not going to provide much insight. More recent market conditions will likely be the best indicator.
The proposed top and bottom targets must also be taken into consideration when performing analysis for these types of binary options trades. These are the prices that the asset price must remain within. If the actual price exceeds either level at any point while the contract is live, the trade closes immediately and goes into the loss column. When the range is tight, the level of risk increases. When there is a larger gap between the two, the level of risk decreases. The offered return rates will likely reflect the associated perceived level of risk.
When should you avoid these instruments? They should not be used when price movement is volatile. This includes volatility at the present time, as well as potential volatility while the position will remain open. Make sure to check your economic calendar, and factor in times when the markets are typically more active, such as just after opening and just before closing. There are also certain assets that are just inherently less active than others. Pinpoint those and do not be afraid to use them over and over again.
Profits can come from many different instruments when trading binaries. For every type of price action, there is an instrument which can provide a path to earnings. While most do require some type of price movement to occur if they are to finish in the money, Boundary and Range require exactly the opposite. When you’re ready to trade, but market conditions are flat, look no further than these binary options instruments as a means of building up the funds in your trading account.
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